Why middle-priced goods are slowly disappearing from shelves
Why middle-priced goods are slowly disappearing from shelves
Claire Tassin’s got a thing for old rugs.
“I’m really into home decor,” she said. “It’s my passion project.” The reason she sways vintage is because it’s tricky to find quality, new rugs at a reasonable price. They’re one of those things that cost something like $1,000 or $100.
“When you get up close to a rug and you can see that it’s, like, screen-printed and it’s not actually woven with the pattern that you want, that to me is just — I don’t want that,” she said.
Lately, Tassin, a retail analyst at Morning Consult, has been seeing this high-low price split happen in more categories. From sweaters to couches, it’s easy to find fast fashion and fiberboard furniture. It’s also easy to find cashmere scarves and hand-carved teak dining sets.
“‘In the middle ‘is kind of falling out,” she said.
The growing gap between consumers in this country — between the have and the have nots — is increasingly influencing how people shop and what they buy. In 2023, just over half of Americans were middle class, compared to more than 60% in the 1970s, according to the Pew Research Center. It means American consumers are financially further apart than ever before.
That is changing what retail looks like. Bifurcation is what the industry calls the split in stores and brands catering to two different kinds of consumers — budget-conscious on one end and luxury-focused on the other. And with that division, famously middling stores like JCPenney and Macy’s have nearly disappeared.
And as this split happens, American consumers are changing.
“It’s not always the high-income households or high net-worth household that are purchasing the premium appliances,” said Dean Brindle, head of product management for home solutions at LG.
Consumers of all kinds are skewing toward luxury. And a lot of that has to do with aspiration that starts on social media and spills over into certain parts of our homes.
“When you have guests over, friends, family, etc., they’re not typically looking at your laundry appliances,” he said. “In the kitchen, where people want to show off a little bit maybe, those home chefs typically will lean in a bit.”
In response, LG has been developing more premium appliances. Some refrigerators run up to $9,000 and have fancy features like ice makers that make multiple styles of ice and temperature-controlled drawers for storing kimchi.
The trend toward high end is playing out in the market for phones, too.
“Consumers, generally speaking, are skewing premium,” said Drew Blackard, vice president of product management at Samsung Electronics America. “Historically, that was not the case. You used to see that consumers maybe would opt towards the entry model and decide if they want to plus up. So it’s kind of gradually changed over time.”
Of course, there will always be a market for entry-level everything. The profit margins for those products aren’t as big, but the sales volume is usually bigger. And it’s why Ed Johnson, who leads retail and consumer products at Deloitte, said the highbrow-lowbrow split is happening everywhere — even at the grocery store.
“You can even think of a category as mundane as ground beef,” he said. “You have different grades, you have organic, you have grass-fed, you have fat content. And so on that matrix based on what you’re looking for you can pay anything from $2.99 a pound to $9.99 a pound.”
Increasingly, the brands making all of these competing products are owned by the same companies. Campbell’s makes Prego pasta sauce and Rao’s. L’Oréal Groupe owns its namesake drugstore brand and Lancôme. Hormel Foods makes Spam and Applegate organic meats.
“And it’s done intentionally,” said Johnson. “It’s done to create these sub-brands that maybe appeal to a different audience or have slightly different formulation, but can reside on the shelf at different price points.”
Which leaves you, the consumer, with fewer options if you’re looking for something not too fancy, not too basic, but just middle of the road.
Reporter Kristin Schwab is looking to find out more about different kinds of consumers and consumer behaviors by interviewing a diverse group for a new series. We’ll tell macro stories through personal ones — including, potentially, yours! If you’d be willing to be interviewed, please share some details with us.
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