2 Consumer (Hourglass) Markets
“P&G isn’t the only company adjusting its business. A wide swath of American companies is convinced that the consumer market is bifurcating into high and low ends and eroding in the middle. They have begun to alter the way they research, develop and market their products. Food giant H.J. Heinz Co., for example, is developing more products at lower price ranges. Luxury retailer Saks Inc. is bolstering its high-end apparel and accessories because its wealthiest customers—not those drawn to entry-level items—are driving the chain’s growth. Citigroup calls the phenomenon the “Consumer Hourglass Theory” and since 2009 has urged investors to focus on companies best positioned to cater to the highest-income and lowest-income consumers. It created an index of 25 companies, including Estée Lauder Cos. and Saks at the top of the hourglass and Family Dollar Stores Inc. and Kellogg Co. at the bottom. The index posted a 56.5% return for investors from its inception on Dec. 10, 2009, through Sept. 1, 2011. Over the same period, the Dow Jones Industrial Average returned 11%. “Companies have thought that if you’re in the middle, you’re safe,” says Citigroup analyst Deborah Weinswig. “But that’s not where the consumer is any more—the consumer hourglass is more pronounced now than ever.” …Firms catering to low-income consumers, such as Dollar General Corp., also are posting gains, boosted by formerly middle-class families facing shrunken budgets. Dollar stores garnered steady sales increases in recent years, easily outpacing mainstream counterparts like Target Corp. and Wal-Mart Stores Inc., which typically are more expensive.”
By Tyler Cowen, an economist worth following at Marginal Revolution. More here:
The Need for Meaning, Not Titles.
“We are currently encouraged to think of ourselves either as consumers, or as entrepreneurs. We are told to be shoppers for goods, or investors for return. Neither of these types of lives, if they are the dominant character of those lives, strike me as particularly meaningful. This is because their narrative themes — buying, investing — are rarely the stuff of which a compelling life narrative is made. To be sure, we must buy things, and may even enjoy shopping. And we should not be entirely unconcerned with where we place our limited energies or monies. But are these the themes of a meaningful life? Are we likely to say of someone that he or she was a great networker or shopper, and so really knew how to live? What is the point of understanding what makes lives meaningful? Why not just live them? On one level, the answer is obvious. If we want to live meaningful lives, we might want to know something about what makes a life so. Otherwise, we’re just taking stabs in the dark. And in any event, for most of us it’s just part of who we are. It’s one of the causes of our lying awake at night.”
Well worth the longer read. It’s got me thinking a lot about our own personal narratives, the stories we tell ourselves, and the stories we allow to be told to us.
We Deny Mistakes Cause it Hurts
“With error as with disaster, we screen out unwelcome information to protect ourselves from discomfort, anxiety, and trauma. Denial is still a defense mechanism, but in this case, what it defends us against is the experience of being wrong. We’ve already seen that that experience can provoke intense and often painful emotions. And we’ve seen, too, that our beliefs are inextricable from our identities, our communities, and our overall sense of security and happiness. No wonder, then, that any major assault on our beliefs represents a trauma in its own right – one that can arouse denial just as swiftly as any other upsetting event.”
By one of the smartest writers on neuroscience and human psychology, Kathryn Schultz. I’ve talked about some of her ideas before here. This new essay (more found here at this link) is related to recent Troy Davis story, but of course applies to all of what we do.
