In reading a special retail report in the 8th Feb edition of AdNews, a term was used that really grabbed my attention: the ‘hourglass economy’. The term is used to describe the polarisation of the Australian consumer market: more people are becoming richer, and more people are becoming poorer. The middle market is becoming smaller and smaller by the day.
For me, this term echoes not only my personal situation, but explains a rather strange shift in the retail environment, especially locally. I am one of those few stuck in the middle range: struggling like so many other young people to save that elusive home deposit, yet still purchase the brands, products and things that I enjoy and just happen to be, more often than not, on the expensive end of the scale. My assets are relatively nonexistent, yet I spend and act like a high-end consumer (refusing not to sacrifice my current lifestyle). Whereas our older generations are asset rich, yet earn very little. As a result, the population of a town like Busselton appears to be significantly low-end, as the average income is very low. In fact Busselton is almost a perfect physical example of this ‘hourglass economy’.
The retail environment in Busselton has a distinct low-end, high-end divide (yet they are all thrown in together in a great big, unorganised mess). There’s homewares, boutique clothing and furniture stores, jewellery stores, gourmet food stores, and giftware, all pushing the high-end of the demographic scale (for example, the popular, yet relatively pricey, homewares store House recently came to town). Then there’s about 4 or 5 op-shops, heaps of discount stores ($2 shop style), discount clothing retailers, and a whole swag of other low-end stores who crowd their entrances with discount racks and awful flouro orange and green hand-written signs saying ‘warehouse clearance sale’. When tourists come to Busselton, they must be completely and utterly confused.
p>Whilst I’ve used Busselton as an example, this trend is being realised all over Australia. Companies in the middle do face a certain death, which is why some middle-style retailers (for example Target) are aiming at the higher, or lower end, of the market to try and secure a steady market base. If you’re in retail and reading this blog, I’d suggest having a think about where you fit into this scale. We know that trying to be things to all people is impossible. If you have a carved a nice little niche for yourself, preserve it like you would fine wine. You never know how long it is going to last.