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Coleby Nicholson
Coleby Nicholson

Are you a middle market retailer?

Life was easy when there were three distinct markets; the high and low ends and, of course, the middle market. Everyone knew how they fitted, but COLEBY NICHOLSON believes there are now only two types of consumers. 

Conventional wisdom tells us that there are, or always have been, three markets – the high and low ends and, of course, the middle market. We can debate how to accurately define terms like high-end, mid-market and lower-class, but all products and services basically fitted into one of these three generally-defined spots. 

Life was easy and we all lived happily ever after!

This all changed for me several years ago while I was shopping for an ordinary pair of football boots. You see, the footy season was about to start and my son had grown out of last year’s boots. When I visited some sports stores they were filled with the latest ranges from the famous brands; however, I noticed something most peculiar – stores either had cheap footy boots or very expensive models, but almost nothing in the middle.

“Do you have anything in-between this $50 pair and those $250 boots?” I asked. Invariably, the answer was no, and I assumed it was because the store had sold out of the mid-ranged styles. 
To my surprise, I was told that anything between those price points didn’t sell, or at least not in enough numbers to warrant the store holding the stock. Parents wanted either cheap boots for little Johnny or really expensive ones.

It was the same for the older guys and more serious players: low-end or high-end styles sold but the mid-range didn’t. Considering my son’s footy ability, I bought the cheaper pair knowing they wouldn’t suffer too much from the wear and tear of kicking the ball... if ya get my drift!

Ever since then I’ve been intrigued about this change in the middle market and whether it’s disappearing. It should be noted that this shift was happening well before the Global Financial Crisis (GFC) but it is a shift that has gained more media attention since, as the GFC has increased the polarisation of retailing.

Conflicted consumer
This, along with the rise in internet shopping, has contributed to the “conflicted consumer” – someone who would willingly trade up, purchasing higher-value items as a treat in some areas, while trading down in other areas to ease their conscience or bank balance.

Today, this new consumer behaviour means anyone trading in the middle market finds themselves grappling with a continually-shifting consumer mindset, which is causing a squeeze from both the premium and value ends. The old norm has changed. Welcome to the new norm, a place where confusion abounds and no-one lives happily ever after.

Some experts believe the enormous increase in choice has also contributed to this shift. Consumers now face an oversupply of products in a larger number of categories, all available from a wider selection of stores that are competing in an ever-expanding raft of shopping centres. Don’t forget to add the new norm of internet shopping with its vast array of new shopping "models". 

Is it any wonder a confused or confusing retail market exists where the once-safe middle market stood? Maybe the epitome of this predicament is the sad case of the iconic retailer Darrell Lea Chocolates. 
After 95 years of trading, it’s said that Darrell Lea lost its way, not really knowing who its customers were. It didn’t change with the times and eventually found that the premium and value ends had aggressively eaten away at its market share (pun intended).

There are many other examples of mid-market retailers squeezed at both ends and, while I think jewellers are in an almost unique position to differentiate their businesses from competitors and competing categories, they are not totally immune to a shifting market.

Indeed, some experts believe the diminishing middle market actually creates new opportunities for retailers, some directly benefiting those in this middle market!

I am not sure the middle market will ever totally disappear, though I do believe it has severely contracted as my footy boots example suggests, and I have my own theory about consumers. 
I think there will always be three distinct markets, although I believe there are now only two types of consumers: those who are cash rich and time poor; and those who are time rich and cash poor.

The question is, can you successfully target both, simultaneously?
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Coleby Nicholson

Former Publisher • Jeweller Magazine

Coleby Nicholson launched Jeweller in 1996 and was also publisher and managing editor from 2006 to 2019. He has covered the jewellery industry for more than 20 years and specialises in business-to-business aspects of the industry.

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