Markets used to consist of a broad range of offerings ranging from the cheap and basic to luxury and expensive. Not any more. As people have become richer and technology has become cheaper, markets have started to polarise between the top and bottom segments. In other words the middle market has all but disappeared, with people either trading up to quality or luxury products or happily accepting high quality basic (value driven) products. In other words, metaphorically speaking, everyone is either flying with a low-cost airline or upgrading to business class.
Polarisation of markets
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Companies are looking to reduce fixed costs while employees want flexibility in terms of hours and location of work. Result? — an increase in part time work, working from home, virtual offices, sabbaticals and ‘downshifting’ (25% of homes now contain some kind of home office and 25% of people claim to have ‘downshifted’ to improve the quality of their life in the past 18 months). However, most companies still don’t get it. But they will. Demographic trends will mean less people available for work, which means more competition for workers, which in turn will drive a more flexible approach by employers.
In the US the self-storage industry is now bigger than Hollywood. This is because people buy too much stuff and then can’t face the idea of throwing anything away. Companies are just as bad. The paperless office seems like just another ridiculous prediction as we print out endless emails and keep hard copies of worthless presentations. We predict that throwing things away will be a big future trend.
Looking at cars like the Mini, Beetle, PT Cruiser and Ford Thunderbird, you would think that we were living in the sixties. Well to some extent we are. People are longing for simpler times, when roads were empty and driving was a pleasure not a chore. As a result everything from cars and petrol stations to classic car magazines have focussed on bye-gone eras. But perhaps this particular automotive trend is coming to an end as manufacturers are re-discovering their local roots. Ever since car companies went global and ever since they started using computers rather than pencils to design cars, cars have looked remarkably similar. This wasn’t always the case. Once upon a time a British car could only have been made in Britain and the same was true with cars from the US, Germany, Italy and France. They just looked and smelled whence they came. However, global markets, CAD software and focus groups changed all that. Not anymore. Car companies are re-discovering their roots and the new Mustang, Cadillac CTS and STS could only be made by Uncle Sam. Equally the new Infiniti Kuraza concept car could only have come from Japan. Is this an early sign of the end of global products or just a clever case of ‘glocalisation’?
How about lunch in Paris or dinner in New York? This isn’t as crazy as you might think (even if you live in London) because people are getting used to going further. What was once exotic is now considered ordinary, which means that travellers are constantly seeking out new and further flung destinations like Latin America and Asia. Part of the reason for this is the growth of low cost carriers pushing routes further out. US carriers like Jet Blue, Spirit and AirTran are all adding destinations like Jamaica, Costa Rica and the Dominican Republic to their schedules. It’s also got something to do with people having more money to spend and airlines making the experience more comfortable. One could even argue that it’s to do with security post 9/11. If you’ve got to get to an airport 2 or 3 hours before your flight you might as well make the journey worthwhile by going somewhere far away. You could even argue that it’s down to the Internet, which has given ordinary travellers access to new information and low prices.
Have you noticed how fewer people are wearing watches these days? Under the age of 21 a watch is almost a novelty as people use their mobile phones to tell the time instead. And so, the theory goes, phones will replace wallets too as people find it more convenient to carry their cash digitally inside their phones.
The level of credit card debt in Britain has increased by 73% since 1997. The UK now holds 60% of all credit cards issued in Europe and has 75% of all European credit card debt. Spending on credit cards now represents 11% of GDP and 40% of people say they expect to use their cards more with the advent of new technology. Meanwhile, the amount owed to credit card companies in the UK now stands at GBP £53 billion. Figures for other countries such as the US and Australia are following a broadly similar trend. So what happens if (when) interest rates really go up? Trouble, that’s what.
Pre-pay is a type of private currency in that you can restrict where people spend their money, in some cases to a single brand, outlet or service. This is good news for loyalty and also good (or bad) news for privacy depending on your point of view. For example, parents can give their children pre-paid cards with certain categories or locations locked off. However, the big news in private currencies is what’s happening in the air and in cyberspace. According to the Economist magazine, airmiles are now technically more valuable than the US dollar while over in cyberspace gamers are exchanging cyber dollars for the real thing.