The other day I was watching a report on Fast Fashion and the new Ultra Fast Fashion, and how these companies are bringing clothing prices to ridiculously low levels for the young generation who will buy them, wear them a few times and then throw or give them away. The report focused on the labor abuse and environmental damages. Some items truly shocked me, but it also got me thinking about a totally different trend, which I would almost say is a megatrend at the core of our societal and business evolution, at least in the western democracies: The thinning out of the stable middle.
For a number of decades after the second world war, we saw the emergence of a middle class in the west who were not rich, but they had a decent living standard, with decent societal benefits (such as healthcare, education and leisure), contributing to the development and growth of the countries. They also provided the stability and the reason necessary to run and reform the economic, political and social systems. We still had (and unfortunately still do) a large underprivileged class and a tiny rich privileged class, but this middle class drove many of the positive evolutions we witnessed in the west.
From the early 80s, however, this class began losing purchasing power, and this trend accelerated from the years 2000: education became more expensive, healthcare became less affordable, work conditions and workers’ rights deteriorated. Nowhere is this trend more visible than in the US and the UK, but not only. During this period, total wealth and diversity of products and services exploded, but its distribution became skewed. So now in 2021, we have a smaller middle class (as a % of total population), a larger lower purchasing power class, and a small very rich class. The paradox is that this middle class is increasing in Asian countries.
Now let me take you to another dimension, on a fractal level and see how this trend is common in other areas. We are witnessing a certain trend in many of the daily consumption items such as clothing, food and groceries, beauty and cosmetic products: The high end positioned / high priced sector is maintaining its share, its physical stores and customer contacts, while the highly competitive and low priced sector is lowering the price, moving into nearly 100% web and abandoning physical contacts. And the mainstream middle is losing stores, access and attractivity: they are either moving down, or out. So that stable middle backbone is thinning out.
Without wanting to paint a dark picture or be a doomsday prophet, I am (maybe nervously) waiting for the restaurants to open up where I live, to see what will happen to the hospitality industry. Hopefully not the same thing, because we then may be looking at ghost towns everywhere.
Paris, March 17, 2021,
Zeejay