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Monday, September 24, 2012

The poor are getting poorer - the rich are getting richer - so what's new?

This is something of a moan. If you got important stuff to do then I would get on with it.

Back in Jan 2011 I wrote a blog posting about the ultra-fragmentation of the market into rich and poor. The OECD published a shed load of research showing this at the end of 2011.

Yesterday's Observer newspaper featured a research report, from a left of centre group called Resolution Foundation. It was one of those 'dramatic new research shows' type of articles. Well either the guys from the Resolution Foundation have been hermits, or maybe the didn't bother to do their research or maybe they were looking for headlines to warm-up a bit of old news that most marketers have known for years.

Most of the large CPG companies are now selling luxury product ranges alongside the brands they would use in the developing world. They have understood the ultra-fragmentation of consumers and the implosion of the 'middle'. This is basic stuff.

The report's author says:

Today, not surprisingly, the only question is when will growth return – but at some point it will become who does growth benefit? If we stay on our current track, the answer is going to be higher income households rather than the large swath of low- and middle-income Britain, where living standards are set to flatline or fall.

Where the author misguided (one of the many places) is this idea that ‘growth will return’, a bit like we are having a hard winter but come next spring the vegetable garden will spring back to life. Afraid not. Sure there will be some perturbations of growth but for the coming decade we (most of Europe) will be bouncing along in the region 1 maybe 2%. 

A little more digging into the research and you find that it is a 'Xmas tree' document. For those of you who don't read this blog, this means it is basic  research that you can decorate with your personal prejudices. In this case the authors believe the reason for the situation is all the fault of the present government's policies.  Truly, if this outfit really thinks that then they both misguided and ignorant.

The sooner that politicians and the policy wonks come to terms, with what many large companies already know, that the UK is fragmenting by geography and income at an increasing rate then we might be able to adopt policies to best fit this reality. The longer we go on thinking that if only we wait a bit longer it will all be OK the longer we put off the hard decisions.   Dick Stroud

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