Sometimes trends become - quite simply - part of the accepted fabric of life and you wonder what on earth the fuss was about, or why such a phenomenon was ever considered worthy of comment. Apart from giving journalists and trend forecasters a chance to exercise their creativity in coming up with a silly name.
But back in 2005, a younger me was excited as anyone about the mind-blowingly amazing news that Karl Lagerfeld was putting out a collection for H&M. Imagine that!
Was this a taste of things to come? Could we maybe expect the much-maligned “middle” to disappear in a puff of mediocrity by 2020?
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This month, I’m going to write about a general trend that I’m sure is prevalent in other markets too, but I thought you might like to hear how this is affecting the German market in particular. It’s the trend variously called “Armani meets Aldi” or “Prada and Zara”, which is best symbolized by legendary designer Karl Lagerfeld putting out a collection for H&M last summer. Now, the collection will probably never be repeated (apparently Lagerfeld was upset that H&M produced his designs in sizes a little bit bigger than those to fit the average stick insect, which is rich coming from him as he used to be quite a porker himself!) but what the whole action represented was an important milestone in the development of this trend.
The trend itself is characterized by the growth of the luxury and discount sectors of many markets and the consequent shrinking of the middle. It’s estimated that in 1980, the middle-price segment represented 49% of sales but it is predicted that this will fall to 20% by 2010 at the expense of growth from the luxury and discount sectors. In contrast, discounters are estimated to have accounted for 38% of sales in 2003. Companies such as Porsche and Gucci on the one hand and Aldi and Lidl on the other are enjoying growth, while the traditional middle segment, such as retailer Karstadt-Quelle or car manufacturer Opel is suffering here in Germany.
The consumer behaviour that is fuelling this trend can be variously described as “trading up/trading down” or “mixing”. Instead of spending our cash on the ‘safe’ middle, we are ploughing what we’ve saved at the discounter into the new luxury segment. This behaviour can be traced back to a number of factors in Germany; shopping at the discounter was a necessity for many, including new groups of people hit by the last recession from which we’re just beginning to emerge. Another factor is the new responsibility that people are beginning to take for themselves; instead of relying on the tried and trusted ‘safe’ brand names, I’ll decide for myself in which areas I save and in which I splurge! This feeling has now translated into a perception across all bands of society that it’s no longer prestige just to buy expensive things; those who are really clever and ‘in the know’ can tell you exactly which manufacturer produces which Aldi goods! The discounters have not been slow to pick up on this trend and are broadening their offer accordingly. Aldi, for example, makes €1bn from clothing alone and is the 7th largest textile retailer in Germany.
Within areas other than retail, brands are picking up on the trend. A good example is the Korean car manufacturers Hyundai and Kia. These brands are deliberately attacking the value end of the car market with emphasis on quality and design. Hyundai recently ran advertising under the headline “Es gibt wieder richtige Volkswagen” (“Now there are real Volkswagens (peoples’ cars) again”). Both these Korean brands are enjoying double-figure growth in a stagnating market. In all branches, those that offer design at a good price are winning, from H&M to IKEA.
Part of the problem of the middle market is that the discounter products are, in many cases, as good. It is really not worth paying a little bit more for a brand name, especially when Aldi is a strong brand name in itself these days. The middle-market brands can no longer rely on their brand name; they must find a way upwards to the new luxury market and offer something worth having. The new luxury market is based on the principle of offering ‘specialness’ in fields where the basic price is not so high. In this way, Danone’s Actimel yoghurt can sell quite happily at a price premium of 100-200%. It is expensive (but jusitified, due to the L.Casei bacteria!) but affordable.
Some of the traditional middle-market brands are beginning to incorporate ‘luxury’ elements into their offer or communication in the hope of winning back customers. It is certainly true to say that the boundaries of what is discount, what is mass and what is luxury are becoming more and more blurred but it is questionable whether these actions which are not unique or an integral part of the brand concept will be powerful enough to buck the trend. For example, the mass-market mail-order catalogue Otto now has collections from Heidi Klum and Claudia Schiffer (have they not noticed that the old Supermodel trick has been used to much better effect by H&M for the last ten plus years?). C&A now have TV advertisements with super-high top fashion production values but at the end of the day, you can’t make a silk purse out of a sow’s ear.
Maybe the German middle-market brands should learn from M&S in the UK; increasingly, this is all about personalization, not about buying into a ‘blanket lifestyle’. It is about picking and choosing to suit oneself across categories, styles and price-bands. It is also about substance and attention to detail. A final example of the ‘new luxury’ is the Internet shopping site www.brot-und-butter.de .Here we see “everyday products but not everyday quality” (the cynical could add something about ‘not everyday prices’, too!).
This has all the elements of specialness, individualism, authenticity and a touch of luxury that I can afford. I imagine that it won’t be long before Aldi offer a similar selection of ‘special everyday’ products to go with the €12.99 champagne!
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It’s true to say that this “trend” has simply become a way of life - fashion designers, influencers, TikTokkers and probably activists can all have a go at doing a collection for Lidl or Aldi. It’s no shame for Gucci and The North Face to use a super-nerd in their brand communication. And grocery discounters don’t just have “everyday luxury” food ranges, but ironically branded fashion items, too.
And, on top of that, I think that sustainability and a shift in values have led to questions: what is luxury? There are some thoughts on that here. And what is discount? Is it cheap at any price (to the environment or society?). How do people’s priorities shift in times when we’re more cash-strapped? I’m reading a lot about the “lipstick effect” in all of this year’s trend reports. But the question is not so much whether but what - maybe this time we’ll be giving something a second life rather than splashing out on something new to treat ourselves. Doing good to the conscience and the wallet.
... and, well I never! I blogged on exactly this article this time last year. “Giving something a second life."Whoops. The system is out of sync. Oh well, I’d already taken the picture, and some of the thoughts are new.
Talking of which, the “middle" is still here - especially the “spare tyre”. It’s a mark of what does change.
Can anyone imagine Karl - should he still be alive today - having the audacity to complain about his clothes being made in sizes beyond that for a stick insect?
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