Economist: New Opportunities in the US Marketplace

In a recent article, the Economist‘s Schumpeter highlighted an increasingly attractive market segment among US consumers:

The average American household saw its real income decline between 2005 and 2009. Millions of middle-class Americans have been forced to “downshift”, as credit dries up and the costs of college and health care soar. Some 44m Americans live below the official poverty line ($21,954 a year for a family of four). Consumer spending per household fell by 2.8% in 2009, the first time it had fallen since the Bureau of Labour Statistics started gathering data in 1984. . . .

Aldi, a German discounter, has been doing surprisingly well in America, too. Unlike Walmart, it specialises in small stores—the size of a basketball court rather than a football pitch. More than 90% of its goods are its own unfancy brands. To keep its supply chain simple, Aldi stocks barely 1,000 products; some of its rivals stock 100,000. Yet Aldi is not a grotty place to shop. It has wide aisles and bright decorations, unlike some of the discount stores that disfigure American inner cities. Aldi’s success highlights an interesting fact: that there is a lot of innovation in this market. Companies are reconfiguring themselves to appeal to the nouveaux pauvres as well as the old poor: middle-class people who enjoy lattes and salads but who are currently strapped for cash. . . .

Even that staple of the urban poor, the pawn shop, is being reinvented. Pawngo is putting pawn on the internet for the convenience of what it describes as “college-educated working professionals with temporary cashflow problems”. Customers can send their college-graduation presents (for example) to Pawngo by FedEx and get a loan in the form of a bank transfer.

Nouveaux pauvres?  Sort of leaves one speechless. . . . 30 years of catastrophic social policy described as a market opportunity.

The full post is here.

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