Catering to the rich and poor

Companies are choosing to make products for the highest and lowest income levels -- not the gray area in between.

By Kim Peterson Sep 12, 2011 3:31PM
We live in an economy where luxury shops and dollar stores are doing spectacularly well. It's an odd distribution that some analysts describe as an hourglass -- bulging at the highest and lowest income levels.

The middle class? History. The housing market bust and the high unemployment rate have taken a huge toll on what was once a steady middle class (families with annual incomes of between $50,000 and $140,000).

Now, companies are changing their focus to cater to the rich and the poor -- but not that crumbling area in between.Tiffany (TIF), for example, is doing gangbuster business selling to the wealthy, but the lower-priced silver items targeted to the middle class are its weakest sellers, The Wall Street Journal reports.

Will President Obama's jobs plan help the middle class? Check out the following video.

Post continues below video:
Target
(TGT)
and Wal-Mart (WMT) used to do well with its more expensive items, such as furniture and clothing. Now, they're focused on food and basic household gear in an effort to keep customers from fleeing to dollar stores.

Some companies are going for both groups. Procter & Gamble (PG), for example, makes the pricey Olay Pro-X skin care line, but it also touts the cheap Gain dish soap.

You can see this divergence more clearly in the Gini index, which measures income inequality. In 2009, the index showed a 20% rise in income disparity over the last 40 years, the Journal reported. The U.S. level was on par with the Philippines or Mexico.

That income disparity means that retailers like Coach (COH) and Estée Lauder (EL) are doing just fine. So are Family Dollar Stores (FDO), whose shares are trading above $50, and Dollar Tree (DLTR).

But the companies that once reached out to the broad swath of middle America are having a tougher time. That could bring about strategy changes for Kraft (KFT) and Johnson & Johnson (JNJ) in addition to what we've already seen at Wal-Mart and Target.

VIDEO ON MSN MONEY

52Comments
Sep 12, 2011 4:23PM
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Looks like it will be the poor in the military. The Marines, The Navy, The Army and the smart ones in the Air Force. Protecting & dying for the luxury of the rich people. The middle class jobs were given to other countries or down graded to lower wages at home. One country under pure greed and controlled by wall street has led to the rich & the poor. Too much welfare leads to a lack of ambition. Social advancement (promoting kids to a higher grade even though they fail subject matter) produces stupid people in society. Prisoners have more security & medical privileges than those who work for lower wages. What a disgrace & George Washington would be ashamed of what has happened to us as a nation.
Sep 12, 2011 4:14PM
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I'M HERE, working my A$$ off paying for the mistakes of others and not mine. Big government and wayward spending. That's why we are in this greedy place we live today.  Special interest groups, lobbyist, speculators, there all crooks.
Sep 12, 2011 4:52PM
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I don't trust either party.  Maybe us newly poor, formerly middle class people should start our own party - the middle class party - and tell the others to shove it.
Sep 12, 2011 4:06PM
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That was the plan all along, put us on par with 3rd world countries. It's been a 15 year implementation which is now basically complete.
Sep 12, 2011 4:46PM
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The poor pay the taxes and the rich reap the benefits while the middle class moves toward extinction.  For students of history this is the path of Rome happening again.  Government leaders don't understand because they do not want to understand and yet they fail to see the seeds of unrest that have been sown in other countries suffering from many of the same problems.   The occurrence of another American revolution is becoming a real possibility as the majority of Americans are being ignored by their "elected" representatives.  Unless our leaders begin to seriously address the problems that we as a society face this path sadly becomes the only method of recourse for all of us.
Sep 12, 2011 6:01PM
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We have seen the middle class pushed into the lower eschelons by traders and investors who are steering the markets... We should not be looking to the Gov't for answers.... We need to take control of our country, our economy - it's every American's tax dollars that WE THE PEOPLE need to hold our elected officials responsible for.  It isn't about Democrats, Republicans, or any other party.  If our government officials aren't doing what they should, (remember that document, uh, begins with a "C"? I do believe they took an oath to uphold it..... help me here folks.... we the people need to uphold the Constitution and get rid of any official who does not honor it. That by itself would help reduce spending significantly... Cut congress's pay, STOP paying ex-presidents, eliminate tax loopholes for wealthier individuals. Follow Warren Buffet's advice and TAX the SUPER-RICH.

Bottom line:  reduce the deficit by firing half our elected officials, giving power back to the individual and the states! The Federal Gov't has trampled our individual freedoms, but that's another subject...  Require drug testing for welfare and food stamps. Require elected officials to live on welfare and food stamps for the first year of office. Significant reforms sure to follow...

Sep 12, 2011 5:43PM
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All countries have rich and poor.  What makes America a decent place to live is our middle class.  The rich and power are using their GOP puppets to eliminate the middle class and turn us into a third world economy.  Cheap labor, low tax rates for the rich, and wholesale deregulation are their recipe for America.   Their ultimate goal is concentrated wealth for the few and poverty for the rest of us.  The only jobs they want to create are wage-earning slaves that will help them become even more rich and more powerful.
Sep 12, 2011 4:50PM
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My mom always said there would be no middle class, just the rich and the poor.  She has been dead 22 years now, so she made that prediction at least that long ago.
Sep 12, 2011 6:14PM
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Since we middle class have to pay the bills for every other class we don't have anything left. We have finally been bled dry. I am sick and tired of paying for 3rd 4th 5th generation welfare recipients. The wealthy who have tax laws created by our politicians that allow them to pay little or no taxes are also on my s--t list.
Sep 12, 2011 5:01PM
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Vietnam veteran ,worked hard , did not buy what I could not pay for. expect nothing for free. The consumer sheep that did all this and now wants the govt to bail them out. Suck it up eat beans till you feel like working for steak and a decent roof over your heads that you can actually pay for
Sep 12, 2011 6:37PM
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The disappearing middle class...Makes me wish I learned some better survival skills like raising my own food.  Bank tellers and retailers won't be high demand when the economy crashes.  Sewing, farming, agriculture, basic construction however will matter.

 

At least the military taught me to shoot and a good bit of medical skills...that may come in handy I suppose.  Speaking of the military...I swore to defend the constitution against enemies foreign and domestic.  Is it just me or are others starting to perceive the Washington DC elite as those "domestic" enemies that the nation needs to be defended against?  I seriously can't  think of a bigger threat to the constitution, the nation's well being or the american way of life than the politicians...of both parties....Oh the irony, if it wasn't so sad it would be funny.  I have seen the face of the enemy and he is us.

 

 

Sep 12, 2011 4:12PM
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USA is finally a 3rd world country thanks to the shrinking of jobs including govt jobs. strink the economy/jobs and we lost alot of middle class. 
Sep 12, 2011 5:30PM
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Well, there you go; just as the Republicans predicted, the wealthy are spending their tax cut and stimulating the economy... at Tiffany's.

Sep 12, 2011 5:23PM
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The demise of the middle class I believe started with all the demonstrations of the 1960's.  The American public stood up against things that were wrong with America.  The pressure put on the government by these demonstrations forced our ruling class to realize that they had to do what was being mandated in the streets.  The majority of the demonstrators were middle-class Americans.  Because the government didn't like to be told what to do by the demonstrators the answer was simple.  ELIMINATE THE MIDDLE CLASS!  So they did.
Sep 12, 2011 5:40PM
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Where did the middle class go? Overseas, where most all the middle class jobs have gone! Duh!

 

Sep 12, 2011 6:25PM
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whens the last time anyone bought anything that was actually made in the usa ? Its time to vote out ALL incumbents !.
Sep 12, 2011 6:16PM
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AGAIN....

The Magical Shrinking Package:

I have much to say about the economy, unemployment and more, but I would

like to discuss only one topic today...the new and improved shrinking

package.  I mean those items we bought at our grocery stores five years

ago that now seem to have magically shrunk.  First it was the toilet

tissue you buy.  Have you noticed that the "big" roll is the same size

as the old roll but more expensive?  After that, every item we buy now

has become smaller and more expensive?  The straw that broke this

camel's back was the Kleenex tissue and the Bounty and Brawny paper

towels.  I hope that you, the reader of this editorial, have noticed

this too.  Only now, since Wall Street and those large corporations are

hurting too, everyone is talking about a "new" recession.  I believe

that we never were out of the "first" recession and I must have faith

that you and I will write or e-mail our President and Congressmen and

Women in Washington and let them know that the average person will not

be able t o withstand this much longer as the camel's back is almost

broken.

Sep 12, 2011 5:41PM
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republican president in 2012=revolution from the poor and non existant middle class.  republicans, george bush, killed the middle class with tax cuts two the rich, two wars and supporting raised oil prices...his family does own an oil company.  and cheney, the war profiteer is still laughing at what he got away with.  cleptocracy years.

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I don't know why some of you are comparing the US to a Third World Country. Most Third World Countries are far better off than we are here. I know, I have visited many and found America wanting. As for a revolution one should only look at the founding fathers for their advice. Thomas Jefferson said that the US needed a bloody revolution about every twenty years so no one got to settled in their ways. As for the poor being in the armed forces, the rich had better watch out. It was the army in Rome that took over and set up the Caesars. The poor have all the guns.
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