The middle class feels squeezed in terms of income. The way middle-class consumers adapt to this squeeze is not by consuming less but by “trading down,” that is, by consuming lower quality goods and services. At the same time, we have a part of the economy that is doing extremely well, and those consumers are trading up to consume luxury goods and services. So, we have a polarized economy where growth opportunities are plentiful for value and luxury brands but scarce for brands that have traditionally targeted the middle class.
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