The Full English – The Decline of the Middle-Class Brand

I referenced a Nil’s Pratley opinion piece in the Guardian on Tesco’s new budget store, Jack’s, last weekend. I’m returning to it as the comments are worth a look on their own. In amongst them is this pearl of wisdom.

What Aldi/Lidl are doing well is taping into the change in incomes and what “middle class” means now and that, basically, people aren’t really middle class.

We have a much smaller genuine middle class (2 holidays a year, 1 skiing, then 2 weeks in the sun over seas, new cars that they own, large house with minimal debts…) than we used to have and now there’s really just a much larger upper working/lower middle class who like to think that they can live the life but know that they really cant so actually need shops like Aldi and Lidl so that they can buy wine (as they can’t afford to from Majestic or whomever where it’s bought by the case, as a real middle class person would) and meat that they can claim is fancy still (not from a proper butcher, like real middle class would) to pretend that they are living well, but at a cheap price. (1)

Spelling errors aside, this observation is interesting. Is the middle class ‘brand’ sliding down as a consequence of aspirational executive types? I’ve noticed this amongst car manufacturers in my little hobby. The old executive companies; Mercedes, Audi, BMW etc, now produce small bland euro-boxes starting at very reasonable prices on solid finance deals. One argument is that this is a consequence of EU directives dictating all manufacturers reach a certain efficiency target. Others would say it’s good business sense, as the aspirational lower middle classes want ‘the brand’ and therefore will pay slightly more for a comparative bland euroboxcar with a three-pointed star than one from a Korean microwave manufacturer. That’ll be the (demise of) Daewoo (2, 3)?

Extend this line of logic out to supermarkets, and Aldi/ Lidl allows people to feel they lead a middle-class lifestyle; the food is more affordable so a bottle of wine, halloumi, olives and smashed avocado on toast dahling is less of a luxury item. The treats associated with middle class life can be every day. And to be fair, I’ve seen Bentleys being filled up with the weekly shop at Aldi, because you don’t stay rich buying Waitrose essential vermicelli nests (4, 5).

So if the lower middle-class have decided that Lidl and Aldi’s budget kale smoothies are a taste of the good life, where are the upper middle-class off to? The trendy local deli and the Riverford food box, or the organic inner-city farming co-operative (I regret nothing)? The hotly anticipated pop-up keralan-fusion van? Some other half-cooked, over-spiced ‘superfood’ containing slop cooked by an unwashed fake-prison-tattoo-sporting manbun-topped ‘entrepreneur’?

It seems they’re actually off to buy something of quality. Because that’s what they’ve always done. That’s what brands used to mean. There’s an excellent anecdote about the demise of Rover from when they were owned by BMW in the 90s. When BMW built seriously well-engineered cars (the same ones that can now be found drifting round empty retail car parks at night). The story goes that engineers were discussing a part at a meeting in Germany, and the question around the table was “How can we make this better?”. Those same engineers came back to Rover in Birmingham and were asked “How can we make this cheaper?”.

And now everyone is asking, “How can we make this cheaper?”, to squeeze every inch of profit from the ‘Brand’. But that’s not sustainable, because cheaper quite often means poorer quality, and engineered obsolescence and throwaway white-goods don’t fit with the fashionable sustainable movement. See the rise in repair cafe’s as an example (6). Miele may not be in every home on the rabbit-hutch new estates with financed-Mercs on the drive and 0%-interest Samsung american fridge-freezer in the kitchen, but it maintains it’s market share because it sells solid products. And you can buy spare parts and have them repaired. And they last 10 years.

How the hell does this relate to Jack’s? Lidl and Aldi buck the trend. They’re not focused on brand, they’re focused on reasonable quality for a value price. Tesco bosses also have to learn that lesson, and not sell Jack’s as a budget brand. Brands are dead. Long-live quality without a badge.

Have a great weekend,

The Shrink

Side Orders

Other News

Opinion/ blogs:

The kitchen garden:

Tips for composting from Real Men Sow (29)

What I’m reading:

The Windup Girl by Paolo Bacigalupi – Fantastic world building in this dystopian Hugo & Nebula award winner.

Religio Medici by Sir Thomas Browne – the theological and psychological reflections of a C17th doctor.

Enchiridion by Epictetus – Bedside reading for a bad day

References:

The Full English Accompaniment – Switching energy suppliers

What’s piqued my interest this week?

The Shrink household is currently switching energy suppliers. If you’re here, then you’re probably smart enough to already be doing the same on a regular basis. I’m not going to go into how much you can save, MoneySavingExpert does it much better (1). On moving into casa-del-Shrink we had a number of problems with the existing supplier, particularly surrounding pre-existing debt on the pre-payment meters. We switched to British Gas. Big mistake, as we continued to have problems paying off the previous tenants debts, and found out how bad British Gas complaints procedure is. Cue hours of interminable hold music, patronising ‘we’re listening letters’ and complaints being closed unresolved (2, 3). The actual staff we spoke to were helpful, but appeared constrained by a draconian “computer says no” system. We weren’t the only ones having problems with British Gas this year, who’ve been fined £2.65m for overcharging customers (4). When they put their prices up in August we voted with our feet and left to avoid exit fees (5).

We’ve gone back to Bulb, one of the smaller energy companies outside of the ‘Big Six’ who buy from entirely renewable energy sources and who we’ve had excellent service from before. We considered using the MSE Credit Club, but I get a little tin-foil-hat about giving out my personal info willy-nilly (6). In the same way we avoided Flipper, an app touted on Moneybox which automatically switches you onto your cheapest supplier (7). Sadly we’ve been told we’ll also be having an immediate price rise (8, 9), which takes Bulb out of the MoneySavingExpert’s cheapest list. The government via Ofgen recently implemented a cap on energy prices to protect vulnerable customers (10, 11). But despite this it looks like most peoples energy prices will go up, with suppliers citing increased wholesale prices (12, 13, 14). Time to break out the coal braziers and pile up the logs, we’ve got a long winter ahead!

Have a great week,

The Shrink

Side Orders

Other News

Opinion/ blogs:

What I’m reading:

Smarter Investing by Tim Hale – essential reading

Religio Medici by Sir Thomas Browne – the theological and psychological reflections of a C17th doctor. This is turning out to be real heavy-going so has been ignored a bit.

Enchiridion by Epictetus – Bedside reading for a bad day

References:

The Full English Accompaniment – The neuroscience of a frugal mindset

What’s piqued my interest this week?

In a throwaway conversation this week MrsShrink said something which I’ve subsequently been ruminating on. In running our household I do most of the shopping, but MrsShrink does the toiletries. She remarked that she actively enjoyed going to browse in Savers, Home Bargains etc, as she enjoyed spending money she knows she has to. She’s learnt to be frugal, to penny-pinch, and spending is a treat. She gets a hit out of buying things most of us wouldn’t think twice about because to her it’s a forbidden joy.

Attitudes and behaviour towards money are learnt in childhood by observing your parents. On a structural level, the dopaminergic mesolimbic ‘reward’ pathway develops through your childhood and adolescence (1). This is the time when your brain is most sensitive to it’s reward system, and is setting down the pathways for a lifetimes use (2). The way I explain behavioural modelling to patients is to think of it as a parallel to learning your first language. As a toddler you observe your parents using sounds as language, try it out, see what works, gradually accumulating your understanding without consciously being aware of the process. Other behavioural processes also follow this unconscious accumulation process, including financial attitude. If you model your child’s behaviour at this time (consciously and unconsciously) you lay down the pathways for a lifetime of reward processing.

Hundreds of websites and blogs have signed onto this, offering to teach us the ways we can consciously train our children to be better financially. This doesn’t have to be as intense as paying your child through an investment account, or making them buy fractional shares in Netflix as some would recommend (3). The piggy bank, pocket money, weekend job development path will work just fine (4). I clearly remember learning the value of money calculating how many penny sweets I could buy with my 50p pocket money. The pre-frontal and frontal cortex projections of these pathways continue to develop into your teens and early 20s, forming your conscious awareness of pleasurable responses as you grow into adulthood.

The unconscious processes are far harder to model, alter or change. These are the deep cortex projections close to the archaic midbrain structures, projections which develop during early childhood through modelling. These are learnt through observation of those around you. This is why teaching your child to be a spendthrift can only go so far if your own approach is spending all you have to keep up with the Joneses. This is also why, in my opinion, people such as Little Miss Fire struggle with her Shop Floor Mentality (5). If you have grown up in an environment of thrift as a necessity of poverty the rewards from saving, investing and watching wealth grow are not hard-wired in your cortex. There is no unconscious drive for these goals. The Stanford Marshmallow experiment on delayed gratification is a case in point example, and potentially a way of teaching your child the benefits of patience (6).

Which is where I bring things full circle. Many rich people are innately frugal; look at Warren Buffett (7, 8). These winners derive their pleasure from the process not the outcome. MrsShrink is innately frugal as she was brought up in an environment where frugality was a necessity. She observed her mother being able to afford the things they wanted by saving wherever possible. I secretly suspect she is much more likely to become FI than I because of this innate drive, but will be hampered by her mistrust of investment vehicles. She has no desire and gains no pleasure from making non-frugal choices. Consciously training thought processes to be the same way is far harder.

Have a great week,

The Shrink

N.B. There won’t be a Full English Accompaniment next week as I’m on holiday AFK.

Side Orders

Other News:

Opinion/ blogs:

Mining in the UK sees a resurgence (15) – I find the mining industry fascinating and will do a piece on this at some point in the future
The Fire Starter runs the maths on an electric car (16)
BBC – Why are people not saving? (17)
UKVI – Is Ted Baker a perfect dividend stock? (18)
IG market analyst – Is investment in renewable energy drying up (19)
Larry Swedroe – Determining ESG’s nature (20)
Firevlondon – a high-value investor adjusts his portfolio (21)
Firevlondon – a high-value investor’s July returns (22)
Ermine at Simple Living in Somerset, being Ermine (23)
A new blog to me, Eagles Fear to Perch (24)
Monevator’s weekend reading (25)
And a piece from this week on the intricacies of risk and reward (26)
Wephway at Deliberate Living reconsiders savings rates (27)
Weenie challenges our phone addiction (28)
MMM – The 20 dollar swim (29)
Monevator linked this fantastic article on cognitive bias from The Atlantic (30) – I’ll be doing a few pieces of cognitive bias in the future, but a great starter for 10.

What I’m reading:

An exam textbook

Religio Medici by Sir Thomas Browne – the theological and psychological reflections of a C17th doctor

Enchiridion by Epictetus – Bedside reading for a bad day

References:

The Full English Accompaniment – A nation of preppers?

What’s piqued my interest this week?

This week that bulwark of British strength Theresa May advised us all we should start prepping for a “no-deal” Brexit, just as the Government had by stockpiling food and medication. We should “take comfort” in the Government’s actions (1). “It’s right to prepare for all eventualities” (2). Unfortunately the actual understanding of how they’re going to do this is lacking (3). Currently the EU supplies 31% of the UK’s food, and Brexit will have huge implications across the supply chain (4, 5 ).

This led to lots of media outlets running pieces on ‘what to stockpile’. The Guardian recommended olive oil, pasta, pepper, rice, spices (6). The BBC warned of the threat to our sandwiches (7). Heavens! Anything but the sandwiches! Even The New Scientist got in on the act (8). Plenty of organisations are piling on the warning bandwagon. The UK dairy industry has warned that butter, yoghurt and cheese will be occaisional luxuries (9).

My solution to this problem is to gradually move my consumption to more local suppliers. Coming from a farming family I’ve always tried to support UK growers. For at least the past few years I’ve only bought UK grown seasonal veg, and cooked based on what is in season. Very middle class yes, but healthier, more varied, and often cheaper. This year I’ve tried to take this further, using a local butcher and market garden co-operative (feel free to roll your eyes) delivery. It appears I’m not alone. We all saw Blue Planet 2, the anti-plastic movement gains traction, and people are finding ways of reducing their packaging usage. One of these ways is going back to the local milkman with his bottles. Milkmen are seeing a surge in demand throughout the country (10). Fresh local milk served in retro glass bottles delivered by an electric van does sound pretty ‘now’. Expansion has not been without it’s problems for the national Milk&More, but these appear to be teething problems (11). The traditional local trader milkmen are doing better (12). We’ve come full circle with convenient deliveries from local producers. Everything old is new again.

Have a great weekend,

The Shrink

Side Orders

Other News:

Opinion/ blogs:

What I’m reading:

Eric by Terry Pratchett – light relief

Religio Medici by Sir Thomas Browne – the theological and psychological reflections of a C17th doctor

Enchiridion by Epictetus – Bedside reading for a bad day

References:

The FIRE Shrink

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The Full English – The Decline of the Middle-Class Brand

The Full English Accompaniment – Switching energy suppliers

The Full English Accompaniment – The neuroscience of a frugal mindset

The Full English Accompaniment – A nation of preppers?