A recent article on self-storage in the NY Times mentions that “we’ve spent more on furniture even as prices have dropped, thereby amassing more of it.” The same appears to be true in other markets, apparel, housewares, etc. As the prices drop, people spend the same, but amass more items of a poorer quality.
This trend has no choice but to reverse, as we are facing a downturn in available income coupled with consumer burn-out. If spending ticks down a little, but consumers choose to again buy higher quality, the premium market will make a comeback against the discount stores. Consumer behavior also predicts this movement, as the early adopter markets have already moved this direction, and the larger consumer backlash against the surge of stuff should follow soon.
Again, this is going to take substantial consumer education to overcome the price barrier. Tactically, there are many options at every contact with your customers, starting at the first encounter all the way to the point of sale.
I’ve helped a few companies and retailers work through price-sensitivity for a premium product. It’s hard going, but it can be done.