ccording to a report from Boston Consulting Group (BCG), a certain form of economic polarization will be accelerating "for the foreseeable future." Moreover, this polarization is having, and will continue to have, a significant impact on travel trends.

At one end of the polarity are buyers of what BCG is calling "new luxury." At the other end are ... well, the very same consumers, searching for the cheapest socks Wal-Mart has on the shelves. Their purchasing habits are defined by what BCG is calling a "trade up/trade down" phenomenon.

They want nice things, and in order to get them, they're willing to sacrifice elsewhere. In other words, a middle-income passenger who books passage aboard the Queen Mary II may try to balance some of the expense by buying generic beans at Sam's Club.

Cunard wins and Wal-Mart wins, but anyone in the manufacturing/supply/distribution chain for midpriced socks and beans loses. BCG researchers say the change is a structural, not temporary, shift, and that profits will soar at the polar ends of various markets.

For those catering to upscale tastes, the news is especially good: BCG says "new luxury" goods typically account for 20% of a category's unit volume, 40% of its dollar volume and 60% of its profits.

BCG singles out the travel industry as a microcosm that is useful in defining the trade up/trade down phenomenon, but its examples may seem a bit fuzzy to travel insiders. It identifies JetBlue as one of the top 15 "new luxury" players -- the ones people trade up to -- when BCG is looking for stock market success stories. But it identifies JetBlue as a "no-frills" and "discount" airline -- one people trade down to -- when looking for success stories at the bottom end of the polarity.

(By the way, I can't really blame BCG for getting this wrong -- BCG is not the only one to continue to call JetBlue a low-fare, no-frills airline when today it is neither. Ultimately, I suppose, it is confused consumer perception about JetBlue that BCG reflects in its report.)

In reality, travel is a poor choice to highlight as a microcosm of the phenomenon BCG identifies. The examples it offers don't really give support to its assertion that the trends are structural and long term. It cites last-minute getaways and Web deals as illustrations of ways consumers can "trade down" in travel.

But, even though distressed merchandise was ubiquitous during travel's post-9/11 recession, it turns out that the phenomenon may have had more to do with a cyclical swing in old-fashioned laws of supply and demand than with a change in the paradigm of how vacations are priced. When demand increases, distressed merchandise becomes difficult to find, as anyone who is waiting until the last minute to book a trip to Europe this year is discovering.

One final observation: The BCG report says that "companies offering conventional goods are increasingly mired in the middle and will struggle to survive." For smaller companies, I think that is probably true. But I can think of many established "new luxury" travel companies that wish they were as mired as Globus and Cosmos, Gogo and Carnival Cruise Lines.


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