Ma Laomiao's most memorable market observations this year are two things. The first was seen at a vegetable market in Nanjing: a stall specializing in mushrooms, slightly larger than an average stall, about seven or eight square meters. It sold only mushrooms, and all were particularly expensive varieties, with thirty to forty types, priced mostly at 30-50 yuan per jin, more expensive than pork and comparable to beef and mutton. Daily revenue was around six to seven thousand yuan, more on holidays, and during the Spring Festival, it could reach tens of thousands per day. You can calculate the annual sales and approximate profit yourself. Laomiao stood by the stall for most of the day, and buyers never stopped coming; he could only chat intermittently with the proprietress, and he felt like switching careers to sell mushrooms. The second was a conversation with a big shot from an authoritative media outlet in the industry. He said that this year they wanted to find some well-growing companies to share as learning references for the industry, but the situation was very pessimistic: few companies were growing well, and it was hard to find them. After the pandemic, companies generally reported that times were tougher than during the pandemic. 2023 is destined to be a magical year. On one hand, we feel consumption continues to slump, corporate profits generally decline, and the wave of store closures is unprecedentedly fierce. Some colleagues who frequently visit the front lines say that the number of store closures this year exceeds the total for the three pandemic years. The financial sector continues to flood with liquidity, but prices don't rise; people are depositing money in banks rather than spending. To gain market share, companies are all emphasizing "value for money," with no "cheapest" but only "cheaper"—in a word, "involution." Pinduoduo, targeting the "beyond the Fifth Ring Road" market, saw revenue grow over 40% in the first half, and net profit nearly tripled. On the other hand, the National Bureau of Statistics reports that consumption grew 8.2% in the first half, stronger than any year in recent times. What? You didn't feel it? That only shows that poverty limits our imagination. In the first half, Moutai continued to lead high-end liquor with over 20% growth; sales of cars over 300,000 yuan grew at an astonishing 35.1%; with the rapid growth of craft beer, white beer, and other high-end beers, the beer industry, dormant for years, also saw a revival with both volume and price rising. The owner of LVMH, the world's largest luxury group, became the world's richest person again this year, with dozens of luxury brands under him growing rapidly: negative growth in the US, 19% growth in Europe, 29% in Japan, and 34% in the Asia-Pacific region including China. Arnault is called "the world's richest man created by Chinese women's spending." Not only LVMH brands are growing, but also Hermès and Gucci are growing, not just in sales but also in prices. Not only luxury goods, high-end liquor, and high-end cars are rising, but even health products, long "notorious," also saw rapid growth in 2023. You say there are still people crying about consumption downgrading? Where's the logic? "It's easy to go from frugality to extravagance, but hard to go from extravagance to frugality." Once you've consumed better, it's hard to go back to worse; that's human nature. Coupled with productivity development and increasing material abundance, the overall trend in consumption is more and better. But if you're a business manager or marketer and simply summarize market trends as upgrading or downgrading, that's like the blind men and the elephant. Consumption structure depends on the income structure of different groups. Since the 21st century, the biggest change in consumer demographics globally has been the decline of the middle class. Whether it's America's proud vast middle class or Japan's "one hundred million middle class," both have seen large-scale decline, even "extinction." Kenichi Ohmae calls this middle-class disappearance and the society with large top and bottom and small middle an "M-shaped society," while Miura Atsushi calls the society where young people are unwilling to strive, socialize, marry, or have children, and have simple low desires, a "downward-moving society." In our country, this phenomenon is even more pronounced: the wealth gap is larger, and wealth distribution issues are more severe. The Gini coefficient has long exceeded the warning line of 0.4; 1% of households hold over 30% of wealth, and the so-called middle class is merely an illusion from the economic boom years, never truly existing. Once the economy turns sour, the consumption characteristics of an "M-shaped society" or even a "downward-moving society" quickly emerge. High-income earners become more glamorous and indulgent, with even higher consumption, while the masses uniformly start focusing on functionality, practicality, and value for money, especially young people, who increasingly choose to "lie flat." The consumption trends and characteristics brought by the M-shaped society are just beginning and will intensify for many years to come. For consumer companies, this undoubtedly brings new challenges and opportunities. The first opportunity comes from premiumization. In recent years, growth for consumer goods companies has mostly come from premiumization, based on the growing and increasingly extravagant wealthy population. Premiumization makes market segmentation easier and offers more opportunities. Second, the opportunity in premiumization comes more from innovation in premium categories. Currently, few domestic brands can support being luxury goods, but competing in premium categories still offers significant opportunities. For example, the high-end mushrooms and white beer mentioned earlier are examples of competing through premium categories. If you occupy a premium category for a long time, you naturally become a luxury brand, like Moutai. Third, pay attention to the middle-aged and elderly. Money is where the market is; social wealth is concentrated in the hands of the post-60s and post-70s generations. The middle-aged to elderly, over 40, are the main consumers of high-end products and the most promising market. Due to fixed thinking, many think the elderly are reluctant to spend, and consumerism always encourages the young to spend, so in recent years many companies have been obsessed with "youthification" or "post-90s and post-95s," only to end up competing in tracks with little spending power. But in recent years, fast-growing industries like liquor, luxury goods, health products, and high-end ingredients are mostly driven by middle-aged and elderly consumers, while snacks, beverages, daily chemicals, and fast fashion, which target the young, generally struggle. Fourth, if possible, make products with collectible value. Some categories are naturally suitable, like liquor and gold jewelry, while others are not, like snacks, beverages, and cosmetics. But some categories can be given collectible value, such as luxury bags and watches, which originally had no collectible attributes but were given such value through branding. This method can also be considered in other industries like furniture, handicrafts, and cultural products. Fifth, cherish life and stay away from the "middle-class market." Once upon a time, "white-collar urban youth in first- and second-tier cities" was the unanimous choice for countless consumer goods companies. The basic characteristics were: quality equal to or slightly higher than mass products, plus a lifestyle proposition, plus a somewhat differentiated brand image, sold at prices 20%-50% higher than mass products. With the collapse of middle-class consumption, such products declined rapidly, with fast fashion being the most typical example. In the future, this track will become increasingly competitive and treacherous. Sixth, practicality first, stay away from nonsense "ultimate products." Not all companies are suited for the high-end market. If you're in the mass market, you must emphasize "practicality." Luckin Coffee is your best reference template. Comfort, durability, taste, nutrition, low price... you should have at least one. Compared to face, mass consumers care more about substance; compared to emotional benefits, mass consumers care more about material benefits. "Value for money" is a particularly misleading term: when companies say value for money, they often mean "cheap goods"; when consumers say value for money, they often mean "want everything"—both cheap and good. Pure cheap goods, knockoffs, and imitations will never have a future, and "want everything" is something companies can never achieve. The correct value for money is finding the best balance between product practicality and cost: whether it's "90% quality at only 30% of the price" or "one cell lasts six times longer but at only twice the price," both have a higher chance of success. Of course, the latter has a much higher success probability than the former. The most taboo is to pursue so-called "ultimate products" or "craftsmanship spirit" without considering the marginal utility of input and output: improving quality by 20% but increasing costs fivefold, losing 80% of users. The ideal spindle-shaped society never arrived, but the cruel "M-shaped society" with large top and bottom and small middle has emerged with a sharp momentum after the pandemic. People's incomes are splitting, ideas are splitting, and consumption is splitting. High-end products are further differentiating, while mass basic consumer goods are unifying; consumption between different classes is drifting further apart. "Why don't they eat meat porridge?" and "poverty limits imagination" are no longer isolated phenomena or internet memes, but real reflections of the chasm-like differences and mutual incomprehension between different consumer groups. This brings greater market opportunities for business operators, but also places higher demands on professionalism and market insight.