10 Questions for Michael Silverstein

WHAT WAS THE INSPIRATION FOR TREASURE HUNT?

After Trading Up, I talked to a lot of people about new luxury, and consumers—mostly women—would say, "You only got half the story. You got the trade-up part, but in order for me to afford to trade up, I cut corners." They would tell me stories about particular treasures that they had found. So the book became a demonstration of the fact that the middle-class consumer is actually saving money.

BUT ACCORDING TO THE U.S. GOVERNMENT, THAT CONSUMER IS IN DEBT.

Here's how the numbers are wrong. Every time you spend money against your home, the government calls that consumption. The truth is that it's savings, and this is a 6% or 7% swing in the savings rate. So you can go from a zero savings rate to a 7% savings rate just on the accounting for durable goods. American middle-class consumers have a higher net worth than any middle-class consumers in the world, including Japan.

DO WOMEN OR MEN SPEND MORE?

Women hold the purse strings in the household. Today, in 27% of two-income households, she makes more money than he does. Assuming income equality is achieved within the next 20 years for college-educated women, they will earn more than men by 2030. Higher incomes have changed the balance of power in the household.

WHAT ABOUT IN SOCIETY?

In the upper echelons of corporate America, it's absolutely true that he's still in charge. But I think increasingly, at the middle levels in business, the female is dominant. So at a company like the Gap, 80% of the managers are female. And that is, in fact, the way things are going to flow. The world of 2025 is going to be a female-dominated economy.

WHEN DID TREASURE HUNTING FOR DISCOUNTS BECOME COOL?

In the past five years, consumers have actually taken shopping to a scientific level. They've become experts in terms of the promotional cadence of stores and acquiring prized goods at discounted prices. If you stop a middle-class female and say to her, "Here's a list of 100 items in the grocery store. Tell me the prices," she will be able to tell you the prices on 100 common items, plus or minus 2% or 3%.

HOW DID THE CONSUMER GO FROM BRAGGING ABOUT STATUS TO BRAGGING ABOUT A DISCOUNT?

Women have a different communication style than men. They talk to one another about shopping behaviors, and they share their secrets. What we learned in our research is that every time you satisfy a consumer, she's actually going to tell 10 of her friends. Every time you dissatisfy a consumer, she's going to repeat the story to as many as 300 people.

SO THERE IS NO LONGER A STIGMA ABOUT DISCOUNTS?

We just did a survey of 2,000 consumers, and 92% of them said that when they buy an item at a steep discount—a branded good—they tell their friends proudly. Only 8% pretend that the good was purchased at full retail price.

HOW DOES TREASURE HUNTING AFFECT THE MARKET?

Big companies in the middle market are really in trouble. The high end and the bottom end of the market are growing rapidly. We estimate the high end in most categories is growing 10% to 15%, and the low end is growing 7% to 8%. The middle market is shrinking 3%. Now shrinking 3% might not be much in the course of a year, but over a 10-year time period, it's a hollowing of your market.