Perhaps you read recently of P&G's decision to test "Tide Basic".  Also Abercrombie & Fitch plans to lower prices after standing firm on premium pricing over the past year.  Travelzoo's recent email headline was "NEWSFLASH: Worldwide Air Sale from Chicago, $49 & up".  And the Wall Street Journal reports that the average home is about a third cheaper than it was at the peak three years ago, a plunge unprecedented since the Great Depression.

What's going on?  Is it capitulation to the economic mood?  Or is something more fundamental - something worth pondering after all these months of lower revenues and squeezed margins?

• "Now, some of the biggest innovations in our company are geared toward making products more affordable," says P&G Chief Technology Officer Bruce Brown.


• "Consumer spending patterns domestically continue to be dictated by cost and value propositions, and this is clearly a headwind for our premium brands," Abercrombie Chief Executive Michael Jeffries said during a conference call.


•  "It's not terrorism this time," said David Swierenga, an aviation economist. "It's a sea change in demand."


• A June 2009 survey commissioned by the National Foundation for Credit Counseling, found a deep-seated pessimism about home ownership.  One third of respondents don't believe that they will ever be able to own a home. And 42% of those who once purchased a home, but don't own one now, believe that they'll never own one again.

I have to admit, I had been secretly cheering for Michael Jeffries.  He was a holdout on discounting and stood firmly confident in Abercrombie's premium brand positioning.  But now I'm no longer a fan.  The message in his last investor call was actually twofold - yes, the consumer spending patterns have changed...and oh by the way they stumbled on the fashions.  A bad time to get the value proposition wrong.

I think globalization and the US economic downturn have intersected to motivate a more selective, more discriminating consumer.  It just might be that economies like China and India are teaching us something important: our deeply held convictions about US consumerism are being challenged.  What we want and what we need are being defined more clearly, and we can no longer afford sloppy behavior.  If we choose to be extravagant, it had better be worth it.  And if we find a lower cost way to get what we need, we feel savvy - not like cheapskates.  And the persistence of the movement to "do without" shouldn't be underestimated.

It's time to face up to the fundamental questions of category relevance and brand value, because in this environment there is nowhere to hide.