Niche: Why the Market No Longer Favours the Mainstream

I once tried to buy a shirt at Abercrombie & Fitch. It was clear the staff did not want to sell me anything. I could handle the loud music, but their dismay at having to deal with anybody more than a decade or so away from bouncy castles finished me off and so I left.

Leaving all that aside, there was no intrinsic reason why I should not buy an A&F shirt. The styles were similar to those of many other shops, from Ralph Lauren at one end of the market to Gap at the other. Oldies wear such things as often as teenagers. The only difference was that the clothes were more crumpled, more expensive and more heavily branded. But the ageism of the staff and the mood of the store - dark, noisy, faintly threatening - sent the signal that these versions of ordinary clothes were specifically intended for the young.

A&F's business is not clothes, it is niche marketing. This is an idea that has been around for some time. The old assumption that advertising and marketing should aim for sales volume has been superseded by the idea that they should aim for specific sectors. Any loss of volume should be offset by a widening of profit margins; make people feel special and they will be willing to pay more.

The internet ensured that niche marketing became the orthodoxy. Costs are lower online, and tracking consumers in order to spot trends and cultivate loyalty is easier. The approach was crystallised in the idea of the long tail - the total market in niche items is as valuable as or more valuable than the total of mass-market items. This may always have been potentially true, but the internet made it exploitable.

James Harkin, a trend-watcher and social forecaster, starts his book on the marketing pheno­menon of the niche with the traumatic effect that A&F had on Gap. Gap - happy, friendly, no loud music - had been selling clothes to everybody when, in 1999, it realised that it was losing sales to A&F, whose stores were "openly hostile to anyone over 30". Tell me about it.

Over the ensuing years, Gap's cosy liberalism led to a catastrophic decline in sales - not just because of A&F, but because the market had changed fundamentally. Now being in the middle of the road meant being run over. "The missing middle," Harkin writes, "has its origins in social changes going back many decades, but it has recently gathered pace to become the single most important social phenomenon of our times." Er, more important than, say, Facebook, emboldened Arab youth, acceptance of sexual diversity . . . ? Probably not, but never mind, books must be sold.

Harkin identifies a category of "big beasts" whose dominance is being overthrown by niche players. What he says is true enough, but he becomes trapped by the phrase. Halfway through the book, its repetition was undermining this reader's sanity and I found myself counting occurrences. There were six on the two pages I was reading at that moment.

Definition is a problem. In the early stages of the book, we learn that Gap, General Motors, UK Woolworths and Gone With the Wind are all big beasts. Certainly, they are all good stories, but each has quite a different message. GM was damaged not by the niches but by other big beasts - notably Toyota - and by turning itself into a bank making bad cars on the side. Anyway, it has bounced back. As for Woolworths, it was neither big nor beastly, and Gone With the Wind was, well, a book and a film.

This relentless branding of the idea spoils and obscures what could have been a useful analysis of an interesting change in the way we sell and buy. There is something different about the way brands such as Starbucks, Moleskine, HBO and Apple have established themselves. They cultivate not just customers, but fans and, for want of a better phrase, lifestyle adherents. Crucially, they do so with the aid of technologies of astounding precision. "Micro-targeting" is the fine-tuning of the sales effort down to the level of the individual. Our casual acceptance of hyperconnectivity - through social networking, online buying and so on - has created a new form of high-resolution marketing. So, for example, researchers in the lead-up to the 2004 US election could say that Republicans drank Dr Pepper, bourbon and red wine while Democrats drank gin, vodka and Pepsi. This is not trivial. Combining such insights with a few thousand others, researchers can - or, just as alarmingly, think they can - profile every member of the population with enough money to buy a cup of coffee, an iPad or an Aston Martin.

In other words, freeing ourselves of the big beasts is not necessarily a liberation, and this niche phenomenon might just be the latest manifestation of an old process - capitalism's cycle of creation and destruction. After all, if Harkin's favourite phrase means anything, clearly it should apply to Apple and Starbucks as much as to GM and Gap. The new beasts just dress differently.

I like the idea of the book: a mix of stories, analysis, reportage and anecdote is the best way to describe this kind of diffuse process. But, precisely because it is diffuse, the insistence on the idea that it is all one story - the overthrow of the big beasts - just gets in the way.

Niche: Why the Market No Longer Favours the Mainstream
James Harkin
Little, Brown, 256pp, £20

This article first appeared in the 21 March 2011 issue of the New Statesman, The drowned world