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There was an article in Barron’s this past weekend about the split in performance between the stocks of companies that serve the haves and those that serve the have-nots. They argue that the divide between the companies that serve high-income consumers and low-income consumers is increasing. I’d argue that the companies they identify as doing well are those that are actually positioned with products that consumers are willing to rocket for. Whether they be jewels from Tiffany (the allure of the robin’s-egg blue box crosses all income lines), bags from Coach, or water from Fiji — these companies are succeeding by offering access to the world of luxury across several income demographics. Tiffany has items under $100, not because the rich might want to save money (they might), but because it allows a broadening of the customer base in a way that doesn’t cheapen the brand image.

Understanding that the reason that these stocks are doing well is just not because of a growth in income at the highest levels, but because they offer luxury to more consumers is key.

The real gap that is increasing is the performance of stocks that have products “stuck in the middle.” Having a good “branded” product that is not the best value, nor worth rocketing for, is becoming an almost impossible place to be. Companies can either choose to serve consumers with price-driven, functional products where folks feel giving up a familiar “brand name” is worth the trade-off for price. Or they can design premium products and give folks reasons for trading-up for them.

Being average is clearly a below average solution. And Barron’s data seems to show it also leads to below-average stock performance.