COVID's "Middle Out" Squeeze

Excuse the pun from HBO's Silicon Valley, but I have a thesis about the middle going away. Middle class, middle market, middle anything, middle everything. I believe that in most cases, middles go away, and COVID merely accelerates the changes.  For example, COVID shelter in place restrictions triggered a universal move to eCommerce, and no one could escape the squeeze. That move unclutters a weird market for retailers. Malls that were struggling for a decade, may not come back at all, and retailing gravitates towards the big boxes (TGT, WMT) or the neighborhood stores (DG and DLTR). 

The big brands dominate ecommerce, too, where WMT, BestBuy, and AMZN capture huge swaths of the market, or upstart brands capture valuable niches like Dollar Shave Club. Of course, those upstarts get absorbed by the massive brands eventually, leaving nothing in the middle tier of ecommerce that can long survive.

COVID (and oil) cratered the stock market and global economy, which portends a rage of bankruptcies and business closures. Only the titans with fortress balance sheets will likely survive to emerge, with an opportunity to scoop up the struggling middle tier firms. Small firms aren't attractive to titans and have low costs to return to business, so can get back on their feet. Middle sized firms, already squeezed at the margins, get gobbled up or die.

Middle class incomes have stagnated, requiring two earners and often a third job or side hustle just to make ends meet, suggesting that the future will be more lower income, more higher income, and the middle class is just a way station for households on the road to either end of the curve.

Like Malthus, my theory may live only in a thought experiment, as the living organism always figures out how to survive. I guess we will see how well the economy recovers, and if in a couple of years the middle class and middle sized entities of any kind find a way to get back on their feet.