In short: we’ve been here before. Many times before. Hard to define, and apparently in decline, “literary fiction” is a reminder of past debates over literary snobbery: Thomas Bodley dismissing early modern drama as “baggage books”; novels as licentious little luxuries, a charge to which Jane Austen offered a cross-generic, unilateral rejoinder in Northanger Abbey. But it is also a debate encoded in the language itself, and in the name of this publication itself: the “literary” in Times Literary Supplement may be taken to indicate “relating to the writing, study, or content of literature” (OED) but also “esp. of the kind valued for quality of form” (OED again). Take your pick.
John Updike, for one, felt moved to dismay about the rise of the term “literary fiction” and how it denoted “a genre almost as rarefied and special and curious in its appeal, to contemporary Americans, as poetry”. That was in 2006, a few years before Updike died, but his remark occurs in a curious context: at the end of a brief interview, now available on the Poetry Foundation website, about the somewhat surprising popularity of his poem “Ex-Basketball Player”.