If people hadn't suddenly decided to embrace conservatism again,
That's not what's happening. The Democrats' rightward shift began in response to Raegan, and has continued for other reasons. They chose to distance themselves from unions and pursue the votes of the white-collar professional/managerial class; we just witnessed this during the Clinton/Ossof campaigns.
America moved to the right and the parties moved to get their votes.
It's a common fallacy that most Americans are center-right. Going issue-by-issue the country's overwhelmingly to the left. While slightly more people self-identify as 'conservative' (36% conservative, 34% independent, 25% liberal) that's only in regards to largely meaningless ideological self-identifications.
Just look at how Black voters―the most consistent supporters of the Democratic party―would be considered 'conservatives' based on the same measure of self-identification (29% C, 43% M, 24% L).
I think the democrats go with the flow.
This is another reason why they keep losing. While Republicans were eyeing House districts and state legislatures for extreme redistricting, the Democrats' overarching strategy was to do nothing and rely on certain demographics expanding in their favor. I'm not joking, this is literally their strategy. It's called the ["Coalition of the Ascendant."]()
Mainstream Media Is Dead Wrong On The Direction Of the Country
U.S. Public Opinion on Four Key State Ballot Measures
Gallup Review: Americans, Immigration and the Election
Are African-Americans Conservative, or Is Ideological Self-Identification Meaningless?