Consumer Behavior Memo: 'Uber-Cocooning' -- Many American Consumers Staying 'Home For the Holidays' Out of Forced Economic Necessity

Yesterday we wrote and published this piece, "Consumer Behavior Memo USA: 'Life, Liberty and the Pursuit of Frugality' - America's New Consumer Frugality," about a trend we are calling the "new, frugal American consumer."

Jennifer Waters, a staff writer for the Marketwatch.com news and business Web site has a well researched and written article today, "Be it ever so humble: Cash-strapped consumers embrace 'home for the holidays,'" which we think serves as a good companion piece to our frugal consumers story linked above from yesterday.

Ironically, the old saying, "There's no place like home for the holidays," has always evoked warm thoughts and feelings among Americans because it reminds them of being home for the holidays as a child -- hearth and home and other such feelings of comfort. And many Americans do stay home for the holidays even though they don't have to. Having that choice makes doing so evoke even warmer thoughts and feelings, after all.

But this year, cash-strapped, house-poor, near 401-K retirement account-less U.S. consumers are in most cases staying home for the holidays not out of choice but because they need to from a financial standpoint. Home is not only where the hearth is this year, but it's where the money savings is.

In her story, Jennifer Waters uses a term we like to explain the stay-at-home 2008 holidays --"a forced rendition of cocooning." It appears the CIA isn't the only user of forced rendition these days -- so is the U.S. economy.

Cocooning of course is that popular term thought up a number of years ago by trend-forecaster Faith Popcorn to explain why at the time increasing numbers of consumers were staying home more rather than going out. The trend was towards more meals at home, renting videos and watching them at home rather than going to the movies, and other related at-home behaviors.

Ms. Popcorn is quoted in the article in Marketwatch.com, calling the 2008 version of staying at home "uber-cocooning," attributing it not to choice but to economic realities this holiday season.

Read the article, "Be it ever so humble: Cash-strapped consumers embrace 'home for the holidays,'" here.

"Uber-cocooning," or economically-forced home rendition, fits with our concept of the new, frugal American consumer. And while this new frugality poses challenges for food and grocery manufacturers and retailers, it, along with the fact consumers are spending more time at home -- and eating more at home than ever in recent times -- favors grocers as well as food manufacturers and marketers more so than any other consumer products and retailing industries. After all, even "Uber-cocooners" must eat.

In fact, sense many more consumers are spending the holidays (and the non-holidays) at home, this means fewer will be eating holiday meals out at restaurants. Instead more consumers will be cooking their holiday meals at home, meaning shopping at the supermarket, discount store or natural foods market for food and groceries this year. The upside to cocooning or hibernating of any kind is cocooners need provisions. The grocery store is where they must go to get them.

The challenge of course for food manufacturers and marketers, especially those in the natural, organic and specialty foods sectors, is to get these home for the holidays (and regular days and nights as well) consumers to buy their brands. With a huge surge in store brand purchases right now its advantage retailers. Of course many of these manufacturers produce the private label brands for the retailers so there's some saving grace there at least.

But overall, this year's home for the holidays trend should be good for the food and grocery industry as it will mean more shoppers, perhaps buying less, and since the Thanksgiving holiday for example is a four day holiday, cocooning consumers will need to stock up for those four days at home. The same should be the case for the rest of the year -- not just the holidays.

Consumer Trends Memo: The 'Era of Cheap Food' May Be Over in the U.S.; But Good Cheap Eats Can Still Be Found...it's All About Value

New York magazine is just out with its annual "New York Best Cheap Eats" cover issue. The magazine scours the Big Apple every year for its "Best Cheap Eats" issue, which devotes dozens of pages to the restaurants and stores in New York City where consumers can find the best deals on foods ranging from the simple--a slice of pizza--to gourmet-quality meals across nearly every ethnic range.

The magazine's editors say this year's issue will likely be its most popular ever since the poor state of the U.S. economy, which includes soaring food inflation, is driving even many of New York's more affluent residents--not to mention the scores of business travelers, and tourists who flock to the Big Apple this time of year--to search out cheaper alternatives for their meals and food purchases.

The current economy is doing the same to most lower, middle and even many upper-income consumers in every big city, suburb and small town in America.

This year's edition covers what seems like every square inch if New York City's food landscape in terms of the editorial teams search for the cheapest eats in America's largest city.

Among the food categories the special New York magazine "Cheap Eats" issue features include:

The Cheap List
The best cheap eats of 2008.

Chef’s Choice
Top cooks’ favorite cheap eats.

Cheap Eats Consumer Price Index
How the rising cost of food trickles down to pizza and hamburgers.

The Cheapest Of the Cheap
The ten best new things to eat in New York for $5 or under.

Beggars Can Be Choosers
What can you get for a measly dollar these days?

The High-Low $20 Showdown
We asked two very different chefs to create a three-course meal for two using the same $20 budget.

New York magazine also asked two chefs to design a three-course meal, giving them just $20 to complete the task. You can read that story at the link directly above ("The High-Low $20 Showdown). One chef created a more basic meal with the $20, while the other went more high-end and gourmet with the $20 budget.

The more basic (not so basic to many eaters) but tasty looking $20 feast on the cheap is pictured directly below. Below it is the higher-end, gourmet quality menu on the cheap.

Twenty bucks can buy lots of good, cheap eats, as the graphic above shows, if one knows how and where to shop, along with being able to cook, or learning to do so. Click on the graphic for an enlarged view. [Graphic source: New York magazine.]

The chef put together this three-course gourmet dinner, plus wine and desert, for $20. That's value, considering the same meal would easily cost four to five times that amount at a white table cloth restaurant. Click on the graphic for an enlarged view. [Graphic source: New York magazine. Food retailers take note: value gourmet recipes are something consumers are looking for. A three-course gourmet meal promotion using the chef's concept above would be hot.

Consumers are searching out bargains today like food and grocery retailers and restaurant operators have not seen in decades.

At retail, store or private label brand sales are rapidly rising, as are items on promotion. Value is becoming the new black among American consumers, who are being pinched by a combination of soaring gasoline and home energy prices, rapidly-rising food costs, a credit crunch, increasing unemployment and job security, dramatically lowered housing values, and now what looks to be rising overall inflation overall as well.

Good cheap eats no longer are merely for lower-income American consumers. For example, Whole Foods Market, which up until now has been fairly immune from concerns about food prices from its consumer base, has launch what it is calling its "Real Deal" program. The supernatural foods grocer is lowering prices throughout its stores, offering more and deeper price promotions and has even created "value scouts" in-store, who help shoppers find deals and values being offered in the stores.

Mid-range casual dining restaurants like Applebee's for example in the U.S. also are drawing more diners, while higher-end restaurants are putting more basic, lower-priced items on their menus because even affluent consumers are feeling pinched in the down U.S. economy.

As is often the case during bad economic times, behaviors consumers acquire--such as being more price and value conscious when it comes to food shopping and eating out--often stick even once the economy improves.

If true this time around, value and cheap eats could not only become the new black, but also could prove to be the biggest challenge--and as a result a real deal for consumers--to food retailers and restaurant operators in the U.S.

The natural, organic and specialty foods industry also needs to look more closely at how important price and value is becoming to most American consumers. Shoppers are trading down to discount supermarkets. Many are even shopping at salvage grocery stores, which are reporting sales increases of up to 15% in the last year, along with rapidly increasing customer counts in those stores, which sell discontinued, overstock and food and grocery items with slight label flaws.

Further facts: Two U.S. food and grocery retailing chains, Safeway Stores, Inc., which operates nearly 1,800 supermarkets across the U.S., and upscale eastern USA regional chain Wegmans, reported last week sales of their respective store brand grocery items are currently outselling national brands in the stores, both retailers attributing the fact to the poor U.S. economy and consumers' search for greater value.

There's a tipping point at which even the most dedicated natural and specialty foods shopper will buy conventional over natural or organic, or specialty and gourmet. That tipping point in terms of price is unknown. Rather, its defined as "we know it when we observe it." In other words, as we see sales of natural, organic and specialty food and grocer items starting to remain static or even decline, which there currently are some signs of, we can assume price is the primary reason in this current poor U.S. economy.

Therefore, natural and specialty foods retailers and suppliers need to take value very seriously at present or they will lose market share which could take a decade or so to gain back.

We aren't ready to fully proclaim it yet, although we have proclaimed the "era of cheap food" in the U.S. is over...but Natural~Specialty Foods Memo is willing to go as far right now as to say we think the "era of good, cheap eats" may be just around the corner.