Turning Point 2008: Cocooning Makes a Comeback
By Tom Ryan
Editor’s
note: In what we plan to make an annual end-of-year tradition, RetailWire
has compiled a list of the most significant retail industry “Turning
Points” of 2008. (See our news
release…) What follows is the sixth in a series of 12
discussions based on the list.
Cocooning first gained
prominence after the 9/11 terrorist attacks when families began entertaining
at home more as a way of bonding and saving money. But first due to rising
gas prices and then to the slumping economy, cocooning once more became
a buzzword for consumer behavior in 2008.
For much of the early
part of the year, news stories around cocooning came about as surging gas
prices forced people to skip vacations. More recently, sharp declines in
home values and stock portfolios are said to be keeping people close to
home this holiday season. Consumers are avoiding traveling, eating out
or even heading to the movies.
“This is a different
kind of cocooning compared with the nesting that occurred after the
terrorist attacks of Sept. 11, 2001,” Stacy Janiak,
vice chairwoman at Deloitte LLP, told MarketWatch. “This
is more a continuation of what we saw this summer with ‘staycations.’
People aren’t going anywhere.”
For food retailers, the
cocooning trend has opened up opportunities to create meal ideas for the
home. Some also point to more opportunities in hot tubs and barbecue islands
backyard entertaining as well as the strong sales of flat-panel televisions,
video games and other electronic gadgets for in-home entertaining. USA
Today recently ran a page of gadgets that embrace the stay-at-home
trend and are expected to do well this holiday season, including Nintendo’s
‘Wii Fit’,
Logitech’s Driving Force Wireless, as well as updates to the Guitar Hero
phenomenon.
Tech analyst Michael Gartenberg at Jupitermedia said
that people are “investing in their living area and looking for value.”
Trendwatcher Faith
Popcorn, who popularized the “cocooning” term in 2001, called
this year’s approach “uber-cocooning”
as budget-conscious Americans become “anti-over-consumers.”
“It’s a deeper and
deeper snuggling down into the home,” Ms. Popcorn told MarketWatch.
She also noted that consumers are foregoing discretionary spending to a
much higher degree than in recent years.
“None of us can
afford to do anything we have in the past,” she said. “And we
won’t miss all that stuff.”
Women’s Wear Daily also recently noted that, much like
the period after September 11, consumers are looking for “small indulgences,” such
as comfy robes or bath and body products while avoiding big-ticket items.
But the article also agreed that the cocooning trend is different this
time .
“After 9/11, there was
a presidential mandate to go back to our normal consumer habits,” said
Robert Thompson, professor of media and pop culture at Syracuse University.
“Buying a pair of shoes or underwear was tantamount to doing a patriotic
act. This is a whole different situation. Buying and spending will rehabilitate
the economy, but the fear now is we’re keeping company with the Great Depression
and ‘I’m the next one to be laid off.’ People have got a sense they’re
in it for the long haul.”
Discussion Questions:
What short- and long-term effects do you see cocooning having on consumer
spending? What merchandising and marketing opportunities is it opening
up? How is it different than the stay-at-home trend that developed after
the 9/11 terrorist attacks?
When folks feel rich they eat out and travel. When they’re unemployed or scared of becoming unemployed, they stay home. Is that cocooning? Or just reasonable behavior? Doesn’t seem new, either. My guess is that unemployed folks in decades past didn’t travel much either.
I know it’s popular to talk about cocooning, nesting, empty nesting, empty pockets, etc…during times of economic distress. But let’s all step back and take a look in another direction.
In many cases, home is where the crisis is–financial and otherwise. People may cocoon because they think they have no other choice or that it’s the right thing to do.
But I firmly believe, after talking to business people, visiting stores and actually talking to customers, that people are craving changes of scenery, new places to go and things to do other than worry 24/7 about the state of the economy. They need to be, with value in mind, entertained, diverted and brought to places that feed optimism and improve their mindset. There must be a way to change the conversation from how to keep people at home to how to make them happy.
How about partnering with restaurants (you’re never going to get every penny for food purchases, anyway), discounts at department stores, tickets to special events or even a coupon, perhaps tied to loyalty points, that will get people snacks when they go out to a movie? Think outside the store.
Well, the Nintendo Wii sales are doing great.
Smart retailers should walk stores with shoppers, determine what kinds of products make sense in various cocooning scenarios, then bring that merchandise up and out in more visible areas with reassuring messages that tap into easing some of the emotions/values people are dealing with, such as control, self-sufficiency and pragmatism.
One example could be a bundled display of paint and lighting (Ace, Lowe’s,) as a simple inexpensive way to bundle up a way to brighten up your mood by brightening up your surroundings. Simple, inexpensive, and a good winter day family project.
I’m no Martha Stewart but a soft yellow room with plenty of light can go a long way to change your attitude. I’d offer the eco version of paint and feature LC lightbulbs as well, to give shoppers a choice!
Last year I was speaking at a conference in Copenhagen and was joined by a speaker from Europe who talked about what she saw as coming changes in consumer buying behaviours. Most notably, she spoke about how consumers would turn away from conspicuous consumption and excess, and move much more towards spending on ‘themselves’ in the form of personal development and ‘at home’ activities. Much of what she spoke about has come to pass and has been expedited by the slumping economy.
The restaurants appear to be ’empty’ this season, but the aisles in Best Buy are packed with consumers. While this observation isn’t scientific, it does certainly support what we hear from our clients is going on out there. A focus on improving your customer’s ‘quality of time’, versus ‘quantity of purchases’ would seem to hit the mark.
This “future trend” seems to emerge every year at this time (maybe it has something to do with the onset of winter). It emerged years before 9/11 but there’s no evidence that it’s ever occurred in a substantial, lasting manner. People will go out just as much as ever; they’ll just change what they do and how elaborately they do it.
The short-term effect will hit the travel and entertainment industry hard unless they get creative. For instance, car load admission specials, etc. Long-term effects will be a move back towards the days when families talked to each other and played games. You’ll see more neighborhood shops and farmers’ markets doing well, stay-at-home, close-to-home.
This trend goes beyond just the expense of gas and other commodities. There are families moving in together. I recently talked to a grandmother who had two kids and their families move back in with her after losing their homes. You’ll see multi-family households for quite some time. This will translate to less household furniture, decor, and accessory spending.
The correction we’re undergoing will be much more than cocooning. At least for the next 18–24 months, the mentality of over-consuming and super debt will be on hold. This is a pretty big STOP sign we’re all facing.
The largest product sector to be affected will be consumables. Grocery stores and Big Box superstores are in a great position and should take advantage of this cash flow bump by pushing the pedal down on innovation: multiple formats, private label expansion, customer experience training, and new and better products. If they do, they will own the next decade.
Short term effect but not a real long-term challenge. Just as we saw after 9/11, people hate to change. We will see some minor modification but as consumers adapt to the new reality, they will begin to see how they can go about enjoying the things they have always enjoyed. Yes, life will be different for a while but we will be back to having a good time. We Americans have learned to adapt but we seem to never want to give up the easy life, even if we have to pay the piper later.
As usual, Ian hits a deeper chord of insight with his comment. My Grandpa Flynn used this little witticism to keep our heads on straight…”He who dies with the most toys–still dies.”
Best Buy CEO Brad Anderson said in a statement yesterday that “We believe that there has been a dramatic and potentially long-lasting change in consumer behavior as people adjust to the new realities of the marketplace.” Best Buy’s stock soared on news that the company will take steps to adapt to the downturn.
I firmly believe that Americans are going to scale back. They’re going to fix better meals at home instead of going out. They’re going to decide that the car in the driveway doesn’t need to be replaced. They’re going to realize that the sweater in the closet can be worn next year, too. Previous spending levels were unsustainable…that means major adjustments ahead.
“Cocooning” always sounded to me like a lifestyle fad for trend-conscious baby boomers. I think we are now witnessing a social phenomenon that is far more profound and enduring, that I’d label “retreat to the home.” At the risk of sounding very gloomy, I go on:
Are sales of electronics and home repair items really growing? Or are they are just down less than everything else in the present economy, creating a kind of figure-ground effect that resembles a positive trend?
Certainly conspicuous consumption is out of fashion. Middle class people truly can afford less, some are on the brink of disaster. Meanwhile wealthier people have suffered sizable paper losses in investments and real estate that have re-calibrated their views of their own prosperity.
Cocooning post-9/11 was rooted in fear of politically motivated violence. Today’s retreat home is rooted in fear of lasting economic hardship–a permanent change in lifestyle and expectations. We hold back because we don’t believe it will get better soon. This is prudent behavior in uncertain times.
Smart retailers and marketers will adjust their expectations and strategies to align with this phenomenon over the long term (3-5 years). More function, less fashion, and an awareness that future prosperity will be linked to emerging initiatives in energy, transportation, and healthcare.
It’s hard to see how merchandising and marketing opportunities can capitalize on this trend (if it is a trend) because–at least for my crowd–the reasons to stay home are many and varied. We’ve cut back significantly on going out to bars and clubs because it is too difficult for those who smoke to smoke, especially during a Chicago winter. We’ve stopped going to the movies completely because aside from the fact that most films are garbage, we can’t sit in the theater with cocktails and must sit in the theater with kids under 30. We’ve cut back on going out to eat because it seriously costs too much once the cocktails are added in. Six drinks and three appetizer plates will set you back $150 at Pops for Champagne; at home with a little effort (and a whole lot of fun), the same thing might cost $60. Don’t even get me started on traffic, parking or taxi fares. Or the general public. The hospitality industry has its work cut out. Not only are we saving money, but also we’ve discovered we’re a pretty entertaining bunch by ourselves just watching CNN and mocking the news.
I have an oddball perspective on this question. Maybe if people do a lot of cocooning, particularly for the Holidays, January and February, by early Spring people will be so tired of looking at their interior surroundings, they will race outside to the malls and shopping districts to reconnect with retail. Home improvement sales may also spark, particularly if the new administration gets past an economic stimulus package and it gets to the right people.
So if you have a home, hang on. If you are selling to home owners, stock plenty of the basics, and let’s all try to make it through the next three months.
By the way, in Asia, expats go to other Asian countries for vacation at this time of year. Since this is my first year living in Hong Kong, we are staying put…about the only people doing that that I know of. We will see who really goes and who stays.
Cocooning is back. And the staycation is still a viable activity–one I suspect will gain renewed attention once consumers get thru the holiday season. Both represent opportunity for merchants.
That said, during the recession, one of the keys for retailers is to remain top of mind. One low-cost way of doing just that is via store classes, e.g., cooking, decorating, photography and organization skills. (earlier this year, I participated in a department store class on elder law). There are any number of short-term, low- or no-cost classes that creative merchants can create to keep the brand top of mind. Essentially, these classes generate the “gratitude effect,” i.e., a sense of gratitude to the merchant for offering consumers info that improves their life, for offering a low-cost social event, and/or for giving them an opportunity to dabble in hobbies and activities that the consumer may not have done otherwise. A related way to stay top of mind and take advantage of the staycation trend is to offer some form of experiential retail.
In either case, the merchant may not generate immediate income, but a seed of gratitude is planted. When the post-recession dawns and consumers feel more confident about spending, the hope is that those seeds will sprout green–as in dollars.
Every consumer development offers retailers, especially supermarket retailers, an opportunity to create new business, and uber-cocooning is no exception. It fits right in with the thought that consumers are shopping with affordability foremost in mind, rather than availability. Nielsen has posted 20 or so trends that will take place next year, and cooking from scratch is one of them. Nielsen’s thinking is that cost savings might be a prime mover, but there are also the benefits of a return to cooking from scratch, such as taste and nutrition. Cocooning looks real. And, the opportunities are just as real for manufacturers and retailers alike.
The silver screen was an inexpensive family diversion for many people during the great depression, and some wonderful classic films and stars emerged during that dark time. The current sad state of Hollywood movies, and the lack of genuine stars make “going to the show” an unlikely mood enhancer during this economic crisis–and it is certainly no longer cheap. But there will surely be other new and rediscovered forms of diversion/entertainment which become popular, and cocooning will probably be a big part of it. Retailers who get ahead of this curve will benefit mightily. (Think Wii)
Many people who have homes and jobs and fewer money worries than others will finally appreciate what they have and will relearn and enjoy the fine arts of cooking, baking and in-home meals and entertaining. (Think groceries, cooking paraphernalia, and wine.) Hopefully, innocent abandoned pets whose lives have been ravaged by foreclosures will get new homes with good people who may find they have room for one more, or who previously felt they were away too much to care for an animal. (Think pet food and products.)
I sincerely hope the many jigsaw puzzles I’m giving as gifts this holiday season will be well used, and their charm appreciated anew by the recipients and their friends.
Oh, and my new cat’s name is Robinson!
I agree with those who believe the change in consumer behavior to seeking value is deeper and longer-term than “cocooning.” Many people believe the sea change to a lifestyle that embraces family time at home instead of so many outside events will take hold.
We are more aware of environmental issues, and are finding it easier to make choices that involve less stuff. Driving miles are down, with a large drop in auto accidents as a result. We are becoming smarter shoppers, combining our shopping trips and making more thoughtful choice. It’s OK to make these less expensive choices–the pressure is off, the Joneses are shopping at Walmart too!
It seems to take a whack on the head before people take stock of just how foolish many of their choices are. This current meltdown will, for a while, cause us to have dinner with our families, have an actual conversation with our children, spend what we can afford, think about what we really want to do with our lives and generally recognize that it’s time to stop feeding the myth that accumulation is how we keep score. Yup, the lesson is hard and the homework is tough to get used to. But how can all this not be a good thing?