New Habits of the Formerly Upper Middle Class

People are eager to report all the ways they’re saving money these days. Whether they’re well-off or not, everyone has a story about spending less. Some people are substituting private labels for brands. Others are simply buying less. Then there are those who are behaving differently and buying accordingly.

The Chicago Tribune ran a story recently about how home cooking, familiar brands are gaining in popularity during the recession. A recent Google search on “money-saving tips” returned 598 results spread across 60 pages! From articles, to focus groups, to informal polls of friends, to noticing what's going on in my own family, here are ten new food-related habits of the potentially formerly upper middle class:

10. Having friends over for dinner more often instead of going out

9. Buying fresh fruits and vegetables in bulk

8. Shopping at Walmart

7. Using coupons more and shopping the sales

6. Checking the “market” price on eBay before going shopping

5. Making more from scratch

4. Getting more of our protein from beans

3. Buying fewer prepared foods

2. Serving and eating less

1. Eating comfort foods that remind us of better times

Which brands stand to benefit most from these new habits? According to the Chicago Tribune’s Recession Survival Guide, “Walmart, Gold Medal Flour … Kraft's Velveeta cheese or Hormel's canned chili. Hormel's chili and its Dinty Moore brand stews posted double-digit sales growth during its most recent quarter. Ditto for Kraft's Velveeta, despite a run-up in cheese prices.”

As consumers have gotten choosier about what we put in our shopping carts (and our mouths), upscale grocer Whole Foods has taken a beating. The stock is down nearly 80% from its year-ago level, while Kroger and Safeway are down less than 20% and 40%, respectively. To be fair, this difference is not entirely due to Whole Foods’ higher prices. As the WSJ reported recently, the company’s acquisition of Wild Oats is compounding its problems. "Instead of concentrating on our business," Whole Foods Chairman John Mackey laments, "we are forced to focus on dealing with regulators in Washington at a time when (our) business is declining."

An unexpected beneficiary of these trends (except the comfort foods one)? Try Weight Watchers. Competitors like Jenny Craig and NutriSystem sell pre-made meals to participants as part of the program, which is more expensive than making it yourself. In contrast, many of the new habits are fully in sync with the Weight Watchers program – no pre-made meals, more from scratch, eating less meat, and making and eating less overall are all fundamental aspects of the Weight Watchers plan. So, with the program more simpatico with the times than ever, people should be seeing more success on the scale. And that means more good buzz, which should drive up membership. Note to Weight Watchers, Inc. – take advantage of the trends in your favor!

A silver lining to the recession? Maybe we’ll actually get healthier while we’re learning how to live on less.

The Ways Consumers Are Shopping Smarter

Coupons have always seemed like a hassle to me. I’ve never been organized enough to keep track of them. In this digital age, it seems like coupons should be stored electronically on my card or my record at the stores I shop, so the savings happen automatically instead of my having to keep track of another piece of paper.

With the economy the way it is, I may be learning a new skill. Stuart Elliott’s story in the Dec. 5 issue of the NY Times proclaims the humble coupon as this season’s must-have. The story quotes Lance Saunders EVP and head of account planning at Campbell Mithun in Minneapolis, an agency owned by the Interpublic Group of Companies “Thrift is the new normal…There’s no stigma to getting anything on discount. Instead, there’s a sense of pride.”

In research with homeowners this week, we asked what they are doing to save money these days. Nearly everyone said they are paying attention to the coupons they get in the mail, find online or in newspaper inserts. In fact, more than ads, it’s the coupons they are remembering and using.

Our findings are consistent with data from the Coupon Council of the Promotion Marketing Association. Up until two years ago, coupon penetration had declined steadily since 1992. In 2006 it increased to 86% of the population saying they used coupons and it went up again in 2007 to 89%. Preliminary results for this year indicate a jump to 94% penetration!

Our findings are bad news for those who make their living from traditional advertising. Seems TV, radio and print ads are not getting through the noise of the season and the economic gloom and doom.

According to our research, here's what consumers say they are doing more than ever to save money:

1. Doing it themselves
2. Deferring it
3. Comparison shopping for the best deal
4. Relying on coupons
5. Scouring the internet

Most of the people we talked to get coupons even if they’re not in a store’s loyalty program. They get them in the mail, the newspaper, email, or go online and print them out. They seem to manage the paper flow just fine. I'm still hoping a digital form will catch on. What about you? Are you clipping coupons yet?