There are many commentators espousing the view that consumers increasingly want to buy experiences rather than material products.
Phrases such as the “ownership shift” and “nowners” are being used more than ever before, leading many economists to suggest leisure spend will grow. How true is this?
A big part of this thinking has been the rise of the millennials – those born after 1980. This generation is entering the workforce and by 2025 will make up a big majority of the working population, so businesses are heavily focused on them. They are demanding, less work-focused and the generation of the internet and social media.
A survey by Boston Consulting Group found they rank restaurant meals and drinks ahead of consumer items in terms of spending their money, including buying apparel and even consumer electronics.
However, it’s not all one way. Despite many commentators suggesting they would rather join car clubs than own a car, millennials are as keen to buy cars as their parents – the baby-boomers – were.
But they also have a greater preference for fashion shopping than baby-boomers, which is why many shopping centre owners focus a lot of their marketing on them.
This shift is actually being recorded across the generations. Those over 50 years of age are eating out more, are one of the fastest growing cinema-going age groups and are increasingly members of health clubs. A poll by Zipcar showed that 61% of 18-34-year-olds picked experiences over possessions, but a nearly identical proportion of older groups did as well. It seems we are all making this shift.
The internet and the cloud have got consumers used to buying items which don’t have a physical presence. We spend a big part of our incomes on items such as broadband, satellite TV, streaming services, iTunes, GooglePlay and mobile phone contracts, where most of the consumption is experiential. This is affecting all age groups and is enhancing our perception of the value of an experience.
What about the psychology of consumers? A paper published in Psychological Science by experts Gilovich, Killingworth and Kumar found people do achieve greater satisfaction from experiences than the ownership of items.
Two big factors were anticipation and sharing. In terms of anticipation, waiting for an experience such as a meal, movie or holiday provided much more happiness and excitement than a material product. The anticipation of something is a critical factor in how much value we place on a purchase.
They also found people were much more excited to share their experiences with others and that it was socially acceptable to do so. Telling others about a meal or a trip to a theme park scored much more highly than telling people about what products you have bought.
This grants leisure operators a significant advantage in areas such as social media. The anticipation around the latest Star Wars film is a great example that many material products would love to achieve.
Ultimately these factors are combining to drive experience as something consumers value more and more.
The post-war generation wanted material goods and consumerism after rationing, but the baby-boomers took their children to restaurants, to the cinema and on foreign holidays. Their children, the millennials, are now growing up with an even more pronounced view on spending their money.
As they enter the workplace and hit their peak spending power, all of us in leisure and retail property need to cater for their increasing demand for great experiences.
Ashley Blake is chief executive at Otium Real Estate
