Consumers spending habits are changing; experiences are being placed higher on customers’ shopping lists than ‘things’! Millennials are leading the way with the shift, with 72% of millennials preferring to spend money on experiences than on material things.
Why the shift in spending habits?
– Everyone has ‘stuff’ and owning products isn’t hard anymore. Thanks to developments in technology, we can purchase anything we want with the touch of a finger. As a result, the novelty is wearing off and people are looking towards experiences to make their purchase extra special and unique, and something that money can’t buy
– Social media plays a bigger role than ever in millennials lives, as they connect with friends and report on their day-to-day activities. An experience allows the consumers to create memories while engaging with their peers and creates envy amongst their friends – the same way a new pair of Louboutins once would have done!
– Millennials view ownership differently to previous generations. Traditionally, young adults have placed high value in a car and home, whereas many now see them as major commitments and would rather spend their money on one-off experiences to create lasting memories
– The bar is constantly being raised; new purchases lead to new expectations. As soon as we get used to a new possession, we look for an even better one, meaning we are never satisfied. Possessions, by their nature, foster comparisons. There’s always going to be someone with a better or upgraded version. Experiences are less easily comparable as they are personal and can satisfy people much more than a physical purchase
This new direction of spending has become known as the experience economy. The group of consumers that are focusing their spending on experiences is continuing to grow, and brands must adapt to harness the opportunity and incorporate experience into their offering.
How do retailers adapt?
– Hosting events that make consumers look good in front of their friends – VIP customer-only parties, exclusive sneak peaks and secret sales are just a few ways to appeal to the shopper looking for adventure, status and an experience that connects them with the brand
– Taking shoppers on a journey – Athletic brand Lululemon’s #FuelHappiness campaign encourages fans to practice building on their positive mindsets through sharing a variety of mood-boosting tips, exercises and inspiration. NotOnTheHighStreet.com recently used experiences in their Father’s Day #hangoutwithdad campaign, which included a video featuring and encouraging children to spend time with their Fathers
– Offering custom shopping: Subscription retailer JustFab offers personalised shopping experiences based on the customer’s preferences, creating a unique and tailored experience for each shopper
Retailers must now look at creating moments of enjoyment for their customers and experiences that will create lasting memories. They can no longer rely on their products alone and must extend their offering to align with the shift in consumer spending habits. Consumers want to spend their money being with others as they believe attending live experiences helps them connect better with their friends, their community and people around the world. 72% of consumers said they’d like to improve their expenditures on experiences in the coming year; retailers need to adapt fast and effectively to the shift in consumer spending habits as it is only set to increase!