The experience economy: spending money on experience not stuff

The experience economy: spending money on experience not stuff

| The Barclaycard consumer spending reports for Q1 highlights the trend that we have all felt over recent years: the move from buying stuff to spending our money and precious time on doing things: |

Consumers prioritised leisure time with friends and family, with entertainment spend up 10.4 per cent, while physical goods such as electronics and clothing saw spending contract year-on-year
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Entertainment was particularly healthy, increasing 10.4 per cent in Q1 and marking its eleventh consecutive quarter of double-digit growth.

The “experience economy” is new in phrase to describe the phenomenon. Irrespective of Brexit, elections, student loans and a sinking pound, we are spending more on doing stuff not buying stuff.

There are many examples of businesses making the most of this change, from cinema to restaurants to art centres.

Home, a £25m arts centre in Manchester was formed by the merger of two proud but financially imperilled institutions, the Cornerhouse cinema and gallery, and the Library Theatre Company.

“There was confidence from the city leadership that it would work, but a lot of my peers and colleagues in the arts were saying to me, ‘Who’s going to go there?’” says Sheena Wrigley, executive director of Home, which includes two theatres, five cinema screens, an art gallery and a restaurant and bar. “It was a very unprepossessing area with a big car park and one large office block. It wasn’t visible or on a main thoroughfare.”

Wrigley admits to having been nervous when she and her team set an ambitious target of 550,000 visits for the first year. “But we smashed that in six months and did just shy of a million,” she says. And they kept coming: as Home approaches its second birthday, it is about to welcome its two-millionth visitor. “It’s fascinating to me that you can open a venue of this kind and size and it can find its audience straight away in a difficult period,” Wrigley adds. “Of course, I would like to say it’s all about good artistic choices, but something else is going on.” In 2011, Chris Goodall, a British environment writer, used government data called the UK’s Material Flows Account to track consumption of stuff, and identified 2001 as a tipping point, long before the 2008 recession and everything that followed. He believed we had “decoupled” economic growth and material consumption.

“If you think about the 20th century, the big dominant value system was materialism, the belief that if we had more stuff we’d be happier,” says James Wallman, a trend forecaster and the author of Stuffocation: Living More with Less, in which he charts the move from possessions to experience. “The big change to what I call experientialism is more about finding happiness and status in experiences instead.”

In March, Simon Wolfson, chief executive of Next, blamed the clothing chain’s years on the move from buying things to doing things. More startlingly, Ikea, the world’s biggest furniture retailer, told

a Guardian conference last year that consumption of many goods had reached a limit. “If we look on a global basis, in the west we have probably hit peak stuff,” said Steve Howard, the company’s head of sustainability.

Studies suggest the anticipation of an experience has a crucial, additional value. In a 2014 paper called Waiting for Merlot, psychologists Amit Kumar, Thomas Gilovich and Matthew Killingsworth showed how people report being mostly frustrated before the planned purchase of a thing, but mostly happy before they bought an experience. That feeling lingers longer, too, tied up as it is with memory. “We call it hedonic adaptation,” says Colin Strong, the head of behavioural science at Ipsos, the market research group. “And the hedonic payoff of experiences is much greater.”

Can we attribute this trend entirely to the millennial generation?

“It used to be that our car, or handbag or wallet showed our status. Now we post Facebook pictures from a chairlift in Chamonix or the latest music festival,” Wallman says. “Social media is supporting this change. Posting pictures of what you just bought is gauche; posting pictures of something you’re doing is fine.” Strong also thinks the “slightly impoverished nature of millennials” is compelling them to get out more.

Restaurants are capitalising fast, opening at a record pace in cities all over the country. In London, restaurant guide Harden’s counted 200 new openings in its 2017 edition. Cities including Manchester and Glasgow have seen similar or even greater booms. Russell Norman, founder of the Venetian-inspired Polpo restaurants, is about to open his 12th outpost in Bristol, having taken the chain to Brighton, Exeter and Leeds since it landed in London in 2008. The restaurants are as busy as ever, but Norman has been surprised by booming recent demand for gift vouchers and private party requests. “When we opened in Exeter we expected it to be an all-day offering, but we’re really finding that people are coming for special occasions, as an event, or an experience,” he says.

Businesses already dealing in experiences are enhancing them to benefit from the shifting economy. Theatres would once never have considered putting a restaurant downstairs, but now you’d be mad not to. The restaurant at Home in Manchester is taking £2m a year, Wrigley says, almost double what was expected. At the Chichester Festival Theatre, where ticket sales are up 12% on last year, the restaurant is booming, too. “We don’t have to be just excellent theatre-makers, but excellent business people,” says Rachel Tackley, the executive director at the venue in West Sussex. “It’s about creating theatres as destinations where you can spend more than two and a half hours watching the show.”

Marston’s, one of the country’s largest pub groups, with more than 1,500 pubs, is racing to meet demand for more than pints of beer. Traditionally “people use pubs, but go to restaurants,” says the Wolverhampton-based firm’s managing director, Pete Dalzell. The group has shed hundreds of “wet-led” traditional pubs in recent years, and opened more than 150 pub-restaurants since 2009. Last year revenues were up 7% to £905.8m, and the average pub profit has doubled since 2012. “We’re opening up a new range of offers for consumers who are choosing to spend disposable income doing something with friends rather than buying something,” Dalzell adds.

The challenge now is to provide a memorable experience. Or at least one that makes it onto facebook.

Source: The Guardian

Source: Barclaycard

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