“In the west,” Ikea’s then head of sustainability said in January 2016, “we have probably hit peak stuff.” Steve Howard was certainly on to something – since then, consumers have spent less on stuff and more on experiences.
In its annual analysis of UK consumer spending, Barclaycard revealed that, during 2017, Brits spent 10.2%, 12.6% and 3.3% more on eating out, entertainment, and travel respectively. Spending at department stores, by contrast, declined by 3.6%, while 2.6% less was spent on women’s clothing, and 5% less on consumer electronics.
The millennial-driven trend has been dubbed the experience economy – and while the figures may suggest otherwise, it represents a game-changing opportunity for physical-product brands.
The key to unlocking it is understanding that younger consumers no longer simply make a purchase and walk away. Now, they want a memorable experience to go with their product. An experience that makes them feel part of something.
How can, say, the luxury industry capitalise on this when consumers are increasingly indifferent to high-performance cars or status bags? Well, take the Gucci Garden, which opened in January 2018. This themed museum has galleries showcasing Gucci’s clothes, art, video installations, and a restaurant helmed by Michelin-starred chef Massimo Bottura.
“Providing an experience is the way forward,” Tamara Hill-Norton – Sweaty Betty’s founder and creative director – told The Business of Fashion in August 2017. “Developing a genuine relationship with the customer is really important.” Hill-Norton was speaking before the UK athleisure brand opened its new London flagship, which encompasses a fitness studio, a café, and a blow-dry bar.
What effect will developments like these have on brands themselves? Well, one is that retailers in particular will become increasingly concerned not only with their competitors’ offerings, but by the experiences their target audience typically spends its money on.
In 2016, for instance, Adidas opened Runbase Berlin – its first “holistic wellbeing centre”. Here, runners can take part in guided training sessions, celebrity-hosted workshops, running classes and personalised training plans. The following year, Reebok opened La.Salle.De.Sport in Paris – a lifestyle hub and events venue that combines sport with art, culture, and fashion.
Nike, meanwhile, has a dedicated team – S23NYC – that develops augmented reality-powered treasure hunts to enable sneakerheads to shop for limited-edition products. Could this – and other ‘out there’ experiences – become a new way to instil brand loyalty?
The short answer is yes. Consumers crave experiences; now brands are giving them what they want. The rewards of doing this for a mobile, digital-first consumer generation – crucially, one that’s willing to share its experiences – could be huge.
We’ll be exploring the experience economy in detail at 'Stylus presents Decoded Future'. On our Experience & Lifestyle stage, Andy George and Jay Jameson (Lost Village Festival’s co-founders & directors), and Rafe Offer (Sofar Sounds’ co-founder & co-CEO), will discuss how to develop meaningful experiences in an authentic way. Find out more.
Image Source: GUCCI.com