Move Over ‘Must Have’
In summer 2016, UK consumer spend continued to rise by 2.5% year-on-year. However, if images of busy shopping centres and bustling bags spring to mind, think again. Clothes retailers reported a drop in sales of 2.8% and fewer people are visiting high streets and retail parks. So, if more money is being spent, where is it going?
Money for Luxuries
Online shopping, supermarket price wars and the rise of discount stores mean consumers can get their groceries and essentials cheaper than ever before. In a climate where consumers can get more for less, they also have more disposable income to spend on luxuries. Yet, when it comes to treating ourselves, retail therapy is no longer our go-to. In terms of disposable income, the leisure sector is attracting 50% more than retail. Rather than buying things, consumers are spending more on doing things.
In Q1 2016, 95% of consumers spent money on leisure activities in a sector which is growing twice as fast as retail. Leisure is all about experience – from holidays to concerts, gym memberships to dining out. It also encompasses in-house leisure such as entertainment subscriptions. Amongst these activities, eating out is the most popular; 85% of consumers do it and it has experienced 5% year-on-year growth since 2010. Meanwhile, holidays are up 10% in the same timeframe. It’s easy to see the appeal of jet-setting and dining out – but why more so now than before?
Fear of Missing Out
The shift from ‘must have’ to ‘must do’ coincides with innovations in technology, including the rise of social media. Platforms such as Facebook, Instagram and Snapchat make it easy for consumers to share where they are, what they are doing and, ultimately, what they’re experiencing. Holiday panoramas, luxurious dishes, festival selfies – social media is flooded with updates on all of the exciting things consumers are doing. On the flipside, when other consumers see how much fun their peers are having ‘fear of missing out’ (FOMO) sets in. In a recent survey, nearly three quarters of respondents claimed FOMO had driven them to seek out new experiences. However, leisure experiences aren’t all once-in-a-lifetime trips and selfie moments. Technology has also sparked new business models which cash-in on consumers’ desire for comfort and convenience.
Fear of missing out: Instagram has become a popular app to show off experiences.
New Business Models
The internet has made it easier than ever to connect with other people and share ideas, media and resources. As a result, new business models have emerged that allow users to access these products and services more conveniently and cost-efficiently than ever before. In this ‘collaborative economy,’ we have moved from paying to own these goods and services to paying to access them. For example, the emergence of entertainment streaming services. Now, consumers can pay a low subscription fee to access TV, films and music ‘on demand’ in their own homes or on the go. In the past, they would have made a series of retail purchases – hoarding CDs and DVDs. This allows them to enjoy the same media at a lower overall cost. Meanwhile, their subscription fee fuels the booming leisure sector.
The Retail Experience
In a recent report, financial consultancy Deloitte predicted the leisure sector would become more closely aligned to retail. By blending these boundaries, retailers could profit by making their in-store shopping experience a lifestyle choice – in turn, drawing in experience-hungry consumers. Some brands are already leading the way. For instance, Waterstones launching in-store coffee shops, John Lewis using interactive displays to allow consumers to trial gadgets, and Apple hiring enthusiastic staff who talk to consumers more like peers than as salespeople. These retailers make consumers feel like they’re part of a club. In doing so, they transform a transaction into a leisure activity.
For more on how retailers can harness the benefits of their in-store experiences, read our related blog: ‘Is the digital age impacting our high street?’