Research has found that increasingly, consumers prefer to open their wallets for experiences like travel, a lunch out or a concert rather than buying a new high-definition TV or a dress.
Dr Sommer Kapitan, a lecturer in marketing and retailing at AUT, says as we’ve become wealthier as a society, experiences have eclipsed items in rarity and value.
“The more we fill our wardrobes with things, it doesn’t change our level of happiness, but if you plan a vacation you get a bigger boost than saving up for a big-screen TV,” she says.
“Research shows the more disposable income we have, the more we can save up and buy things – we’re all past the necessity stage. What’s next that can change your outcome and what you think? A unique experience.”
There are a couple of reasons behind favouring experiences over things, she explains.
People can talk about experiences more easily and often than they can about purchases, such as discussing a new movie versus a new handbag.
“You can share experiences more, they don’t degrade. Material things, by definition they degrade.”
Colenso BBDO social and digital strategist Neville Doyle agrees, saying social media has been at the forefront of driving this change, as people are under pressure to have an interesting life narrative.
“Social media is a better forum for documenting experiences than possessions and to share your creativity over your wealth. A trip to a unique eatery now confers more status than a new TV; a ticket to the gig that no one else knew about is more desirable than being the first one to own the latest, ever so slightly improved iteration of the iPhone,” he says.
As well as this, discussing experiences doesn’t make others feel inferior.
Material goods and their features are often the subject of comparison between people, while a particular experience usually can’t be devalued by that of someone else and holds up to social comparison.
This trend towards experiences is being attributed to Millennials (those aged 18 to 34) and Generation Z (those aged 13 to 19) who are accessing increasing purchasing power and discovering a different perspective on what’s worth owning as they age.
When a group of people in their 20s were asked to share why they are spending more on experiences than things, the common thread was because experiences last longer.
“Because experiences last a lifetime. Experiences can change you for the better, like travelling can grow you up, allow you to see the world and therefore mature you a lot and give you something to talk about in conversation.”
“Material things will be around forever, the opportunity to have a certain experience at a time in life when you’re most capable, financially as well as mentally, physically etc is the best opportunity I’ve had. Life is too short and I’m aware of that firsthand, travel the world, follow your dreams… You can buy your ideal handbag or new car when you’re 80.”
“Material goods won’t last forever – the memories we make now are the stories we tell our children and our children’s children. I want to be able to say I’ve travelled the world and witnessed artists perform rather than say I purchased Kylie Jenner’s lip kit while it was popular for 30 seconds.”
So is this bad news for retailers? Well, yes.
There’s no doubt it makes it an even more difficult environment out there – retailers don’t only have to battle competitors in their industry, but also the other industries where spend is going, like travel and hospitality.
Experience-based spending booms in New Zealand
But it’s not all bad. One retailer adapting to this shift in apparel, one of the most struggling categories, is Icebreaker.
At a recent event, international merchant manager and market insights Tsveti Enlow said research by Icebreaker found over three quarters of Millennials would spend on an experience rather than things.
She said because of this, it’s important consumers have a connection to a company’s brand and storytelling process.
Icebreaker has since been encouraging consumers to “take Icebreaker on their adventure” and “live wild” by wearing their clothes when they travel somewhere. It has also installed a travel and lifestyle section for its apparel on its site.
By promoting its apparel to be intrinsically linked to its customers’ experiences, Icebreaker bypasses the problem.
It’s also adapted its products to suit its customers’ needs. Enlow says consumers now want fewer pieces to do more, so Icebreaker is focusing more on multi-use clothing that can go from “trails to cocktails”.
The other route retailers can go down is turning a regular shopping trip into a unique experience within their store, Kapitan says.
“If they move towards atmospheric stuff it’s definitely one kind of arrow in their quiver and the way they can still get at the consumer heart.”
She says creating atmosphere by engaging the shoppers’ different senses is a good place to start.
She gives the example of Glassons putting beautiful chandeliers and velvet curtains in its dressing rooms, cat cafes where people can come pet felines and drink a coffee, or Auckland cookie stand Mrs Higgins and the smell that wafts out onto Queen St and draws people in.
The Cat Lounge, Glenfield
“It’s anything that helps consumers feel more welcome means they will stay longer, even scent,” Kapitan says.
Other examples include Auckland’s Nike Britomart store, which hosts a run club, and Barkers High St, which has a coffee shop and the Groom Room salon.
Barkers High St
Internationally, companies like Nordstrom have been adding counters into stores where shoppers can customise their footwear, while Lululemon has a concierge service in store that can book shoppers into exercise classes.
“It’s creating a destination and creating that look, feel and vibe. That’s how retailers are going to compete,” Kapitan says.