Behind the growth of the ‘Experience Economy’ is a cohort of young professionals entering their prime spending years. Born at the turn of the last century, they grew up in the midst of rapid technological and economic change. Our white paper “The Experience Economy: Riding a rising tide” takes a deep dive into the extent of which Millennial purchasing power is driving economic value in a digital age, and as a result, changing the face of retail forever.
Who are Millennials?
Born between 1980 and 2000, Millennials began their early years using analogue technology, before trading in their landlines for smartphones. Different to their Baby Boomer counterparts and Gen X predecessors, Millennials are conscious of socio-political issues – and are arguably the most ‘woke’ generation in history – as they so eloquently put it. They care about creating meaningful, lasting connections – reflected in both their personal lives and the workplace. They want to make a difference to the world and find others, be that people, employers or brands, that share the same values they do.
Macquarie strategists have described them as “the most powerful consumer cohort in history”. By 2025 Millennials will make up 75% of the global workforce, and will possess a higher than average spending power.
NOwnership, no problem: Why Millennials value experiences, not stuff
Hindered by high student debt and living in a time where “affordable” homeownership is nigh impossible, Millennials are driving the idea of ‘peak stuff.’ Hyper aware of cost, value and environmental impact, a staggering 78% – over three quarters of Millennials are instead preferring to spend money on a desirable experience, education or a ‘shared’ good, rather than a material possession. Millennials are also much more considerate during the buying process, with a wealth of information at their fingertips – 70% have consulted social media or online reviews whilst shopping in a store. This is reflective now, more than ever, as they move into their prime spending years, which is informing what they value, and in turn, how they choose to spend.
According to a survey by Deloitte, nearly half (43%) of Millennials plan to leave a job within two years, making them less likely to commit to a mortgage, and more likely to rent or stay living at home with parents for longer. Possessions like cars are viewed as high maintenance and expensive, leading them to instead opt for car sharing services like GoGet or Car Next Door, and they are putting off commitments like marriage and having children to travel and build a ‘wealth’ of meaningful experiences. This is helping shape a different economy entirely, where retail stores no longer have a physical presence (Amazon), transportation services don’t own any vehicles (Uber), and hospitality businesses don’t own any hotels (AirBnB).
The role of social media in bolstering the ‘Experience Economy’
Social media has helped accelerate the growing demand for experiences. Creative snaps in exchange for Facebook and Instagram recognition are now the ultimate social currency for millions – and the quest for likes requires a constant stream of new shareable content in the form of stories, videos, pictures and status updates. Experiences play into this thirst for content because they are more likely to lead to the sharing of stories and pictures than the purchase of a new product would. Even experiences that don’t turn out as expected – say, a long flight delay or rainy football game – eventually turn into shareable stories.
Millennials are serving up the perfect commercial storm
Millennials are the world’s largest generation, entering their prime spending years – with a strong and primary desire to ‘do’ instead of ‘own’. Experiences have become the new competitive battleground of retail, and Millennial buying power in this new environment is creating a perfect commercial storm for those businesses savvy enough to take advantage.
This topic along with other key themes is explored in depth in our white paper “The Experience Economy: Riding a rising tide.” You can download your free copy below.