By Citi Private Bank,
January 29, 2020Posted InCiti
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Spending on experiences has grown rapidly over recent years. A new Citi GPS report explores the drivers and future of this vital trend.
According to the old saying, the best things in life aren't things at all. While acquiring material possessions can bring us pleasure, the experiences that we have along the way ultimately matter more. As it turns out, this piece of folk wisdom seems to be ever more relevant. Across the world's advanced economies, consumers are devoting more of their incomes to experiences. For example, spending on recreation and culture has been growing faster than the economy in both the US and the European Union for several decades. So, what is enabling the boom in 'experiential spending' and who exactly is driving it?
These important questions are among those addressed in a recently published in Citi GPS report titled 'Experiential Commerce'. Its authors address the economic, and business implications of spending on experiences including entertainment (such as theatre, music, and dining), education (such as academic, craft, and cookery), escapism (such as holidays and sport), and aesthetic (such as art and gardening). Such experiences are, of course, nothing new. What is changing, however, are the ways that we access and share our experiences, as well as the amount of time and money we devote to them.
The key enabler of all these developments is technology. Over the long run, improving technology has helped to reduce the amount of time spent at work, but also the time involved in household chores. Progress in medical technology, meanwhile, means that people in most developed countries now live longer and healthier lives than ever before, creating more scope to have experiences. The digital revolution of recent times is also playing a critical role. The internet has made it far easier to discover and book leisure activities, particularly travel. And the proliferation of social media means that many people now live out their experiences in front of others in almost real time.
Given the importance of new technologies in the rise of experiential spending, you might assume that younger generations are at the forefront of this trend. However, a surprise finding of the Citi GPS authors is that the key players are, in fact, the baby boomers. While those born between 1946 and 1964 may not be quite as social media-orientated as their juniors, they have both the time and resources to devote to experiences. As this generation continues to age, though, their spending priorities are likely to change significantly. (See the Age of longevity here for more). This may have important implications for the pace of future experiential spending - and for investors in related industries. Learn more in the full report: Experiential Commerce.