Global consumers’ appetite for unique experiences remains robust despite the ongoing cost-of-living crisis and pressures on household budgets from high interest rates. Yet, the megatrend of prioritising experiences over buying things is not immune to macroeconomic headwinds.
77.3% of respondents stated that it was extremely to very important to experience things in the real world
Source: Euromonitor International’s Voice of the Consumer: Lifestyles Survey
66% stated they seek curated and personalised experiences tailored to their interests and lifestyles. However, there is a sign that inflationary pressures are taking their toll as there has been a decrease in the number of people willing to pay for such experiences, down 2.4 percentage points to 55.5% of respondents.
Experience as default: Delivering greater value through brand interactions
Branded experiences are rapidly becoming the default that consumers expect to enjoy and receive, whether through new product development, fun and engaging brand activations, sensory immersion or loyalty rewards.
According to Euromonitor International’s Megatrends Quantification Model, Experience More is the second largest megatrend in terms of consumers’ per capita propensity to spend after Shopping Reinvented, driven by online, mobile and social commerce, and ahead of Pursuit of Value, powered by the desire to make savings.
Experience More was the most heavily impacted during the pandemic years, recording a -5% CAGR over 2017-2022 as in-person experiences ground to a halt, whilst Convenience accelerated by 24% and Digital Living by a 20% CAGR as consumers pivoted online for work and play.
Fighting fatigue: Experience overload is a threat to long-term success
However, the long-term forecast is challenging for Experience More in terms of consumer spending, where growth will be constrained in developed markets at a 2% CAGR over 2022-2032
Source: Euromonitor International
This is the case as competition intensifies between brands across different sectors to provide the ultimate brand experience. The proliferation of ways that consumers can experience and engage with a brand is at severe risk of oversaturation as brands look to up the ante on all things experiential marketing, explore new brand partnerships, enter new vertical and tap new revenue streams. However, without a clear sense of true value to their customers, the effects risk undermining customer retention and sales, confusing the message and eroding brand values.
The outlook is expected to be even more pessimistic and negative in emerging markets as other priorities overshadow the experience-bagging trend as traditional consumption prevails.
Experience-driven sectors such as travel will witness persistently high prices, as the latter pivots towards a value-driven tourism model, combined with the need to transition to net zero emission targets and invest in green technology, such as renewables and sustainable aviation fuels (SAF), which currently come with a higher price tag.
Advanced markets lead the transition to needs and values-based consumption
Experience More was the second most significant megatrend for North America in 2022. However, US interest in Experience More (1% CAGR) will be overshadowed by the desire for Convenience and digitalisation from Digital Living, recording 11% and 12% CAGRs respectively over 2022-2032.
Regions such as Australasia (5% CAGR) and Europe (3% CAGR) for 2022-2032 will drive momentum for Experience More over the long term
Instead, regions such as Australasia (5% CAGR) and Europe (3% CAGR) for 2022-2032 will drive momentum for Experience More over the long term, as the “anti-stuff” mantra continues to shape consumer purchasing behaviour and shared moments with loved ones take greater importance.
Expenditure on Experience More per capita is eight times higher in North America than Asia Pacific, so there is significant ground to gain and a huge market to address. Growth is forecast to be high in advanced Asian markets such as Hong Kong at 8%, and Singapore 4% per capita CAGR 2022-2027.
Experience More faces headwinds in China
Experience More is the third biggest priority for Chinese consumers after Shopper Reinvented and Convenience, but is constraining growth (-2% CAGR 2022-2032) worldwide as other priorities such as Convenience and Digital Living are of the utmost importance (17% CAGR 2022-2032) for Chinese consumers. Priority spending areas for Chinese consumers are expected to remain consumer foodservice, apparel and footwear, travel, consumer electronics and tobacco.
Potential demand is being undermined by the challenging macroeconomic climate in the country, where income distribution is forecast to be a negative driver, restricting spending on experiences.
The bottom of the income pyramid in China will continue to hold the lion’s share of wealth at 64%, whilst the mid-income band will be stagnant at 44%, and growth will take place at the high end of the income scale, growing to 42.7% of total wealth in 2027. However, with the current property crisis, this may also adversely effect higher-income households, and dampen demand for highly discretionary spending on experiences such as international travel and foodservice.
The megatrends – Convenience, Shopping Reinvented and Digital Living – will be the strongest growth performers at 20%, 17% and 12% respectively, compared to -2% for Experience More in China over 2022-2027. However, Chinese consumers will spend 1% of their disposable incomes on Experience More.
Diverse approach required to tap new growth markets
There is an interesting mix of strong potential target markets for creating enhanced brand experiences that deliver an elevated customer interaction through brand activations, other experiential marketing techniques, or an enhanced product experience through NPD/innovation and new attributes.
Euromonitor International’s Quantification Model reveals the huge potential in the United Arab Emirates (spending 2.1% of disposable income on the megatrend), Sweden (1.9% share), Europe, North Asia and South East Asia. Many brands, especially in the luxury space, are moving into horizontal verticals, offering lifestyle extensions from homewares and fashion into hospitality.
Whether through organic growth, acquisition or partnership, looking to complementary sectors is an assured way to reenergise and reconnect with consumers to create wonder and joy, or even fulfil a need based on shared brand-consumer values, building a deeper emotional connection.
Despite the challenges, the experiential trend is expected to deliver for brands willing to be more creative and meet consumers’ demands in the decade ahead.
Read our report, Megatrends Impact on Consumer Goods and Service Categories: Experience More for further details on how the megatrend is playing across different industries.