Rise of the Experience Economy

Our nation is changing, of course.

Things aren’t like they used to be.

Famous clothing brands are at historic lows and major retailers are closing hundreds of stores. In 2016, 2,056 stores closed their doors. The worst year on record is 2008, when 6,163 stores shut down.

Brokerage firm Credit Suisse says in a just-released research report,

“Barely a quarter into 2017, year-to-date retail store closings have already surpassed those of 2008… it’s possible more than 8,600 brick-and-mortar stores will close their doors in 2017.”

But we’re not in a recession.

According to an April 10 article by Derek Thompson in The Atlantic,

“America’s GDP has been growing for 8 straight years, gas prices are low, unemployment is under 5 percent, and the last 18 months have been quietly excellent years for wage growth, particularly for middle- and lower-income Americans.”

Yes, Amazon.com and the other online players are partially responsible for the decline of retail in America, but not nearly to the degree you might think.

In 2016, only 6% of retail purchases were made online.

But retailers are down by a lot more than 6%.

Want to know what categories are doing better than ever?

“Travel is booming. Hotel occupancy is booming. Domestic airlines have flown more passengers each year since 2010, and last year U.S. airlines set a record, with 823 million passengers. The rise of restaurants is even more dramatic. In 2016, for the first time ever, Americans spent more money in restaurants and bars than at grocery stores. Sales in this category have grown twice as fast as all other retail spending.”

In other words, we’re buying fewer things, but more experiences.

Materialism is on the decline.

In retail stores and online, we’re spending a lot less money on clothing. Its share of total consumer spending has declined by 20 percent in barely more than a decade. Houses, cars and furniture seem to be less important to us as well.

But we’re spending more than ever on togetherness, entertainment, and fitness.

We hunger less for prestige, more for experiences and relationships.

Relationships…

If you’re going to get in step with this trend, you’re going to need to invest in customer bonding.

Use mass media to win their hearts before they need what you sell.

Don’t let your company be just another name on a list of search results.

Roy H. Williams