Author | Esther Fuldauer
Millennials don’t find buying cars and homes anywhere near satisfying as experiences —and bragging about them on social media. ‘Less is more’ is taking root with them, changing the long-held belief that happiness is tied to the number of things we own.
For generations, before millennials arrived, owning expensive things represented milestones in life and were signs of social status. With the advent of the internet, this perspective completely changed. Born between 1980 and the mid 90’s and having lived through an economic crisis as either teenagers or young adults, Millennials have shown different consumption patterns when compared to previous generations.
They were the first generation born in the information revolution, taking advantage of the internet and its ubiquity through smartphones. They lived through a global financial crisis of 2007 and saw how their parents virtually lost everything they worked so hard for in the blink of an eye. Now they are parents of the youngest generation, Gen-Z, in a world that seems more uncertain than ever.
Broadly speaking, there is an apparent disenchantment with the status quo. Why save for future retirement? They might lose it all to a financial system which they find insecure. No wonder Millennials spend on essential things today and not for a retirement tomorrow.
Beyond being risk-free, they discovered that the satisfaction boost of a single purchase doesn’t last for long. Sharing experiences on social media, on the other hand, is not only more satisfying, but it’s also addicting, even demanding. Travel and leisure time become top of the list in priorities. This is changing businesses, as people are more willing to pay for unique Instagram-worthy experiences than just the purchase itself.
The experience economy
In a report by Eventbrite, “Millennials just can’t get enough. 72% say they’d like to increase their spending on experiences rather than on material things […], pointing to a move away from materialism and a growing appetite for real-life experiences.”
Indeed, the possibility of having individual experiences has always existed. However, with new technology, the scope is much more significant. Sharing life experiences on the internet has become more critical than shopping for the next new thing. It is so much so that it has become an epidemic FOMO (“Fear of Missing Out”). According to the report, 69% of millennials experience FOMO when they can’t attend something that their family or friends are going to.
Together, with the other two mega-trends of the economic and time surplus, identity creation, the need to share experiences represent the foundations of the experience economy.
Cities, the experience economy and sustainability
The term “experience product”, coined more than 20 years ago by Pine and Gilmore (1998), is defined as “when a company intentionally uses services as the stage, and goods as props, to engage individual customers in a way that creates a memorable event.”
Substitute business for cities in that quote and you get the experience economy.
Of course, cities already offer culture products, but the “content” of the products does not make them experience products. To be an “experience product,” there must be a specific “relationship” between the customer and the product. It must be able to become memorable and make a good story. And this means place.
Cities are places where activities are experienced. Therefore they can capitalize on the opportunity that the experience economy presents becoming producers of events. People are eager to become participants of the local culture. Tourism becomes then not just about admiring the historical or natural typical places of a destination but experiencing a life-changing event. A story that wouldn’t happen without your participation.
The sharing/collaborative economy and the experience economy
The Sharing Economy was born out of this new idea of a better use of resources. Access over ownership became prime, well suited for these younger generations hungry to turn over an economic model that has reached its ‘peak stuff.’
Cities have embraced this new economic model and aligned it with their general interests, job generation, inclusion, sustainability. Because it uses spare capacity to create economic opportunities and makes better use of resources, it is becoming a crucial development tool for sustainability.
But beyond these broad benefits, it also has the social aspect of creating activities bound to places. They are also marketable experience products, which fit very nicely with the millennials’ way of life, of “more experiences and less stuff.”
Smart cities have something that can add to this experience economy. They already have the knowledge and creative workforce. They can easily create this product. All there is left to find a way to enrich themselves in order to cater that appetite for newer experiences.