All retailers, restaurants, hotels, even corporations have to be aware by now, the experience economy is here. It’s so here actually that I think it’s about over and we’re on to the next.
The Experience Economy, the book by Joseph Pine and James Gilmore came to us ten years ago, and ten years would be long enough you’d think for everyone to get on board, adapt, change, evolve. But business are still dying, and are still doing the things they did before they were warned of the shifting needs of the consumer. As we watch malls close, brick and mortars struggle, restaurants come and go, and hotels lose share, how is the experience economy changing the way we interact with everything.
Let’s recap quickly. The experience economy can be summed up simply by the baking of a cake. Here’s how we’ve evolved over the last 50 years, cake form:
Extract commodities – Back in the day you’d have to go to the store, buy your milk, eggs, flour. Then you’d go home and bake the cake yourself, we had time, we had little money in our economy, this was how you got a birthday cake.
Make goods – Then we evolved, all the ingredients were packed up for us in a box, this saved us the thing that was beginning to become limited, time.
Deliver services – Then we got really busy, too busy to go find all of the ingredients or to bake, so we just started buying pre-made cakes. But when everything is done for us, what’s left for a person to experience when it comes to the cake and birthday process?
Stage experiences – It's simply evolution based on how we go about life. We have our cake, and now we want to eat it too while someone entertains us and gives us that extra layer of memories that come with the practice of having a celebratory birthday cake.
So how does this translate to our respective industries? Think of the pre-made cake as something similar to Uber Eats for restaurants, why go to your restaurant when this person brings me food? Or for retail, Amazon, why get in my car and walk through your neon-lit store when Prime brings me what I need in two days or less? And for hospitality, if someone has a fabulous trip and doesn’t Instagram it, did it really happen? A guest has their choice of hotels now, they’ll pick you based on Insta-potential alone. Are you giving them what they need?
The Why
A Harris study revealed that 78 percent of millennials would rather spend money on a desirable experience or event versus spending on stuff. We’ve finally maxed out on stuff. Stuff used to be a way to show status, so if stuff is now crass but people still want to show their status, experiences take the place of that and become the bragging point. In addition to the break up with stuff, several emerging articles have detailed that the millennial generation is so plagued with job insecurity, and soaring housing prices have dampened their dream of ever owning a home, so they’re spending their money on experiences and apartments rather than mortgages.
Some people are paying attention, according to cmo.com more than a third of CMOs said they plan to spend 21 to 50 percent of their budgets on brand experiences during the next several years. And the ROI is there, Hubspot states that 49 percent of people create mobile video at branded events and a branded hashtag can increase those numbers. It’s basically the new advertising and people are posting for free, as long as you provide the goods.
This shift in the economy isn’t just being tracked in the for-profit world. Everything is changing from employee culture experience to art. And while the change in the standard gallery experience is being debated now, there’s no question on the success of a few exhibitions that have taken off in a big way by adjusting the experience from viewing, to doing.
Meow Wolf is a great example of the human need for an art experience. Currently set to expand in Denver and Las Vegas over the next couple of years, the flagship location in Santa Fe charges $25 for admission and raised $6 million in its first year of operation. A former bowling alley renovated into a labyrinth of touchable twists and turns, and more importantly social-media worthy locations for all ages.
My trip to Meow Wolf in February 2019, only a few of the many images for my social media.
Vince Kadlubek is the CEO of Meow Wolf and quoted to an Artsy article that while TV shows and movies once offered an escape from reality, over time, they’ve become just another part of the everyday. TV is the pre-made cake in the experience economy, and we’re growing out of it quickly. Do you still have cable? We’ve evolved personally, let’s get on board professionally.
Not only is the “social media moment” a new requirement of consumers of all mediums, it’s an opportunity for the business. Public relations used to be the mode that companies would get the word out about their products but now businesses can participate in a very fast-moving word of mouth channel, social. By providing the opportunity for a good post, you’re essentially opening up an advertising channel.
Retailers are creating spaces within stores just for that. Like L’Occitane’s Flagship Store in Manhattan that hosts a photobooth staged with stationary bikes that look like they’re set against the French countryside, as well as a live feed of its own Instagram account running in the background. They’ve also incorporated a VR experience that ties to a hand-massage. Is this too much? Kind of sounds like an interesting adventure…
There are more experiences being created in the art world that are driving exposure in a big way. “Yayoi Kusama: Infinity Mirrors” at the Hirshhorn Museum launched as a limited-time exhibition, not only creating the opportunity for a coveted Insta-moment, but a sense of urgency to get there as well. The exhibition broke attendance records at the Hirshhorn while creating more than 34,000 Instagram posts and 330 million social media impressions.
Even restaurants can’t serve food anymore, or not just food. We’re now eating and sampling with our eyes, everything from the floor to the ceiling needs to be part of the guest experience. The dish itself (or the cocktail) benefits from being social-worthy, if it’s not the restaurant is just missing out on the opportunity for more exposure from its daily diners.
The moral of the story, there’s no escape anymore from needing a story for your brand, from product to food to art. And you have to know how to take it to the next level, the experience. Our brains now expect more from a space and our expectations from a product include a sexy post on social media. The places experiencing success and staying alive are making it through this change. If your company isn’t on board it’s time to incorporate an experiential aspect to your company, actually it’s 10 years too late.