If I count the number of my friends with designer handbags, I would have a couple fingers to spare. Make that a couple fingers and an entire hand. Same goes with designer dresses. But the number of my friends who attended the Coachella Valley Music and Arts Festival this year? Too many to count using all my extremities.
Fueling the experience economy
This year, Millennials surpassed Baby Boomers as the largest living generation. Aged 18-34, Millennials have entered adulthood and the workforce, and many are earning discretionary money for the first time. And spending it, too. But where is all of their money going?
According to a Harris report commissioned by Eventbrite, 78 percent of Millennials would rather spend money on a meaningful experience than on a material possession. That means less Louis Vuitton and more Lollapalooza. With Millennials’ mighty spending power and increased interest in events, the experience economy is growing rapidly. In fact, since 1987, American spending on experiences like concerts, festivals, and themed runs has increased by 70 percent.
Why are experiences so magnetizing?
With our student debt and high rent, it might seem puzzling that Millennials are spending money on fleeting moments rather than materials built to last. From FOMO to ZipCar, here are three reasons why Millennials are fueling the experience economy and leaving the designer handbags on the shelf.
The sharing economy eliminates the need to purchase big ticket items. Today, owning cars and houses isn’t the priority. Instead, Millennials want access to these items without the burden of ownership. With companies like Airbnb, Rent the Runway, Netflix, Zipcar, there is really no need to purchase… anything. Everything is available for rent, so we can put off major purchases until later or avoid them altogether. Why would I spend a couple hundred dollars on a new dress if I could sport it for a month (while at its fashion peak) at the fraction of the price?
We are scared of being lonely. As the most socially conscious generation, Millennials feel the need to be around others constantly and feel left out when they aren’t. There’s even a term for the fear of missing out—FOMO—and 70 percent of Millennials feel this way on a regular basis. I know I do. With instant social media sharing platforms like Snapchat and Instagram, it seems like everyone is always out doing something exciting. When you’re sitting at home on a Saturday, it makes you feel like you’re missing out in a big way. The only way to combat this feeling? Other than living with a lot of people, it’s getting out there and experiencing things for yourself. We’re spending money on experiences so we can be in the Snapchats at the Blink 182 concert, instead of watching from our couch.
Experiences build connections and lasting memories. For me, the most important element of attending festivals, concerts, and parties are the memories and connections I make with others. My peers are on the same page—the Harris for Eventbrite study found that 79 percent of Millennials believe that attending events create the best memories, and 69 percent enjoy attending for the connections they are able to make with others. When I was talking to my friend Kelly about spending on experiences, she mirrored this sentiment. “Objects are replaceable,” she said. “Events, on the other hand, are about collective experience and being able to share a moment with your best friends. Strengthening ties is something that a handbag can’t do.”
“Events, on the other hand, are about collective experience and being able to share a moment with your best friends. Strengthening ties is something that a handbag can’t do.”
How companies can make the most of it
With this movement away from materialism, some companies may be shaking in their boots. However, there are ways to cash in on the experience economy. Macy’s, for example, promotes an ‘experiential’ shopping experience where you can attend a yoga class or mini concert after browsing their sale on athleisure wear. And Apple is integrating performance and community spaces directly into their new stores. New iPhone and Blink 182? At the same time? Companies may also market their products for use at concerts and other live events—H&M’s Coachella-specific clothing line presents a necessity of materials objects for the experience.
Employers too are realizing the impact of the experience economy and may consider making internal changes to accommodate experience-seeking employees. If experiences make people happier than material goods, perhaps reducing spending on expensive employee swag and offering more vacation days would improve employee satisfaction.
Looking forward, Millennials are likely to increase their spending on experiences. So is materialism completely dead? Not exactly. We’ll always need a way to get to our destination and somewhere to stay once we get there. And we’ll need something amazing to wear for Instagram— but that dress just might be rented, and likely won't be designer.
Sara Lighthall is a content marketing intern at Zendesk and a student of life. When she’s not demystifying the Millennial generation on Relate, you can find her with her toes in the sand and a latte in her hand. See what she’s up to on Twitter: @saralighthall.
Our Millennial view series is not just for Millennials. Everyone can gain insight on these important workplace and life issues. Topics such as Finding a friend in feedback, Moving up, while dressing down, and When giving two week's notice is complicated impact us all, regardless of generation.