Growth of the Experience Economy

"The experience economy" is a 20-year-old phrase that refers to a premium, differentiated experience perceived as higher value (by consumers) than, say, service delivery or products alone.

According to the classic Harvard Business Review article about this phenomenon, marketers can "wrap experiences" around traditional goods or services (or both) to enhance the offering. The key benefit of experiences is that they are memorable.

The consulting firm McKinsey notes that spending on experiences has increased much faster than spending on goods. And, McKinsey says, millennials are leading the way in spending on entertainment and fitness-related experiences, for instance. Think about the rise of experience-heavy offerings like the Museum of Ice Cream, which began as a pop-up retail experience in New York City and has sparked spinoffs, extensions, collaborations, and sponsorships.

Growth in the experience economy is a global phenomenon. A cultural event space in Manchester, England, found strong demand for its diverse experience offerings, from theater to music to art and food. "The big change to what I call experientialism is more about finding happiness and status in experiences instead," says author and trendspotter James Wallman.

Does this mean materialism is dead? The lesson from the experience economy is that goods alone may not be the best or only way to satisfy a consumer need, especially for key consumer groups.