The experience economy

By Hendrik Kleinsmiede, Director of Innovation • Visa Europe

March 14, 2016

A key theme emerging at this year’s SxSW Interactive is “The Experience Economy”. What is it, and what does it mean for commerce?

Back in the day, when sailing ships and clippers travelled the earth, commerce was driven by raw goods like sugar cane and spices. In the 19th century, with the advent of the industrial revolution, they were joined by increasingly manufactured and processed goods.

The twentieth century saw an accelerated progression of at least three phases: the commodification of goods (made possible by the introduction of the factory assembly line); a move in emphasis from goods to services; and, by the end of the century, a further switch – to data. Starting in the 1990s, with the advent of the internet, we were told we were living in “the information age”.

Now, in the 21st century, we are seeing the rise of “the experience economy”. Unlike their parents and grandparents — who measured success in the accumulation of material things — millennials measure success by the accumulation of experiences.Shoppers are no longer satisfied with the procurement of things: they are looking for a full experience. Businesses as diverse as banking and fashion are developing new customer touch-points. Capital One, for example, have started opening cafes, where “guests” can learn about money management whilst sipping latte; and Canadian apparel brand “Kit and Ace” (who sell cashmere) also host supper clubs.

For some emergent companies (like Über and AirBnB) the experience IS the product. For other companies, experiences are provided as differentiators. Shops are becoming more than just places to procure goods. They are becoming entertainments. Think Apple stores, where the emphasis is as much on the aesthetic of the environment as it is on the devices themselves.

Fashion has always been tribal, but now brands are promising a similar sense of community. Identifying with a major brand means identifying with a lifestyle. Culture is becoming the new currency, and brands are becoming content providers, story-tellers. They message identity… who you are, or who you want to become.

Many traditional e-commerce providers are opening up physical spaces, permanent stores or pop-up shops, allowing them to provide an experiential dimension. They offer guest speakers; music events; or cool, new technologies like Oculus Rift, where Virtual or Augmented Reality adds further depth to the experience. On line, social media builds community…a further virtual space.

Retail is no longer about the transaction alone. Perhaps, in this new world, participation is the new loyalty, and emotion the new ROI.

Share this post

Like this post

Related Articles

Now’s the time for commercial card adoption in Italy

May 23, 2016

Italy ranks fourth in Europe for Visa commercial programmes and the country’s growth in that commercial card market is consistently robust. However, the full benefits of a commercial card programme are currently largely unappreciated. Today, the timing is favourable for issuers to review their engagement in this market.

Davide Steffanini Read More

Cashless Catwalks

July 16, 2015

The worlds of fashion and tech have never been closer, and as mobile payments continue to build market momentum, designers are looking to their SS16 collections to showcase new innovations.

Nick Jones Read More

Focus on FinTech as politicians and policy wonks meet

October 22, 2015

Regardless of political affiliation, politicians are focusing on innovation and FinTech. Visa UK’s Managing Director reports from the recent UK political party conferences where the subjects featured high on the agenda.

Kevin Jenkins Read More

Money2020: Visa Europe Collab talks wearables and authentication

May 06, 2016

We were excited to be part of the Money2020 conference place earlier this year. Collab Innovation Partner Mike Philpotts took part in a panel talking about the evolution of wearables and authentication systems and shared some highlights with industry news site Finextra, as well as talking about some of Visa Europe Collab’s work exploring the space.

Mike Philpotts Read More

Digitalisation drives the future of payments

July 18, 2016

Our Visa Futures event in Cannes experienced a high level of interest in digital topics, especially digital payments. In the past months and weeks, we already saw some significant initiatives in terms of digital payments in the Central Europe region. In Switzerland the Swatch Bellamy, a watch which allows contactless payments, launched as well as Apple Pay. We suspect that this is still just the beginning.

Albrecht Kiel Read More

Tokens, Bots & Ecommerce

April 29, 2016

This week, the team at Visa Europe Collab have been talking mostly about tokenisation and bots.

Hendrik Kleinsmiede Read More