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.