Desire for experience fuels shift in spending
A range of macro-economic factors currently indicate a positive outlook: stable household consumption, stable inflation, a rise in dual-income families, urbanization, and government spending on infrastructure. But the reality is that FMCG sales volumes are under severe pressure across most categories. “Weaker-than-expected consumption” is the phrase being used to explain this situation. However, the truth is it is something more structural.
There is a paradigm shift in the consumer “share of wallet” when it comes to consumption. Share of spend is declining for traditionally strong FMCG categories, and increasing on leisure and travel (up 11 percent in the past year), mobile data and electronic gadgets (up 46 percent) and wellness (52 percent). This is happening across age and income groups, but is more pronounced among younger people – Gen Z and Millennials.
This is a shift away from buying goods (FMCG), in favor of spending money on experiences (leisure, travel, wellness), and spending to share those experiences on social media (mobile data and broadband usage).
This presents an interesting marketing challenge for the traditional retail sector, but also interesting opportunities for the travel/tourism and health/wellness sectors.
In the short term, strategic tie-ups and joint cross promotions with leisure, travel and wellness brands could be one way of answering this challenge for the FMCG sector.