The shift of a growing proportion of consumer spending undertaken online is clear and has taken its toll on the market. Rents are under pressure as retailer failures release space to the market. However, structural change in another form is also emerging. Some 74% of Americans now prioritise experiences over things, according to a study conducted in 2018 by Expedia and the Center for Generational Kinetics.
Putting life experiences ahead of buying TVs and new clothes is thought to be the preserve of the millennial generation, armed with both a more enlightened view of what is important and the challenge of restricted living space due to the housing crisis.
But UK baby boomers are also showing a similar pattern of spending, albeit they may not be looking for the same experiences. The 50-74 year-old age group is now spending the most on recreation and culture (ONS), in large part due to lower housing costs relative to income.
We are certainly seeing the combination of both flavours of structural shift in consumer spending playing out in the Cambridge-Oxford Arc.
In 2018 we saw a growing number of activity focused operators take up some of the slack on out of town retail parks. This is illustrated by the letting of over 18,000 sq ft to Gymfinity Kids at Stadium MK in Milton Keynes. While such lettings are undoubtedly assisted by rental readjustments over recent years, research suggests the growth in activity operators is underpinned by consumer change.
This perhaps suggests we will see a widespread shift in the occupier base of retail parks in particular, with their ability to accommodate everything from laser tag, DJ accompanied crazy golf to climbing walls and Zombie escape rooms. However, the focus on experience is not wholesale.
Research published in the academic journal Phycological Science [1] found that those on lower incomes were happier or at least felt the same when they purchased possessions rather than experience. The fact that wealthier individuals ‘were made happier by experiential over material purchases’ reflects the fact they have the resources to buy both.
Where does this leave retail parks? Demand for experience spending looks set to stay and we are likely to see a broadening range of activities taking vacant retail warehouse space with rent adjustments opening up the market to a wider range of operations. However, Bidwells’ analysis suggests locational differences will emerge, with greater representation of experience occupiers in higher income locations such the Cambridge-Oxford Arc.
[1]Experiential or Material Purchases? Social Class Determines Purchase Happiness, by Jacob C. Lee, Deborah L. Hall, Wendy Wood, Psychological ScienceMay, 2018
