Luxury bags and that first car can wait. To millennials, experiences are paramount – think a road trip spanning South America or large-scale live music events.
That’s where the millennial dollar has been and will be, according to a variety of indicators such as reports from the likes of Goldman Sachs to the bullish performance of lifestyle-related companies such as AirBnB, budget airlines and events organisers.
“Experiences help millennials shape their identity and create memories, to a greater degree than for older generations,” said the Bank of America’s MD and head of thematic investing, Sarbjit Nahal. This preference is particularly important as millennials – the most populous generation, surpassing even post-war baby boomers – gradually move into their prime spending years.
Their rationalisation seems to hold water: buying an experience is triple-dipping. First, there’s the anticipation leading up to the event, then the actual event, and finally, the generation of fond memories and conversation fodder, which do not deteriorate with time and can be shared repeatedly with peers.
Economics professor at the University of Warwick, Andrew Oswald, says that the desire for material goods and ownership has waned in this demographic, and travel and leisure are the alternative paths to satisfaction. Oswald’s research centres around the “economics of happiness”.
On the other hand, millennials are increasingly averse to long-term financial commitments, such as marriage, or home and car ownership. Saving, as a priority, has also taken a hit – just over a third of those surveyed worldwide by Goldman Sachs reflect adequate monthly savings. It would seem, then, that the adage carpe diem has been truly taken to heart.
A version of this story, adapted from a Bloomberg report, was published on Business Times Online.