🏝Here’s Why Experiences Are Driving This Season’s Spending And How It’s Leaving Pandemic Darlings In The Dark

After being stuck at home for one-and-a-bit years though what felt like 10x that, it’s no surprise that now with the sun finally out we want to spend our time outside the comfort of our four walls that we’ve practically been glued to! We’ve gone from spending covid-style (loungewear, furniture, you know the vibe) to spending on experiences. And companies are having to adapt. Though some are obviously being left out in the cold with heaps of (now) unwanted inventory. It’s a tough time to be a retailer, especially with inflation this high and the crisis of living sweeping the nation here in the UK, and I bet wherever you are too! Though somehow the UK’s managed to rack up the highest level of inflation out of the G7 countries. But that’s a schmooze for another day! 

What covid did (among a gazillion other things) was to totally flip our spending habits on its head. We went from doing normal things which meant spending on normal things like a haircut, for instance, to suddenly having to WFH. This brought a whole new world of spending (and savings). All that non-commuting (yeah, the tube is a pricey so-and-so!) plus not having to spend money on clothes since we all recycled our humble sweats (at least I did) meant we racked up a whole lotta savings. Some savvy ones piled this straight into the stock market, taking advantage of the 30% drop in the S&P 500 that occurred between Fed-March 2020. (Read here how you can buy the dip by taking emotions outa the equation).

Others put that extra cash straight to use in other, more tangible areas! WFH meant that we began to spend way too much time in our homes so many gave their humble abodes a covid makeover. But this crank up in demand meant that retailers couldn’t keep up since their supply chains were in absolute tatters. Hence that 4-month (or more!) wait on that sofa of yours. But what did they really expect? Shutting down the economy for months on end is bound to cause problems. And boy are we feeling the full force of them.

Photo by Tim Mossholder on Pexels.com

A yo-yo of supply and demand

So what did retailers do? They began stocking more covid-related products like garden furniture – oh and if you fancy some now’s the time to buy since they’ve had to slash these prices since the covid makeover is over plus these things are gigantic and they hoard precious warehouse space. So retailers need to shift them before they can bring in their new stock. Many retailers are left with so much excess stock that prices could actually start to come down – for certain things anyway!

For want of a sign of the items look at made.com – a furniture retailer who issued many profit warnings with shares down 93% over the past year! Ouch. It came head-to-head with changing consumer habits, being left with far too much stock as well as consumers who no longer want to (or can) spend on furniture. Inflation is hitting everyone.

Don’t think it’s just retailers, though! Streaming companies are struggling. The once-streaming-king Netflix is also bucking under the pressure of consumers who are tightening their belts, not to mention rising rates which totally dents the valuation of their not-yet-profitable showbiz. Since the start of the year, Netflix lost almost 1.3 million subscribers and a whole lotta share value too – 58% to be exact! This doesn’t surprise me one bit.

Consumers are having to tighten their belts what with inflation at a 40-year high and spending a tenner a month across more than one streaming platform makes zero sense. 80% of us admit to having more than one money-draining subscription. Something’s surely gotta give. Especially now. So many of us bid goodbye to our covid pal.

Photo by Vlada Karpovich on Pexels.com

C’mon, who wants to be stuck at a screen when the weather is this good (and by this good, I mean 34C in London!). No. We wanna be out doing actual stuff. Like being a tourist in our own city or getting to explore other cities. We want to dine out, go to theatres, and enjoy being in the company of people we haven’t seen in too long – talking to myself here!

Are we spending our way into a recession?!

So what are we spending our money on aka the bits we get to keep after everyone’s taken their fare share! The answer: experiences. We’re craving them. We bought so much stuff for far too long and we wanna be out and about doing the things we couldn’t do for a very long time!

From disney’s theme parks (whose tickets have risen by more than 3,000% since they opened!) to overpriced hotel room not to mention paying for deck chairs (very smart move on their part) nothing’s stopping us. Not even the airport chaos! Just look at your friends and family and see how many of them have booked some sort of vacation this summer.

Whether it’s spending time in the countryside or in a sunny spot far, far away from human existence, we want to be somewhere other than where we’ve been for the past two years. We’re craving something different entirely.

Photo by Tembela Bohle on Pexels.com

Plus, I bet most of us are in desperate need of a mental recharge. And holidays are the perfect remedy! If you’ve always wanted to go to, say, universal studios, now’s when you’re most likely do it, after a pandemic! Treating your family to a cool holiday abroad after the mess we’ve had, makes total sense to me. But it’s confusing economists since we’re going out the textbook!

Safe to say, this is one weird recession (read here just how so) and we are not not behaving in predictable ways. We’re splashing out despite inflation and worsening economic prospects. Spending on experiences during a recession is an odd thing to do but covid’s changed the entire game plan. Not being able to do things for a while makes you crave them even more. So inflation or no inflation, we’ll sure be spending this summer. Myself included!

This summer spending cheer may not be all that long-lived. And may be nothing more than a pent-up-demand-kinda-thing which means come summer of ‘23, we’ll have no choice but to be frugal faces.

After all, inflation is still ridiculously high by anyone’s standards (falling from 8.7% to 8.5% is hardly something to smile about!) so we’re going to have to make hard choices about our spending in the coming months.

But for now, let’s bask in the sunshine and all that comes with it! 

Go out and enjoy yourself. You’ve totally earned it.

Disclaimer: This blog is not investment or financial advice. It is my opinion only. This blog is not a personal recommendation to buy/sell any security, or to adopt any such investment strategy. Always do your own research before you commit to any investment

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