Back before the Great Recession, we saw consumers engaging in what was called trading up to what is called affordable luxury. Americans were willing, even eager, to pay a premium price for goods and services that possessed higher levels of quality, taste and aspiration than other goods in their category, but weren’t so expensive as to be out of reach. To be able to do this, consumers were trading down to low-cost alternatives such as generic products and services that are not important to them. So a consumer might buy less expensive grocery store brands to save money so they could trade up to a premium imported cheese.
Well the Great Recession brought much of that practice to a screeching halt. With incomes squeezed and the fear of uncertain economic times, people became super cost-conscious and tightened their wallets, only trading down since they either didn’t have the money to afford any types of luxury or they just became far more conservative in their spending. Trading up to affordable luxury was something that was deferred to hopefully better times.
Research by PGAV Destinations has found that the phenomena has returned at entertainment destinations, in what is called splurging, the act of trading-up for premium attraction experiences. In fact, they found that the intent to splurge at entertainment venues is up slightly from its pre-recession levels. However, they found the psychological motivations to splurge have changed. While creating memories is still among the top three reasons, people are now more interested in opportunities that reduce their stress and give them personal enrichment. Number four on the list of motivations is being a good parent or spouse. The desire to splurge is greatest with people 18-34 and with parents with children.
The survey found that splurgers are looking for quality, for premium experiences. It’s not about the cost, but rather about the value in terms of the experience meeting their needs. The research found that the top four needs to feel satisfied with a visit to an attraction in order of priority were:
From the guests’ emotional perspective, PGVA’s research found a number of top drivers that all included a strong socialization component. At the top of the list is “reconnecting with friends and family in a fun environment” Closely tied was “time together with loved ones” and “a fun getaway with friends and family.”
Although not on point about splurging, PGVA’s research found that the top two pain points (detractors) for attraction visitors were employees who are indifferent or rude (74%) and restrooms that are not clean (63%).
Research in the consumer goods industry is also seeing a similar phenomenon that is now being labeled as the hybrid consumer. Using money saved by trading down on staples, hybrid consumers are trading up to premium, high-end products that matter most from an emotional and social perspective, such as premium brands in supermarkets and fine dining. As a result, markets are becoming increasingly polarized into value and premium, with less interest in mid-market products.
Splurging and the hybrid consumer are really about the same thing, consumers saving in some areas so they can purchase premium experiences and goods. It all ties in with the High Fidelity trends we are seeing with entertainment experiences. Consumers either want the High Fidelity premium entertainment experience that they will pay a premium price for or the Convenient experience that is low cost and low quality, almost entirely in-home or available via mobile technology. The middle ground, what is called the Fidelity Belly, has lost its appeal the same as mid-market products.
So the bottom line for entertainment venues is quite simple. Consumers want to splurge on premium experiences that reconnect them with family and friends in a fun environment that also reduces their stress and possibly offers some enrichment.