Stop blaming millennials and start investing in them

This killer is the millennial and their favoured prey – long established industries. Since 2016, various articles have blamed millennials for the death or slow demise of the golf industry, wine cork manufacturers, cinema chains, upmarket hotels, mid-market beer and wine, banks, gyms, diamonds, the oil and gas industry, home building and, of course, napkins. … The post Stop blaming millennials and start investing in them appeared first on WorldNewsEra.

Stop blaming millennials and start investing in them

This killer is the millennial and their favoured prey – long established industries. Since 2016, various articles have blamed millennials for the death or slow demise of the golf industry, wine cork manufacturers, cinema chains, upmarket hotels, mid-market beer and wine, banks, gyms, diamonds, the oil and gas industry, home building and, of course, napkins.

As ludicrous as it is to blame the falling fortunes of certain industries on changing consumer tastes, rather than a lack of sufficient dynamism from existing business, the millennial as bogeyman has gained significant traction as a convenient story to explain underperformance across a wide range of businesses.

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However, what is true is that, as a cohort, millennials – those born between around 1980 and 2000 (demographers cannot ever seem to agree on the precise dates) – have very different tastes to previous generations.

With a distrust for institutions spurred on in large part by formative years spent battling the 2008 recession and out of reach property prices, a childhood spent surrounded by the nascent internet and the rise of social media, as well as an increased desire to explore and experience the world around them, it is not hard to see that industries that do not respond to the rise of this new consumer are doomed to failure.

Nor is it enough to simply ignore this generation – by 2020 American millennials were forecast to spend $1.4trn per year according to Accenture.

In spending terms, they have already arrived as a force to be reckoned with.

Given their rising importance as consumers across the globe, investors would be far better positioned by looking to deploy capital into businesses that satisfy the demands of millennials’ changed tastes rather than simply blaming them when stale businesses underperform. O

One of the key trends that underpins millennial spending is the rise of the ‘experience economy’. Companies within the experience economy use services as the stage, and goods as props, to engage individual customers in a way that creates a memorable event.

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While the idea has been around for over 20 years, what is different is that millennials are increasingly choosing experiences over goods.

According to an Eventbrite study: “More than three in four millennials (78%) would choose to spend money on a desirable experience or event over buying something desirable”.

During these recessionary times, given a choice between spending their squeezed disposable income either on designer clothes or going to a show, the chances are the consumer will choose the show.

The importance of the experience economy has ever more interest from investors and corporates alike. Being able to communicate and build valuable relationships with consumers is highly sought after and can be seen in recent deals including the sale of the immersive cinema experience business Secret Cinema to TodayTix Group for a reported $100m valuation.  

In order to benefit from this trend, investors must be savvy at choosing businesses that can thrive in the ultra-competitive experience sector.

We have been investing into businesses within the experience economy since 2002, and within that time we have seen the same core features of successful businesses time after time.

The most investable businesses will have multiple revenue streams, differentiated pricing points, ownership of intellectual property and a loyal and recurring fan base.

One exemplar of this is the festival industry. With income from tickets, sponsorship, food and drink, basic day tickets to high end VIP options, a strong brand they own themselves and a passionate fan base, festival businesses tick all these boxes and have the potential to generate exceptional returns for investors.

Transactions that we have been involved with, including the sale of Impresario Festivals, which more than doubled shareholder value in four years, have proven this potential and we continue to invest in the experience economy through the festival operators behind Snowboxx (France), Kala (Albania) and Gala (UK) and competitive socialising concepts like The Crystal Maze Live and immersive bars groups like The Little Door & Co. and Incipio.

Millennials are not going anywhere.

There are over 2.5 billion of them and their spending power will continue to rise.

Businesses that do not look at them and demand a share of that money are not going to thrive, and investors who sit on the side-lines of this huge cultural and economic shift are just as likely to be left behind.

The time has come to stop blaming millennials, and to start investing in them.

Harry Heartfield is senior partner of Edition Capital

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The post Stop blaming millennials and start investing in them appeared first on WorldNewsEra.