Starved for Experiences
The consumers crave human interaction more than they did before. There’s more value being put on that. So, it’s important to … not commoditize your product. … You’ve got to make sure the customer feels valued and [that they] matter.
As consumers, we all overindexed on home goods and other products during the pandemic, which made complete sense when we were looking at the same four walls all day. As expected, spending in that area has returned to more typical patterns. In retail, purchases as a share of wallet skyrocketed during the pandemic but then reverted to an expected growth rate of 4%-6% in 2023. Said Katherine Cullen, senior director of industry and consumer insights of the National Retail Federation, “We are seeing a reset to the overall rate of growth for our industry.”
But as daily lives have normalized, consumers’ shifts away from owning stuff and more toward accumulating life experiences has only grown. “I think it is more about the experiences people are trying to make up for than the things they’re trying to have in their lives from a material standpoint,” said Ranese. Despite the worrisome economic news, “consumers are still … trying to enjoy the life they didn’t have for a couple of years during COVID,” he said, noting that Uber’s best quarter in history was the first quarter of 2023.
The airline business is one huge beneficiary of the shift to experiences with demand for travel soaring. But the customer focus has changed, said Hawaiian Airlines SVP and Chief Marketing and Communications Officer Avi Mannis, pivoting away from what once seemed like a permanent emphasis on health and sanitation to one that highlights the travel experience itself. Although cleanliness continues to be important, “it’s not the same kind of driver of consumer choice,” he said. “What people care about are the things people have always cared about: getting where they’re going safely, being on time, being comfortable and entertained, and having their bags arrive when they do.”
Mannis noted that people are now far more likely to combine a work trip with a vacation, given their ability to work remotely, and that this, too, feeds into the types of experiences he is working to deliver. Hawaiian Airlines is now experimenting with different kinds of more premium, leisure-focused experiences beginning on arrival to the airport, including things like a tasting menu in the lounge for those willing to pay.
For Darden, the increased focus on experiences means an emphasis on service. “The consumers crave human interaction more than they did before,” said Vennam. “There’s more value being put on that. So, it’s important to … not commoditize your product. … You’ve got to make sure the customer feels valued and [that they] matter.” He added, “How are you making them feel special?”
Digital ease is key, but so is the human touch—especially in volatile sectors like investing. Barker from TIAA underscored that the company’s customer seeks reassurance. “When confidence is what you’re solving for, not everything can be solved digitally. In some deeply personal and high consequence contexts, customers may need the power of digital and human solutions.”
One major shift during the pandemic was the prioritization of employees, initially because they were potentially risking their lives to be at work and then due to the shortage of qualified talent. Although recent waves of layoffs may suggest a reversion to the pre-pandemic norm, many companies remain firmly convinced of the connection between happy employees and happy customers. Virginia Tenpenny, former chief global social impact officer at Starbucks, said that employee experience is the essence of customer experience, and the data supports this. “The emotional connection that people have … [in] a positive experience with the barista, that has direct impact to the bottom line,” she said. “Stores that have very high turnover have lower customer scores.”
Understanding that fact means it’s more critical than ever to support employees as they recover from the past few years because their emotional health will rub off on customers. Even as many people order from pickup-only stores for convenience, Starbucks is investing in deepening the connection between employees and customers at their in-person locations. “It’s the right thing to do,” said Tenpenny, “and it’s essential to the business.”