Global consumer spending shifts from shopping to travel
It’s not yet the death of retail, but it’s a fact that we don’t buy as much goods in stores
Analysis of global spending data has revealed a massive shift in spending patterns, particularly among travellers. Clothes buying is falling globally, shopping in stores is slowing down, and people are directing discretionary spending more at experiences than material possessions.
These were some of the findings revealed by Sarah Quinlan, senior vicepresident for market insights at Mastercard, speaking during the World Cities Summit in Singapore this week.
“I don’t shop anymore, we don’t shop anymore,” she said. “Americans have stopped buying clothes, and apparel spending is dropping worldwide. The first reason is that we dress more casually for work. The second thing is that we no longer value clothes as much.
“It’s not yet the death of retail, but it’s a fact that we don’t buy as much goods in stores. So they have to offer more than shopping. They have to answer the question, how do you keep us occupied?”
It’s not that people are spending less, though. It’s that they are spending it differently. Retail spending is swiftly moving online, while travel has become the way people express their wealth. But, says Quinlan, there is also a shift in travel.
“One of the challenges Hong Kong has, for example, is that it was totally set up for retail and shopping. But people aren’t travelling for shopping anymore, they’re travelling for experiences. People still shop, but it has dropped dramatically.”
Every country has to focus on what is unique about the opportunities it can offer, says Quinlan. She points to the success of Tourism Australia, which realised that no one knew what to do in that country beyond the Sydney Opera House and looking at koala bears.
“They realised they had to do a better job of curating their attractions. As a result, people are staying longer, spending more, hopping multiple cities. It’s not a cheap place, but tourists are spending more because Australia has shown them what they can experience.”
Part of the challenge of parting tourists from their money is communicating loudly and often, and using social media effectively. As a regular visitor to South
Africa, says Quinlan, she was shocked to learn only now that Cape Town had indefinitely postponed its Day Zero deadline.
“In the US, the narrative is still that you can’t get water in Cape Town because of Day Zero, so people are not planning trips there. I had no idea Day Zero was gone. Given the city’s past, and given its dependence on tourism, it was really important to share that information with the world.”
The Mastercard data also reveals that visitors from different countries spend money differently. British visitors to South Africa are increasingly buying experiences. Those from China are typically pre-paying for all meals and tours, so are not spending money once they arrive.
“It’s very important to segment groups and not just say a visitor is a visitor,” is her advice. “Figure out what you want to measure and the frequency of measuring it. Then it gets down to segmentation. We are creatures of habit, and everyone has a specific pattern. You can use that to grow tourist spending.”