Adrenaline junkies are giving shape to a fast-growing experience economy

You are at a Saturday night house party. Friends are drinking. You are sipping beer, that too less than your usual quota. By the time others are happy on Highland malts, you are back home sleeping. Hours later, when those friends are going to bed, you are sneaking out of it. Lacing up for yet another long, lonely run. Training for a marathon is exhausting. The mental and physical fatigue, the pounding heart, the burning lungs, the hamstring pulls, let alone the complete lifestyle overhaul. To make it worse that question that keeps popping up ever so often at the most inopportune moment – as my friend Uday Jhala so succinctly puts it: why am I doing this again?

Yet everyday 700 new runners are consciously choosing to push their endurance envelope. They want to soak in their sweat, bear with their sore heels, deprive themselves of all excesses, even sleep, to feel the pain that most of the seasoned marathoners say eventually transcends to the zone of unbridled exhilaration. This cohort tends to be social or absolute loners but there is a sacred bond that connects all of them. It’s almost tribal. From a billionaire to a bus driver, a gonzo or a geriatric, a copper to a chartered accountant or an engineer to an endocrinologist, the road is a great leveller and when their sneakers hit the asphalt they all become the same. An athlete immersed in an experience. For a few hours they forget about their social credentials of being a parent, a partner, a professional, and strive towards a goal they have set out for themselves.

And guess how much money is running on them in India alone — Rs 3,000 crore. Not my fairy tale estimate but that of Vivek Singh, a former rugby champ who along with his brother Anil, organises four of our top marathons in the country including last Sunday’s largest participatory sporting spectacle that took place in Mumbai, under the aegis of their company Procam International. “There is a shift in collective consciousness,” Singh told me. “People who never won a single medal in their school or college are dreaming of a medal around their neck.” Even outcasts can become outliers.

From food to fashion, travel to theme parks, cinemas to concerts, the Experience Economy is underpinned by the idea that consumers are increasingly preferring immersive experiences to objects, thereby creating economic value for the provider of those experiences. There is a strong correlation between rising discretionary spending, transition of the population towards the middle-to-high income strata and the psychological need to seek diverse exposure. What did Apple do? Add a super camera in your phone and kill privacy – every “moment” of your life captured and shared instantly on social media for validation. Netflix went a step further and broke appointment viewing. Nespresso and Starbucks whipped up a froth capitalising greatly on these opportunities using their products which revolutionised user experience.

And this is an area where our demographic dividend kicks in — By 2030, 78% of India’s population is expected to enter lower and upper middle-class brackets, from 54% in 2018. And as our per-capita consumption spends double from $2,000 to $5,000 and even higher, the wallet share of discretionary purchases will also see a quantum jump. And on top of the pyramid, there will be experiences. Guzzling on cheap data, as internet penetration has more or less touched ~50%, an India coming out of Covid has been hungrier than ever. It wants to mingle, feel, touch, jog, smell, swirl, see, slurp, twist, cavort, frolic and break into ecstasy. Turn on, tune in and drop out, but at your convenience. But we are still just about scratching the surface. Technology will aid and abet the experience ecosystem in high-growth, emerging economies like ours. Till recently, we were all passive audiences. Spectators of gladiator sports; now we all want a piece of that meat, nee pie, nee action. We want to cross the finish line, sing along with 1000 others or jump out of a plane to feel just like Mission Impossible. Some are even willing to sacrifice pleasure just to make it to that start line. Endorphins, anyone?

If consultants PWC, Momentum Worldwide, Beyonk and Seigel+Gale are to be believed, the market size of the experience sector is $150 billion and growing. In India too, live events are expected to rake in over $2 billion soon. This is a relatively price elastic segment too. About 16% is the price premium for good customer experiences but 76% of consumers globally would pay for experiences over material goods and $98 billion was left on the table by corporations failing to deliver experiences.

In India, travel and hospitality, wellness and fitness are the two largest segments of this experiential experiment. Mahindra Holidays, with their bespoke holiday packages, are expecting occupancy to cross 85% after Q3FY23 versus 74% during the pre-pandemic era. About 84% of domestic travellers are thrill seekers, a close 79% are seeking romantic getaways. They are willing to pay significant premiums for authentic and personalised elements. But technology, UI/UX and experience recall play a pivotal role in their stickiness. Personal wellness is a $188-billion spending space today with a 25% CAGR expected till 2027 but uniquely enough, lacks easy discoverability as it is highly dependent on referrals. So, experience providers become as important as the experience itself. And finally, even though just 1% of the $800 billion retail spend is on luxury, it still IS the largest contributor to spending in the experience economy. Consumers are incrementally willing to loosen their purse strings for a lux experience either through owning a branded product or spending a fortune for an outing, or perhaps a meal at Massimo’s in Modena.