News Wednesday, June 27, 2018

A golden age of leisure holds eastern (European) promise

Growing economic wealth and evolving social norms are changing consumer behaviour in emerging markets in Central and Eastern Europe

As people look to spend their disposable income on experienced-based leisure activities, there are opportunities for businesses in established European markets to take advantage of the demand.

The pace of economic growth in countries like Poland, Romania and Slovakia makes leisure a more commercially viable sector. Since 2005, disposable income in Poland and neighbouring countries has increased considerably, closing the gap with that of Western Europeans. In Poland, consumers spend 11 per cent of their income on secondary needs like leisure, quickly catching up with Western Europe where the average is 17 per cent.

Changes to social norms including greater emancipation of women, who have improving maternity rights and more contemporary values around work and home life, means there are also new consumers joining the markets in these countries, and our research shows that the frequency of leisure activity is growing fastest among women.

We’ve identified three areas in the sector where there’s potential for further growth – eating out and pubs, cafe and restaurant trade (Horeca), cinema, and health and fitness clubs.

Eating out is the fastest growing of the three, and the core demographic to watch are the under 18s. What money they have, they spend more on meeting over coffee in places like Starbucks and Costa, than on experiencing live music, and about the same as they do on technology and gaming. For the digitally connected teenager, cafes are another platform for social interaction.

At the other end of the spectrum, cinema-going is enjoying a boom among over 55 year olds, who are following the overarching trend towards experiential consumerism rather than product-based purchases. This cohort doesn’t have a cultural context for dining out, but the cinema is an easy access point to the experience economy, and cinema-going grew faster in Poland in this age group than it did in the UK over the last three years, in spite of aggressive entry into the country from streaming services like Netflix.

Finally, there’s been a huge number of health and fitness clubs opening in these countries. In all age groups, between 80 and 90 per cent of people visit a health or fitness club as part of their leisure activity.

Capturing the potential

However, existing clubs are small operators and the experience they offer is limited. There’s potential for growth in opening fitness clubs in residential and office areas, in running loyalty schemes, in widening the offer to include yoga, pilates, tai-chi and similar that might appeal to lighter users, and enriching the activity offer with personal development sessions and health education.

Similarly, cinema operators mustn’t rest on their laurels, but should consider how to enrich the customer experience, with a bigger and more refined food and drink offering, as well as boosting return visits through offers, new products, and loyalty schemes.

For those in the on-trade, the challenge is to capture as much of the low-income but high frequency traffic as possible, leveraging teen culture codes, easygoing, authentic staff, and technology to make payment as seamless and easy as possible, such as partnering with banks to provide preloadable debit cards or app purchasing.

The challenge in investing in experience-driven consumption is not in having to compete with other experiences per se, but of future-proofing the offering to be able to compete with experiences yet to emerge. Another challenge is that while these countries are currently in growth, their economies are more susceptible to wobbles than their western European counterparts, with the possible knock-on effect onto consumer disposable income spend.

Riding the growth wave

Nevertheless, while they might not be in the top five European markets in the next 18 months, the development of emerging European countries is following the same trajectory as markets in the UK and Germany, and the pace is dynamic, creating lots of potential for leisure businesses looking for where there might be growth in the next three to five years.

With different groups of new consumers who are attracted to experiential leisure propositions, but with little to no local expertise capital, concept, or capability in this space to fulfil demand, the field is currently wide open. If taken early enough, the opportunity could be a land grab for established businesses; if left too late, the chance to ride the wave of economic growth in these markets could be lost completely.

Key Contacts

Marek Zdziech

Marek Zdziech


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