Research
Spending wisely

Mintel’s latest British Lifestyles report shows that spending is down, but there are opportunities out there for canny leisure operators


Today, more prudent British consumers question their spending priorities and existing brand relationships. This opens up opportunities for agile and innovative companies and brands eager to capitalise on the new mood. Operators of cinemas and theatres, music venues and sports stadia could do well, as consumers look for affordable pleasures to replace the holidays and short breaks abroad they’re cutting back on.

Many sectors within the leisure and entertainment market have seen little or no growth during the period of recession and economic weakness over the past five years.

On a positive note, though, the state of the UK economy has deterred people from taking foreign holidays, which has boosted the domestic holidays sector and, with it, the days out attraction industry. The weakness of the pound has served to make the UK an attractive destination for overseas holidaymakers, however, and the UK’s downgrade and the woes of the eurozone mean that this will continue.

Growth in the ownership of technology products has helped boost the customer experience in many markets and introduced new users to sectors such as gambling. This will continue as more consumers acquire tablets and smartphones.

High youth unemployment has had an impact on leisure sectors such as nightclubs and, to a lesser degree, tenpin bowling, which derive a large part of their customer base from the younger, less affluent consumers who have been so impacted by austerity measures. With unemployment set to stay at a high level for several more years, little respite is expected for operators in these markets.

According to Mintel’s recently published British Lifestyles report, the largest proportion of consumers indicate their spending on entertainment is unchanged when compared with a year ago, although more consumers are spending less than a year ago (39 per cent) when compared with those who are spending more (7 per cent). Those claiming to spend more are heavily weighted towards 16-24-year-olds, singles and students, underlining the fact that going to university or college often results in increased social activity (and spending).

Overall, the winners in the leisure industry during 2013 are likely to be those providing activities which offer a relatively affordable opportunity for consumers to escape from the daily grind of scrimping, such as the cinema, performing arts, music concerts, and spectator sports. Many of these activities are treats which people have rewarded themselves with in order to compensate for cutbacks in other areas, such as short breaks abroad.

The losers are likely to continue to be those sectors which are being impacted by longer-term demographic and lifestyle trends as well as the shorter-term impact of economic recession, such as nightclubs and bowling.

Health and fitness clubs and leisure centres and swimming pools seem certain to come under further pressure as a result of competition from a growing range of online tools and apps which allow consumers to monitor, measure, compare and share their fitness levels. The sports equipment market, meanwhile, looks set to feel the heat from a continuation of the trend back towards less expensive outdoor sports such as running.


Q & A
Michael Oliver
Senior leisure analyst, Mintel



 

Michael Oliver
 

How did you become interested in statistics and data?
I started off at Mintel, monitoring the newspapers and trade press, before being sent on a CAM Foundation training course to learn more about research and marketing. This gave me the opportunity to start working on Mintel reports and over the years I’ve built up a specialism in leisure.

What do you like most about your job?
It sounds corny but it’s the people I work with. Mintel is such a friendly company and I think it’s one of the reasons why employees stay for such a long time. I also like the fact that I’m able to write about a lot of the activities I enjoy in my leisure time.

Have any of the findings of the Mintel British Lifestyles report surprised you?
The response to the question about how Britons would spend a Lottery windfall of £1,000 surprised me.

The most popular way to spend a financial windfall continues to be on a holiday (27 per cent), however the drop in the proportion of people who are willing to spend on home improvements is significant (20 per cent in 2008  to 11 per cent in 2013). This means people are still prioritising savings (23 per cent) over bigger outlays, especially big tickets items for the home, home extensions and other major home improvements.

Everyone, regardless of their incomes, has tightened their belts.

How is the recession affecting Britons’ holiday habits?
The main effect of the recession has been a decline in the number of overseas holidays taken by UK residents. While they are less keen to forego their annual holiday abroad, Britons have been taking fewer short breaks abroad and compensating by taking more UK short breaks and day trips.

How can leisure operators take advantage of this trend?
There are opportunities for attractions to link up with accommodation partners (if they don’t have their own accommodation on-site) and travel partners to offer special deals, particularly given the rising cost of fuel.

Our research has also shown that consumers like the idea of visiting a location where there is a cluster of attractions and entertainment in one place or close together. For family-orientated leisure, there remains pressure on budgets, so value-orientated promotions are likely to find favour, and vouchers are a popular tool being used by operators in order to maintain footfall.
How are British consumers feeling right now?
Consumers are cautiously optimistic; we saw a slight upturn in their confidence in the beginning of this year.

However, the prolonged economic downturn and continued economic uncertainty means that many habits borne out of the recession are here to stay – for example, savvy shopping is very much ingrained in people’s psyche. A greater drive towards self-sufficiency (cooking from scratch) means that people are better aware of what goes into their meals and are perhaps also becoming more conscious of not wasting resources.

What impact is that likely to have on the leisure industry?
I think the biggest impact on the leisure industry will be the continued price-consciousness of consumers, particularly in those sectors that rely heavily on the family market.

Even though sentiment and confidence is improving, consumers are still finding themselves worse off in real terms every month, because prices continue to grow at a faster rate than earnings. This is going to continue to impact on the spending power of what politicians like to call ‘hard-working families’ for some time.

What do you think have been the most interesting findings from Mintel’s research this year?
As someone who has been a keen cyclist for the past 35 years, it’s gratifying to see the participation rate in cycling jumping to 41 per cent of adults in the wake of a brilliant year for the sport in 2012.

Aside from that, our research suggests there is tremendous potential for the expansion of the provision of fitness services outside of health clubs and leisure centres, which could offer a platform to develop memberships at a later stage.

This move away from the ‘built environment’ is also being driven by increased access to and ownership of technology by the general public, driven by the strong growth in ownership of mobile devices like smartphones and tablets.

What are you working on now?
Right now I am writing the latest Mintel report on health and fitness clubs.

It is quite interesting because my counterpart in the US is writing the report for that country at the same time, so for the first time we have been able to co-operate a bit on research and it is interesting comparing the two markets.


As a keen cyclist, it’s gratifying to see the participation rate in cycling jumping to 41 per cent of adults in the wake of the Olympics

Britons are cutting back on holidays abroad, but compensating with short breaks and day trips in the UK
The Olympic effect has seen a rise in the number of Britons cycling
 


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SELECTED ISSUE
Leisure Management
2013 issue 3

View issue contents

Leisure Management - Spending wisely

Research

Spending wisely


Mintel’s latest British Lifestyles report shows that spending is down, but there are opportunities out there for canny leisure operators

The performing arts, cinema, music concerts and spectator sports are likely to do well during 2013 photo: Simon Annand
Britons are cutting back on holidays abroad, but compensating with short breaks and day trips in the UK
The Olympic effect has seen a rise in the number of Britons cycling

Today, more prudent British consumers question their spending priorities and existing brand relationships. This opens up opportunities for agile and innovative companies and brands eager to capitalise on the new mood. Operators of cinemas and theatres, music venues and sports stadia could do well, as consumers look for affordable pleasures to replace the holidays and short breaks abroad they’re cutting back on.

Many sectors within the leisure and entertainment market have seen little or no growth during the period of recession and economic weakness over the past five years.

On a positive note, though, the state of the UK economy has deterred people from taking foreign holidays, which has boosted the domestic holidays sector and, with it, the days out attraction industry. The weakness of the pound has served to make the UK an attractive destination for overseas holidaymakers, however, and the UK’s downgrade and the woes of the eurozone mean that this will continue.

Growth in the ownership of technology products has helped boost the customer experience in many markets and introduced new users to sectors such as gambling. This will continue as more consumers acquire tablets and smartphones.

High youth unemployment has had an impact on leisure sectors such as nightclubs and, to a lesser degree, tenpin bowling, which derive a large part of their customer base from the younger, less affluent consumers who have been so impacted by austerity measures. With unemployment set to stay at a high level for several more years, little respite is expected for operators in these markets.

According to Mintel’s recently published British Lifestyles report, the largest proportion of consumers indicate their spending on entertainment is unchanged when compared with a year ago, although more consumers are spending less than a year ago (39 per cent) when compared with those who are spending more (7 per cent). Those claiming to spend more are heavily weighted towards 16-24-year-olds, singles and students, underlining the fact that going to university or college often results in increased social activity (and spending).

Overall, the winners in the leisure industry during 2013 are likely to be those providing activities which offer a relatively affordable opportunity for consumers to escape from the daily grind of scrimping, such as the cinema, performing arts, music concerts, and spectator sports. Many of these activities are treats which people have rewarded themselves with in order to compensate for cutbacks in other areas, such as short breaks abroad.

The losers are likely to continue to be those sectors which are being impacted by longer-term demographic and lifestyle trends as well as the shorter-term impact of economic recession, such as nightclubs and bowling.

Health and fitness clubs and leisure centres and swimming pools seem certain to come under further pressure as a result of competition from a growing range of online tools and apps which allow consumers to monitor, measure, compare and share their fitness levels. The sports equipment market, meanwhile, looks set to feel the heat from a continuation of the trend back towards less expensive outdoor sports such as running.


Q & A
Michael Oliver
Senior leisure analyst, Mintel



 

Michael Oliver
 

How did you become interested in statistics and data?
I started off at Mintel, monitoring the newspapers and trade press, before being sent on a CAM Foundation training course to learn more about research and marketing. This gave me the opportunity to start working on Mintel reports and over the years I’ve built up a specialism in leisure.

What do you like most about your job?
It sounds corny but it’s the people I work with. Mintel is such a friendly company and I think it’s one of the reasons why employees stay for such a long time. I also like the fact that I’m able to write about a lot of the activities I enjoy in my leisure time.

Have any of the findings of the Mintel British Lifestyles report surprised you?
The response to the question about how Britons would spend a Lottery windfall of £1,000 surprised me.

The most popular way to spend a financial windfall continues to be on a holiday (27 per cent), however the drop in the proportion of people who are willing to spend on home improvements is significant (20 per cent in 2008  to 11 per cent in 2013). This means people are still prioritising savings (23 per cent) over bigger outlays, especially big tickets items for the home, home extensions and other major home improvements.

Everyone, regardless of their incomes, has tightened their belts.

How is the recession affecting Britons’ holiday habits?
The main effect of the recession has been a decline in the number of overseas holidays taken by UK residents. While they are less keen to forego their annual holiday abroad, Britons have been taking fewer short breaks abroad and compensating by taking more UK short breaks and day trips.

How can leisure operators take advantage of this trend?
There are opportunities for attractions to link up with accommodation partners (if they don’t have their own accommodation on-site) and travel partners to offer special deals, particularly given the rising cost of fuel.

Our research has also shown that consumers like the idea of visiting a location where there is a cluster of attractions and entertainment in one place or close together. For family-orientated leisure, there remains pressure on budgets, so value-orientated promotions are likely to find favour, and vouchers are a popular tool being used by operators in order to maintain footfall.
How are British consumers feeling right now?
Consumers are cautiously optimistic; we saw a slight upturn in their confidence in the beginning of this year.

However, the prolonged economic downturn and continued economic uncertainty means that many habits borne out of the recession are here to stay – for example, savvy shopping is very much ingrained in people’s psyche. A greater drive towards self-sufficiency (cooking from scratch) means that people are better aware of what goes into their meals and are perhaps also becoming more conscious of not wasting resources.

What impact is that likely to have on the leisure industry?
I think the biggest impact on the leisure industry will be the continued price-consciousness of consumers, particularly in those sectors that rely heavily on the family market.

Even though sentiment and confidence is improving, consumers are still finding themselves worse off in real terms every month, because prices continue to grow at a faster rate than earnings. This is going to continue to impact on the spending power of what politicians like to call ‘hard-working families’ for some time.

What do you think have been the most interesting findings from Mintel’s research this year?
As someone who has been a keen cyclist for the past 35 years, it’s gratifying to see the participation rate in cycling jumping to 41 per cent of adults in the wake of a brilliant year for the sport in 2012.

Aside from that, our research suggests there is tremendous potential for the expansion of the provision of fitness services outside of health clubs and leisure centres, which could offer a platform to develop memberships at a later stage.

This move away from the ‘built environment’ is also being driven by increased access to and ownership of technology by the general public, driven by the strong growth in ownership of mobile devices like smartphones and tablets.

What are you working on now?
Right now I am writing the latest Mintel report on health and fitness clubs.

It is quite interesting because my counterpart in the US is writing the report for that country at the same time, so for the first time we have been able to co-operate a bit on research and it is interesting comparing the two markets.


As a keen cyclist, it’s gratifying to see the participation rate in cycling jumping to 41 per cent of adults in the wake of the Olympics


Originally published in Leisure Management 2013 issue 3

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