Chicago (May 21, 2014)—Americans appear ready to move on from worrying about the recession and one thing seems clear: they need a vacation. Mintel’s annual comparative audit report, American Lifestyles 2014, suggests that renewed consumer spending is in line with pre-recession trends and consumer optimism is higher than it’s been in years. In 2013, Mintel estimates that personal consumption expenditures on consumer goods reached $10 trillion for the first time. The outlook for 2014 continues the positive trend with spending expected to increase further by 3.6% – more than three times the projected rate of inflation for the year. In 2014, just one in 10 Americans say that they don’t spend extra money – that they save it; a similar share say that they “never” have any extra money. These sentiments are in stark contrast with 2013 and 2008 survey results when the share of savers was at least double. Meanwhile, all the saving and responsible spending appears to have paid off. Those who say they “never” have any extra money has declined since 2008 from 15% to 12% in 2014. “In 2014, it appears that America has finally stopped holding its collective breath, waiting for the other economic shoe to drop,” says Fiona O’Donnell, category manager, multicultural, lifestyles and leisure at Mintel. “After five years of slow but steady growth, Americans have passed the tipping point of prolonged economic worry and have cautiously accepted that things are better. Confidence in personal finances has allowed consumers to think about the future and look forward rather than linger over the past.” Mintel forecasts that total US consumer expenditures will grow by 20% from 2013-2018 to reach $12,025 billion. In comparison, expenditures increased just 15% from 2008 to 2013 (with a 1.5% decline 2008-09). The categories that appear to poised to show the greatest gains over the next five years are many of the same ones that performed the strongest from 2012-13: nonessentials such as leisure and entertainment (+28.5%), vacations and tourism (+27.3%), technology and communications (+25.2%) and alcohol on premises (+23.7%). Over the course of one year, the share who say they spend extra money on vacations nearly doubled. This is the greatest gain for any one area of consumer spending and is a sign of improved finances – or at least optimism since, when money is tight vacations are often one of the first discretionary areas to be cut from the budget. “One of the common themes noted across different sectors examined in the report is that optimism is a hallmark of youth,” notes Fiona. “Adults aged 18-24, in particular, are looking at the world around them and see all the possibilities ahead. Owing in part to social media and the ability to share instantaneously with others, young adults are placing a higher value on ‘experiences’ as opposed some of the more traditional purchases of their parents’ generation. A desire for experiences over stuff – coupled with a record number of Baby Boomers reaching retirement (meaning that this relatively wealthy demographic has more free time on their hands) – has seen expenditures on categories such as dining out, vacations, leisure & entertainment.and alcohol outpace spending overall. This is a trend that is expected to continue over the next five years.” Along with a renewed optimism in the economy, Americans are also focused on self-improvement for 2014. Top goals for 2014 include increased family time (88%), healthier diet (88%), exercising more (87%), getting household finances in order (84%), achieving a better work/life balance (82%) and taking care of personal appearance (81%). Perhaps not coincidentally, those who have seen their financial situations improve in the last year are more likely to report having more goals. “An improved personal financial situation has allowed many to expand their focus from simply keeping up with the bills to looking more widely at what goals they would like to accomplish,” says Fiona. “Improving personal health through diet and exercise are key areas where Americans are looking to make positive changes, and with less mental energy expended on financial worries, they are in a better position to make these aspirations a reality.” Breaking down some of the winning categories paints a full picture, and it’s one of optimism and growth: Vacations & Tourism: Vacations and tourism spending has outpaced total US consumer expenditure growth and is estimated to have increased by 4.6% from 2012 to 2013, compared with a total growth of 3.4%. Over the next five years, steady growth is expected in the vacation and tourism segment, with total expenditures forecast to reach $282.4 billion by 2018 – a 27.3% increase over 2013 spending in comparison to the total spending growth prediction of 20% over the same time frame (2013-18). Interestingly, when respondents’ change in vacation spending in 2013 is compared to results from last year’s survey, it appears that Americans are more likely to indulge. While previously, 41% of respondents indicated they were spending less on vacations than they had in the year before, this share has now declined dramatically to just 30%. “Consumer spending on vacations and tourism will outpace total expenditure growth over the next five years, due mainly to increased costs associated with international travel as well as a stable and growing domestic market. Baby Boomers are a driving force behind vacation spending, though families headed by young Millennials will also contribute to the market,” says Fiona. Leisure & Entertainment: Leisure and entertainment is the star performer with expenditures forecast to increase by 28.5% to reach $431.6 billion in 2018 – nearly $150 billion more than the total forecast for vacations and tourism. More than half of respondents surveyed say they spent more or about the same amount on leisure and entertainment in 2013 compared with prior years. Similar to vacations and tourism, young adults – particularly men aged 18-34 – are most likely to say they are spending more on this category. In 2013, nearly half of the spending in this sector is attributed to membership dues for clubs, and fees associated with sports centers, parks, theaters, and museums. Millennials’ average spend per year on entertainment is about $716 dollars less than the average American’s. Despite this difference, Millennials have increased their spending on leisure compared to prior years and plan to spend more in the coming two years. True to the moniker of “digital natives,” Millennials spend half of their entertainment budget on audio-visual and video gaming equipment and 57% of Millennials prefer to spend downtime in front of an electronic device. They are also more likely to experience this leisure time alone, especially the 18-24 age group. As the relatively wealthy Baby Boomer generation moves on to its next life stage (retirement), this group will have more time to devote to leisure and entertainment. In 2014, the youngest of the Boomers turns 50. At 76-million strong, their shift from the work place to leisure space will positively impact the category. “Consumer spending for leisure and entertainment will continue to increase over the next five years. Growth will be impressive with spending in the sector expected to outpace all others as recessionary cut-backs fade from memory. The importance of ‘affordable play-time’ is recognized as a priority for Americans – regardless of demographics or financial standing,” says Fiona. Alcoholic Beverages (Out of home): Spending on out-of-home alcohol is estimated to have increased by 5.4% from 2012-13 (the strongest year-over-year growth of any other sector evaluated) to have reached an estimated $92.7 billion in 2013. Steady growth is predicted, with the market forecast to reach $114.7 billion in 2018, an increase of 23.7% over the next five years. Success in this sector may be at least partially attributed to operators’ creative innovative offerings and on-site experiences designed to boost traffic. According to Mintel Menu Insights, on-premise alcohol offered at restaurants has grown 59% over the past three years. Such areas of innovation include alcohol type used, ingredients, flavors, preparation, packaging, portions, and menu claims. Over the past year, nearly one in 10 said they increased spending on alcoholic drinks (out of home). Additionally, compared with 2013, more consumers have moved from saying they are “spending less” (26%) compared to years prior to “spending about the same” (34%). While the increase is only marginal, these numbers indicate that consumers aren’t trading down or drinking at home as much and that people are craving products and experiences with a stamp of authenticity. “Consumers are beginning to return on-premise for alcohol consumption. While still price-sensitive, operators will need to create added value through innovative items and an experience that cannot easily be created at home. Operators are focusing on fresh flavors and local ingredients, as well as specialized alcohol types to spur interest and boost sales,” notes Bethany Wall, foodservice analyst at Mintel. Technology & Communications: Many of the staple CE (consumer electronics) products and services have struggled to maintain their historically high growth levels. This is largely due to market saturation for electronic items such as televisions and the consolidation of functionality to multipurpose devices such as smartphones. Aside from smartphones (two out of three consumers own one) and tablets (four out of 10), the rate of increase in consumer spend on hardware and electronic equipment has slowed considerably, and is also being impacted by consolidated functionality within mobile technology. With more content going digital, consumer interest in streaming, VOD (video-on-demand) and other internet media will rise rapidly, with projected sales of streaming TV and movies doubling between 2013 and 2018. Furthermore, nearly half of consumers reported they watched some form of streaming video (purchase, rental or free) in 2013. While the cable, satellite, television and radio segment saw a 7.5% uptick in sales in 2013, this may be driven largely by bundled services that include internet. There is not much room for growth in the pay TV market, and sales are forecast to slowly decline through 2018. In addition to traditional bundling options, service providers may be able to add value by offering unique bundles that include home security and automation features or cellular service at a discount. “Many segments of technology and communications are at a turning point given the prevalence of hardware in consumers’ lives. While device manufacturers have historically focused on bigger and better devices, consumers and the supporting infrastructure will need time to catch up. A major emphasis for 2014 will be on the quality of the software and services that those devices provide access to rather than the hardware itself,” says Bryant Harland, technology analyst at Mintel. Other categories covered in this comprehensive report include: Food (at home), Dining Out, Alcoholic Beverages (in home), Non-Alcoholic Beverages, Beauty & Personal Care, OTC & Healthcare Remedies, Household Care, Clothing, Footwear & Accessories, Home & Garden, Transportation, Personal Finance & Housing. You might also be interested in: No related posts.