According to a recent study by Deloitte, the UK leisure sector generates £117 billion in revenue. In 2014, leisure spending accounted for over 7% of UK GDP, and it’s growing almost twice as fast as the retail sector.
Leisure as an economic indicator
In many ways, the increase in spending on leisure is a positive indicator of the health of the UK economy. Consumers who feel under pressure economically, who have a gloomy outlook for the future, will tend to refrain from spending on “luxury” items such as leisure. Only confident consumers who currently have sufficient disposable income, and who reasonably believe that they will continue to do so, will spend significant sums on non-essential services.
An increasingly diverse sector
Strong growth in leisure spending has been supported by a period of low inflation, which has served to boost real wages after a prolonged period of stagnation. And consumers are spending their extra disposable income on a wide variety of leisure services and products, including gym membership, dining out, trips to the theatre or cinema, cultural experiences, home entertainment, socialising in bars and cafes, and a wide variety of live sporting events. Spending on high-value items like holidays and elite branded sporting goods has also contributed to the sector’s strong performance.
An everyday activity
Another factor driving growth is that people increasingly want to lead lives that aren’t dominated solely by work. Rather than “treating” themselves just on special occasions, consumers increasingly seek to enrich their daily life with leisure activities, whether that’s lunch at a restaurant, a trip to the cinema, or even a streamed movie at home. Today’s consumers demand a little bit of leisure every day. And providers are only too happy to serve up these experiences in a way that is convenient, accessible and enjoyable.
The changing nature of the leisure sector
The size and shape of the leisure sector has changed significantly over the past 10 – 15 years as new technology has facilitated greater innovation and diversity in service provision. Faster internet connections and the emergence of high-speed broadband have ushered in a new generation of streamed media, online gambling an online gaming. There is also a growing awareness of the importance of physical fitness, health and wellbeing, which has driven rapid growth in demand for personal fitness products and services, and spa experiences.
The outlook for the UK leisure sector looks very positive right now. But what will happen if there’s an economic downturn? As stated earlier, spending on leisure is closely correlated with consumer confidence, so it’s safe to assume any decline in confidence would be accompanied by a contraction in leisure spending. There are a number of factors that could impact consumers’ decisions to spend on a leisure activity – an increase in interest rates that forces up mortgage costs, a rise in inflation rate that reduces real spending power, a slowdown in wages growth, or a rise in unemployment. And it’s not hard to imagine where squeezed consumers will cut spending when trying to manage a tight budget. The challenge for leisure providers therefore is to implement subscription or contract models that aren’t quite so susceptible to ad hoc decision-making. And to create flexible models that give consumers the option to downgrade and save rather than switch off completely.
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