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Disruption by a new 3rd place with lubricated socialization

My blogs and our Leisure eNewsletters have included a series of articles over the past few years featuring a general theme about how digital technology is disrupting real world out-of-home experiences and socialization. My last blog discussed how digital technology is shifting our social interaction from taking place in the real world to taking place in the digital world, especially on the smartphone.

In that blog I discussed restaurant community tables that work to bring people together to socialize in an out-of-home location when there is a social lubricant, either booze or artisanal food. However, at Starbucks, the community tables tend to only function as communal desks where people don’t interact due to the lack of a social lubricant.

Well, those Starbucks community tables, as well the entire store, are about to undergo a dramatic change in the evening, which I predict will create a new social venue destination that will be disruptive to restaurants and bars.

Back in 2010 in Seattle, Starbucks opened its first experimental unit that sells beer and wine in addition to its normal beverages and food. Since then they have rolled out the concept, which they call Starbucks Evenings, to 26 sites in Chicago, Seattle, Los Angeles, Washington, D.C., Atlanta and Portland. Starbucks has now announced they will be going into hyperdrive with a major expansion of the concept to 1000s of their 11,500 stores around the United States.

In addition to offering beer and wine after 4pm, the evening cafes also offer a menu of savory, shareable, warm small plates and desserts, including such offerings as bacon-wrapped dates with a balsamic glaze, parmesan crusted chicken skewers, truffle macaroni and cheese, artichoke and goat cheese flatbread and salted caramel cheesecake brownie.

Starbucks food

Starbucks has already successfully made their stores the place to meet up with friends during the day while you enjoy a wide variety of custom-made coffees, teas or other drinks and possibly a snack or breakfast or lunch selection. In fact, they basically invented what is known as the 3rd place in America and have spread the concept worldwide. Now they will be expanding that social concept into the evenings and nights, and instead of lubricating socialization with non-alcoholic drinks, they are turning up the lubrication dial by creating a place where you can meet and have a cold one or a glass of wine.

They are also tapping into a rapidly expanding trend with their small plate menu – snacking. In fact, today the average American snacks 2-3 times a day, with most of the snacking occurring in the late afternoon, evening and into the night.

I recently had the chance to visit three of the Starbucks Evenings cafes in Seattle. I was very impressed with the interior design. The décor in the evening is more mellow, warm and upscale than the typical daytime Starbucks. And the stores appear to use a richer palette of colors and woods. Starbucks is also giving their store empire a bespoke look by customizing the designs for their locales. Here’s a selection of photos of Evenings stores both in Seattle, Portland and Chicago.

Starbucks Evenings collage

Here’s where the disruption comes in. If you want to meet your colleagues and friends after work or later into the evening to relax and have some great conversation while you have a drink and perhaps a gourmet snack, these Evenings stores offer a much more inviting atmosphere than hanging out at a bar. The Evenings stores have a much more relaxing, comfortable atmosphere, almost a living room ambiance. They are true 3rd place-social hangouts in the evening, no different than Starbucks’ success for the same during the daytime. And based on all the research our company has seen, they are definitely the type of place that Millennials will gravitate to (who already gravitate there during the daytime). In fact, I am much older than Millennials, and I’d much rather meet up with friends at a Starbucks Evenings store than any bar I’ve experienced. In a certain sense, they are much more approachable and far less intimidating then bars.

Starbucks is also very smart by making their stores environmentally responsible and socially conscious. In fact, all their new stores are LEED certified. Research shows this gives them a competitive advantage. For example, research by Technomic found that 63% of consumers they surveyed said they are more likely to visit a foodservice facility they view as socially conscious. This also helps Starbucks attract and maintain a good workforce. Millennials are especially drawn to brands that exhibit sustainability efforts. 85% of Starbucks’ workforce are Millennials.

In a nutshell, I think Starbucks has created a very disruptive new model for an attractive evening and into the night, out-of-home, social destination. They have eliminated the negatives of hanging out at bars and lounges and will have wide appeal to not only Millennials, but also to a much wider adult audience. Bars and restaurants have a new form of competition, which although not a category killer, is sure to cut into their market shares.

Posted in Alcohol & bars, Disruption, Millennials, Out-of-home, restaurant | Comments Off

No need to socialize, as that’s what smartphones are for

In my blogs and in our company’s Leisure eNewsletters, we’ve been giving extensive coverage to the impact that digital technology is having on peoples’ lives and their leisure, and how, as a result, it is slowly disrupting location-based leisure. Our last eNewsletter issue featured an article Why entertainment venues should fear digital technology that discussed the increasingly technology-enabled, hyper-convenience of never needing to physically experience the outside real world, what is known as the super cocooning – just staying in the comfort of our homes where anything, physical goods or digital, can be delivered.

Back in October 2013, our eNewsletter covered Sherry Turkle’s research about people and their relationships with mobile technologies and the effects digital technology is having on how friends and people interact in the world. She sees a trend called a flight from conversation brought about by texting and social media. Turkle says we are developing conversation-phobia, people prefer texting and posting on social media rather than talking on the phone or having face-to-face conversations.

A recent article in The Atlantic magazine, Alone Together: The Return of Communal Restaurant Tables, brought home the point again for me. The article discussed how communal tables tend to only work in restaurants when you have a social lubricant, either booze or interesting artisanal food. The article then went on to point out that the communal tables at Starbucks work a little different, where there is an absence of booze or entertaining food. There, the communal table is used as a communal desk where people sit looking at their digital screens while they occasionally sip some coffee and not interacting. There, The Atlantic said, “We use technology to make sitting around a communal table an acceptable practice. There is an understanding among customers that although the space is shared, there is no need to socialize because that’s what the smartphone is for. The communal table lets us indulge our social needs without actually socializing.”

It is becoming increasing clear that digital technology is shifting our social interaction with each other from taking place in the real world to taking place in the digital world and consequently, real world get-togethers, talking face-to-face, is rapidly becoming extinct. This means that what was once a primary reason for going out to an entertainment venue, the socializing, is losing its appeal, as that’s what texting and social media on the smartphone is for.

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More Evidence of the Digital Disruption of Location-Based Entertainment & Culture

In my blog entries and in our company’s Leisure eNewsletters, we have been reporting on digital technology’s disruption of location-based entertainment and culture, both in time and dollar market share. Since the birth of the smartphone less than seven years ago and the subsequent introduction of mobile tablets, the digital battleground for consumer leisure time has moved from desktops to mobile devices. According to data from Nielsen, in December 2013 the average time spent on smartphones in the U.S. and U.K. exceeded web usage on computer screens. In the U.S., the average monthly time spent per person on the computer screen on the web was 26 hours, 58 minutes compared to 34 hours, 21 minutes on smartphones. In the U.S., monthly smartphone usage is up six hours since December 2012. Pew reports that 58% of U.S. adults now own a smartphone and the percentage continues to grow.

A March 2014 report by Flurry, an app analytics firm, sheds light on exactly how Americans, and I’m sure the Brits, are spending their mobile device time. They found that Americans spend an average of 158 minutes (2 hours, 38 minutes) each and every day on their smartphones and tablets and that 80% of the time is spent on apps. Here’s how that daily time use breaks down.

Time spent on mobile devices mar'14

Research by Penn Schoen Berland that we reported on back in August 2013 found that of social media sites, including Facebook, are considered entertainment by 88% of users. Accordingly, looking solely at app use on mobile devices, three-quarters (76%) of the time is devoted to entertainment. If we add in entertainment using web browsers on mobile devices for such sites as YouTube, I estimate that approximately three-quarters of all mobile device time, or 2 hours per day, is spent consuming entertainment on mobile devices. Those 2 hours, of course, do not include all the additional entertainment time spent on non-mobile screens including computers and televisions.

As we reported in our Leisure eNewsletter back in November 2013, we have research from Scott Wallsten from the Technology Policy Institute that shows that online leisure activities are displacing time spent at real world, bricks ’n’ mortar leisure venues.

So here’s what is so scary for location-based entertainment, sporting events and cultural venues, the vast majority of which are seeing a long-term trend of declining attendance. The use of mobile devices that can be used anywhere 24/7 continues to grow, and the majority of that growing screen time is being used to engage in entertainment, entertainment that is convenient and free or has insignificant cost. Americans no longer need to be in their homes or in attendance at entertainment, sport or cultural venues to meet their entertainment or cultural needs. It’s all going mobile. This is clearly a DISRUPTION to bricks ’n’ mortar venues.

Our company’s research shows that venues can’t compete with the digital screen experience on price. And they sure can’t compete on convenience. The only way to compete with mobile entertainment and at-home entertainment options is to compete with increased quality for all aspects of the bricks ’n’ mortar experience, or what is called High Fidelity (not music fidelity). The experience has to be so great, such high quality, and to a certain extent, unique, that people are willing to take the time to leave their homes and put down their digital screens to experience it. And you know what is so surprising? For the higher socioeconomic who are the lion’s share of the location-based market, they will pay a premium price for it, as it is a value equation for them based on the use of their limited leisure time rather than their money.

The bottom line message is very simple for location-based leisure venues of all types, evolve to Higher Fidelity or die.

Posted in Culture, digital, Experience, FEC, Leisure time, Location based entertainment, Out-of-home, sports, Trends | Tagged , , , , , , , , , , , | Comments Off

New research shows out-of-home entertainment & arts participation on the decline

Over the past few years our company has undertaken detailed research and analysis to identify trends impacting out-of-home location-based leisure and entertainment venues. Some of that analysis has been based on data from the Bureau of Labor Statistics Consumer Expenditure Survey (CEX) and its quarterly interview survey and its diary survey. The CEX documents both spending and participation by households in different consumer products and services.

We recently dug into the Bureau of Labor Statistics detailed American Time Use Survey (ATUS) data to see what interesting information and trends it might reveal. ATUS data is based on over 136,000 nationally representative interviews conducted from 2003 to 2012 that examined how, where, and with whom Americans spend their time. The ATUS data is for individuals age 15 and older, unlike the CEX, which is for households.

Not surprisingly, when we looked at the data on the time Americans spent at location-based entertainment venues between 2003 and 2012, it showed the same trend we have found in the CEX survey data –participation at community-based arts and entertainment venues, including the movies, performing arts, museums and entertainment venues, is on a long-term the decline. The ATUS data shows that on an average day the percentage of the population age 15 and older attending one or more of the entertainment-cultural venues in 2012 declined by almost one-quarter (23%) compared to 2003. For those attending, their total time spent per average day increased by 4%.

ATUS entertainment arts time:participation '03-'12

As you can see, this is a long-term decline that started back in 2005 with a possible sign of a turnaround to an upward trend in 2012. The downward household participation trend that the CEX data shows started in 2004 and is a less severe decline. The different between the starting dates and the severity of the declines between the two surveys is probably attributable to the CEX looking at the entire household (it only takes one person in the household to count that household as spending/participating), whereas the ATUS data is based on individual person behaviors.

This definitely looks like bad news for the away-from-home entertainment-leisure industry. But remember, the trend shows averages at a macro level, not micro data that looks at a particular type of venue and a particular target market. Our company’s research is consistently finding that high quality venues that offer affordable luxury, premium (what is called High Fidelity) experiences for the higher socioeconomic market (and the not so high socioeconomic market that is occasionally looking for aspirational and splurging experiences) are gaining market share and thriving, while the mediocre venues are suffering.

Posted in Leisure time, Location based entertainment, Out-of-home, Trends | Tagged , , , , , , | Comments Off

American’s Optimistic on Spending for Entertainment and Restaurants

Americans are less likely than in September to say that they plan on decreasing their spending on reducing spending on entertainment (52%, down 9 points) and eating out at restaurants (55%, down 7 points) within the next six months according to the latest Harris Interactive poll in mid-December.

And things have definitely turned the corner compared to early 2009 when three-quarters (75% for both) were planning on reducing spending for entertainment and restaurants

Spending Reduction Food & Entertainment

However, this doesn’t necessarily mean that spending will increase for location-based entertainment, as now LBE is in a competitive battle with mostly less expensive at-home and mobile digital entertainment. Will consumers increase their spending on electronics and digital entertainment subscriptions they might have postponed or even cancelled during more pessimistic and economically challenging times or will they now use some of their loosening discretionary dollars to visit entertainment venues? A lot will depend on the quality and value perceptions of those out-of-home alternatives.

Posted in Consumer, Consumer expenditures, Location based entertainment, Movie box office, movies, restaurant | Comments Off

How interactive location-based entertainment can bond families

Karla Christensen is a landscape designer and one of our alliance design members who works on our projects. She is presently living in Caragena, Columbia where her husband is working for the United Nations. Last month she sent me an email about her new found experiences playing laser tag. Here’s what she said:

“Having a 10-year-old is exposing me to a whole new world. Last week in Colombia was laser tag out in a ‘what looked like’ a garbage dump of old cars and buses. Sandro and I played with five other 10-year-olds and we had a blast. My relationship with my son has ‘metamorphed’ into ‘my buddy mom’, complete with shared yellow and purple bruises. This week was a cleaner indoor laser tag at Main Event in Friendswood, Texas where ten kids shot at each other on two levels connected with ramps. At the end of the party, when asked what their favorite activity was in the FEC (with bowling, arcade games, 4-D experiences, cafes, etc.,), they chose unanimously laser tag.

I am reminded of the article that you included in one of your newsletters:

Group physical interactive experiences at entertainment venues such as laser tag and bowling break down the barriers of conversation and fear of real world socialization.

This is true. In a world where our children are constantly alone on their tablets, it is so important to create environments where they can have fun with each other. It can even bring mom and dad together with their son to.”

Karla, thanks for this important insight.

Posted in eatertainment, FEC, Laser tag, Location based entertainment | Comments Off

Why aren’t you listening to me?

In December I had to fly to the Seattle area for our project in Gig Harbor, WA. I flew Alaska Airlines, as they have a non-stop flight from Kansas City. They have an alliance arrangement with Delta Airlines where I have Diamond status. So on the flight home I was upgraded to first class.

Alaska called my cell phone the day before my flight home with an automated voice call to let me know I had been upgraded. The call told me about the upgrade, but also told me that my reservation code was changed. I was not able to write the changed code down at the time. I have never experienced a change of the reservation code on an upgrade on any other airline. But if that’s the way they do it, as long as it works, that was fine with me.

But when I went on-line to print out my boarding pass the night before my fight, I couldn’t, as it required my reservation code. No sweat, I figured. I’ll just get my boarding pass at the airport and hopefully there won’t be a long line at the counter – I hate wasting time in lines, as I’m sure you do also.

When I arrived at the airport, there was a very short line and I went up to an agent who issued my boarding pass. I commented to her that it would be more convenient for customers that if Alaska would text a reservation code change rather than use a voice call. She agreed. I then suggested she pass that on to management. She replied that management won’t listen to the frontline staff and I should directly pass the suggestion on to management using a comment form or on their website. I told the agent I wasn’t interested in taking the time to do that and walked away somewhat pissed.

Here’s what went through my mind at the time, “I’m taking the time to offer the company a suggestion on how to improve the customer experience, which most customers won’t even considering doing. I’m talking to their frontline staff, the face of the company that customers interact with, and being told they don’t want to listen. Instead, they want me to make an additional effort and take time to write my comment down and send it to them. Forget it. So the bottom line is they are telling me they don’t value my suggestion.”

I’m not trying to pick on Alaska Airlines. I can’t tell you how many times I’ve had similar experiences with companies’ customer service representatives, both in person as well as on the phone. It’s just that the Alaska experience is the last one I had and the one that has prompted me to write this blog.

What a missed opportunity for companies. It’s the frontline staff that gets the feedback from customers. It’s just downright stupid for companies to block that communication channel and wait for customers to directly communicate with management. Most customers won’t bother unless they have had really bad experience. The ones who have suggestions on how to improve things will just walk away like I did and opportunities to get better will vanish, just like photos do on Snapchat.

This is the problem with most companies today. They have too many levels of personnel and management, so what the frontline hears never gets to the people who can make changes. The smart companies, even the large ones, understand that it is frontline staff who hear the voice of the customer, they value that input and set up communication channels so it reaches top management where it is listened to. It’s the stupid companies who expect the customer to go out of their way to be heard. What a loss for them.

So, getting back to my experience with Alaska Airlines, here’s a rely from the agent that would have really wowed me, “Gee Mr. White, that is a great suggestion. I will make sure to pass it on to management. Would you like me to follow up with you and let you know what happens? I’ll be glad to do so if you let me take down your email address.”

And then if I actually got a follow up email from the agent, good or bad, that would have made me feel that the company really valued me as a customer. The result would probably be to put them on my preferred airline list.

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Movie attendance continued its long-term decline in 2013

2013 North American movie box office results are in. On a per capita basis, movie attendance declined 1.3% in 2013 after an increase in per capita attendance in 2012 compared to 2011.

cinemaboxoffice2012attendance decline

There is always some year-to-year variance in movie attendance based on the movies offered each year, especially if there are any blockbusters such as Avatar in 2009 and Marvel’s The Avengers in 2012. However, as can be seen on the graph below, the 2013 attendance decline is a continuation of a long-term trend of declining per capita attendance from its peak in 2002. Per capita movie attendance has declined 21% since that peak year.

Moviegoing has the highest participation rate of any type of out-of-home location-based entertainment (more than three times greater than the next most popular, bowling). Roughly two-thirds of the U.S./Canadian population age 2+ went to a movie at the cinema at least once in the past few years. The data on participation isn’t in yet for 2013, so we can’t tell whether the decline in per capita attendance is attributable to a decline in the participation rate or a decline in the number of movies moviegoers are seeing each year, or perhaps both. In any case, our research indicates that other forms of entertainment are slowly displacing moviegoing. Moviegoing appears to be a bellwether of what is happening to all type of location-based entertainment.

Our company’s research suggests that the root cause for the decline is at-home and mobile digital entertainment, both viewing movies at home on large screen HDTVs as well as on mobile devices, and other forms of entertainment including games and social media. Digital entertainment is also taking market share away from other forms of location-based entertainment.

Posted in Location based entertainment, Movie box office, Out-of-home, Trends | Tagged , , , , , | Comments Off

American’s Favorite Leisure Activities

A  September 2013 Harris Interactive poll asked 2,577 American adults, “Thinking of the time when you are not working or in school, what would you say your two or three favorite leisure time activities are?” Here are the results for what Harris defines as Echo Boomers (also know as Millennials) and Gen X.

Favorite leisure activities sept'13

If we exclude reading, although today much of it takes place on a tablet screen, four of the most popular five leisure activities for both Millennials and Gen X take place on a screen:

  •      watching TV,
  •      computer/internet,
  •      watching/going to the movies
  •      playing video games and computer/internet games

This truly shows how our leisure activities have become heavily screen-based.

It is also interesting that food, both cooking and dining at restaurants, ranks higher with Millennials than with Gen X.

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Travel expenditures since 2005 and the Great Recession

Earlier this year The Bureau of Labor Statistics at TED: The Editor’s Desk posted a graph on their website showing “Travel expenditures during the recent recession, 2005-2011.” The post stated that 2011 average annual consumer expenditures for travel for pleasure was down 6% from its peak in 2007. When we looked at the data used to generate the graph, we were surprised that it was not inflation-adjusted. Between 2007 and 2011, inflation (the consumer price index) showed that consumer prices had increased by 8.5%.

So to set the record start, we have redone the graph with all expenditures adjusted for inflation and also included 2012 data.

Travel expenditures 2005-2012

When adjusted for inflation, the drop in travel expenditures was much greater than the Bureau reported. From its peak in 2007, average household total pleasure travel expenses in 2011 were down 14%, not 6%. Food and beverage was down 9%, lodging down 10%, transportation was down 14% and entertainment fees and admissions (from its peak in 2006) were down 21%.

There was an uptick in expenditures in 2012, but travel expenditures are still down from their peaks:

Total travel expenditures:  -9% from 2007

Food and beverage:  -5% from 2007

Lodging:  -10% from 2007

Transportation:  -9% from 2007

Entertainment:  -20% from 2006

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