How Covid is domesticating millennials Everything they enjoy spending their money on has been curbed

Once the epitome of luxury and exclusivity, by the 1990s air travel had opened up to the masses. The new model was all about low costs and high volumes. That marvel of engineering and design, Concorde, was grounded just as upstart low-cost airlines such as Ryanair built their brand by stripping back add-ons and offering absurdly cheap seat sales. Middle-market companies such as British Airways had no choice but to follow suit and lower their prices. The ‘no frills’ competition reached the grocery sector too, with Lidl, Iceland and Aldi chipping away at market share. Their success lay in winning over middle-class consumers for whom ‘bargain bragging’ about a £10 flight to Florence or grocery savings became du rigueur at dinner parties.

Whereas the consumer boom in goods relied on an increasingly globalised and cheap supply chain, the consumer boom in experiences — be it travel, eating out or a hair-cut — centred on tight margins and low prices funded by boosting capacity. If density is its founding principle, then social distancing puts that entire model in jeopardy as consumers begin to prioritise space and safety above cost, and businesses recognise they can only survive by raising prices to counter lower footfall.

Restaurant owners, who all work on an extremely fragile business model, are especially vulnerable. In a survey by Square Meal, three-quarters of bar and restaurant owners said they did not think their establishment would survive social distancing. What of those restaurants with long benches designed like a school canteen where you are so close to fellow diners you end up eavesdropping on their conversation? And will a bar that is only running on 60% capacity have the same ambience? For every punter happy to get a seat, there will be others who miss the buzz of a busy bar.

Jo Eames, director of Peach Pubs, stated that “margins are so tight and costs so high in hospitality that no business can operate for long with much less than 90% full turnover”. Social distancing reduces capacity and will result in job losses and higher prices. Those restaurants in the City or West End, with high rents dependent on international tourists and business lunches, may end up faring much worse than small local establishments who are able to diversify their service with home delivery, cooked to order meals and an add-on specialist grocery store.

Hair salons are another case in point. Hairdressing is modelled on the Ford Assembly line with stylists, colourists and apprentices allotted designated roles and slots. Under this system, one stylist has the capacity to work on three clients over three hours. This becomes impossible under the new rules; stylists may have to stay with one client for the duration, massively impacting on the numbers that will be able to come through the salon door and inevitably pushing up prices. But the salon experience too will be diminished with the removal of the waiting area, refreshments, magazines and the installation of inhospitable Perspex shields between chairs.

The high-density model made everything more accessible and also fed a culture in which consumers prioritised the buying of experiences over the buying of things. This was especially true for the millennial generation priced out of the housing market. What became cheap as they came of age — technology, eating out and travel — were all things, unsurprisingly, that millennials loved spending their money on. More millennials have passports than driving licenses, which is testimony to the fact that the open sky rather than the open road has long been the symbol of millennial consumer identity (compared to their gas-guzzling Baby boomer parents).

For millennials, “keeping up with Joneses” was not about your car, home or stuff owned; we could rent, share or borrow that stuff anyway. No, our status derived from something different: our experiences — the places we went, the people we met, the things we saw — and crucially the documenting of these experiences on social media. It is not the selfie that defined us, but the representation of the self-captured in the moment at a concert, in a restaurant, on a beach.

But now the crowd has been dispersed and the experiences have been put on ice. In a post-Covid world, it’s the home that represents a safe haven while everything that millennials enjoy spending their money on has been curbed. Evidence for this lies in how much money this particular demographic has saved over the past three months. According to Barclays, 18-29 year olds’ savings balances have increased by 9.9%, with an average saving amount of £604, which is 11% more than the national average and the highest of any age group. According to Ipsos Mori, while shopping habits did not really alter for those aged between 55-75 under lockdown, they changed the most for millennials, who bought different products and in different quantities than they did before.

But as lockdown is eased, will millennials (in particular) resume their normal ways? Will we see an era of ‘revenge spending’, (a term first coined in China, which saw an initial uptake in designer items being purchased after lockdown eased)? Consumer analysts and the Government hope that “pent-up demand” will result in a spending splurge — and the long queues outside Primark yesterday certainly point to that. The Barclays consumer survey however reveals that for millennials, the immediate priorities are restaurant meals and getting a haircut. It also revealed that 37% of millennials would like to be more attentive and responsible with their finances.

But good intentions often wane. What may be more significant is that millennials could be forced into different spending habits due to changing prices. It has been estimated that package holidays could rise by £1,000 per head (not accounting for rising insurance costs). In the short term, there may be lower fares to entice customers back, but with airline bankruptcies and reduced competition, an inevitable decline in business travel and consumer fear likely to be a lingering factor, airlines will need to make even more money from their economy-class consumers. As one travel agent put it to me: “The days of flying so far, so often and so cheaply are over” — a fact that will chime with millennial and Gen Z’s environmental concerns.

As if pre-empting this shift, Airbnb has already sacked 25% of its workforce. It may be that, paradoxically, millennials end up benefiting. If over-tourism becomes a thing of the past and all those empty commercial office properties are turned into flats, the urban housing and rental market may finally become more affordable.

Airbnb is already refocusing its attention away from rental business to what they call ‘Air Experiences’; recalibrating the experience economy for the digital realm (clumsily known as phygital). Pitched as “unique activities we can do together led by a world of hosts”, you can take your pick from an art tour of Lisbon, a water blessing meditation ritual with a Bali-based Monk or a virtual trip through Chernobyl with its abandoned dogs — all within the comfort of your home.

For people in their thirties who were already feeling an acute sense of burnout, with a family or soon to start one and desiring greater flexibility at work, lockdown only reinforced what they already knew. A tiny pod apartment or flat-share in the centre of town, especially surrounded by closed shops and lifeless bars, has its limitations. So even if we do snap back into old routines in 12 months’ time, things will be different in the long term, in part because business models will have had to change to survive but also because new habits and values will have been formed. As long as the economic incentives are there, a significant number of them will be encouraged (and possibly forced) to make the same choice as their parents, shifting from buyers of experiences to buyers of stuff and assets.

It will mean the birth of the ‘homebody economy’, where millennials invest in their house as a home beyond a crash pad. Lockdown saw one quarter of millennials increase their purchase of home, garden and DIY products. A move triggered by lockdown will be sustained because of new priorities — not least the inevitable and hugely significant shift in flexible working.

Might we see the rise of a new demographic — the suburban or semi-rural millennial — in their detached houses with their detached phygital dinner parties? Can we envisage a 21^st-century millennial mash up of Mike Leigh’s 1970s satirical play Abigail’s Party where couples share a simultaneous delivery from their favourite restaurant, give virtual tours of their renovated home office, bark orders at their Alexa and share Spotify dinner party playlists while wistfully reminiscing about the good old days of music festivals and cheap adventure travel?

Now that really would be a status update.

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Eliza Filby is a speaker, writer & consultant specialising in the history of generations and the evolution of contemporary values.

@ElizaFilby