What WeWork, Apple, Barclays and Westfield have in common

For generations, young adults have dreamed of buying their own home or owning their first car. These dreams are being replaced by travelling the world or summers of music festivals. Predominantly driven by the millennial generation, consumers are demanding experiences. Where there is demand, there is money to be made. Where there is money to be made, businesses gather, and so we are seeing shifts in entire industries.

The office market has been the latest to embrace the move towards experiences, with phrases such as ‘space as a service’ becoming increasingly popular. Think back to offices 15 years ago, before flexible offices became mainstream. A company would lease a space that contained desks, traditional brown carpets, grey cubicles, filing cabinets and a budget coffee machine (if you were lucky). Employees would use the space for one sole purpose: to work. The concept of an office nowadays is vastly different. The days of selling an office as a collection of desks where workers sit and type away are in the past.

Occupiers are demanding more from their office space because their own employees are more demanding from them. Increasingly, the office is seen as the way to engage staff; to bring them together to collaborate and innovate. The end-user office experience is becoming increasingly important, particularly as the lines between work and lifestyle continue to blur.  Offices are now marketed as an experience, and even more so in the flexible office industry. Community events, breakout spaces with ping pong tables, free beer after 3pm, yoga classes, premium coffee and free breakfasts are now the norm rather than the exception. Flexible offices now offer sleep pods, wellbeing rooms, on-site recording studios and tequila bars. Office aesthetics are a high priority for workers, and employers realise that providing an enjoyable working environment is key for retaining and attracting talent.

Maintaining a strong level of customer service and user experience is vital for flexible offices, where members can often cancel at a month’s notice. The inherent nature of the flexible office business model means that providers must maintain a constant focus on retaining existing customers and attracting new ones. If they are not offering their members a satisfactory experience, their members will cancel and move to an office that does. The versatility that attracts customers to flexible offices also keeps the providers on their toes, which is why we will continue to see dynamic shifts in the flexible office industry over the coming years.

Computers and Technology lead the way

The product-to-experience shift is by no means limited to the office sector. Typically, the technology industry was ahead of the curve. Arguably, the first commercial computer was produced by Apple in 1977. It more resembled a keyboard attached to a microwave, rather than the sleek Apple technology that we are accustomed to nowadays. Little thought went in to the user experience. The focus was on the product itself.

Now consumer experience is key within the technology industry. Just take a look at the iPhone. Clearly the iPhone itself is a product made primarily to make contact with people. However, the key draw is the experience that comes with it: listening to music, playing Candy Crush Saga, checking Instagram, chatting with friends on WhatsApp and Tweeting about your political views. Apple is not selling a product, it is selling the experience of an easier, more convenient life and the myriad of positive emotions that come with it.

The changing face of the retail industry

The retail industry is following a similar path. The standard shopping centres that we have known for the past decades are changing. However, in this case the change is borne out of both shifting consumer behaviour and necessity. In a world where more and more people are shopping online, store portfolios are shrinking with a refocus on strategic locations meaning that redundant space in some cases can be repurposed.

Shopping centre owners are realising that future foot traffic, and therefore future survival, will largely depend on attracting customers with experiences while also delivering convenience. Whereas before you could choose between of a couple of restaurants for lunch, you are now inundated with choices. Shopping centres are offering all sorts of experiences: music concerts, celebrity appearances, gyms, spas, art exhibitions, bowling alleys, ski slopes and go-karting.

Retail banking is following suit

Even the retail banking industry is joining the experience trend. Banks are no longer just a place to store your cash or to borrow from while you await your next pay cheque. Companies like Monzo, Atom, and Revolut, dubbed the ‘Challenger Banks’, have approached the retail banking market with an entirely different strategy to the conventional high-street banks.  Challenger Banks have filled a gap in the market that has fallen by the wayside for many conventional retail banks: selling customers the experience.

Similar to Apple, the Challenger Banks offer a simpler and easier life, as well as a sense of control over your personal finances. With the Challenger Banks, you can open an account via the app in a matter of minutes, split bills with friends in a few taps, receive notifications almost in real-time as you spend and easily set a budget. Even the brightly-coloured eye-catching cards and the language that Challenger Banks use to communicate with their customers are driven by the user experience. Some of the more traditional banks, such as Barclays and NatWest, are appreciating the importance of a user-friendly app, and the rest will likely follow suit. 

Why and why now?

All of this begs the questions: why the increased focus on experiences and why now? On the supply-side, with technology advances, experiences are more readily available. On the demand-side, as societies develop, experiences become increasingly important to personal fulfilment. This can be demonstrated by Maslow’s Hierarchy of Needs, which is a psychological model comprising of five hierarchical tiers of human needs.

As societies develop and living conditions improve, more basic needs are met more readily and you see a shift towards more advanced needs. Safety and physiological needs are largely met by products. Social needs are fulfilled by experiences. Esteem needs are more frequently being fulfilled by experiences. In a day and age of being able to share your daily life on social media, experiences are the new social capital. Self-actualisation needs are met by experiences. It is not a perfectly linear relationship, but broadly more basic needs are fulfilled by products and higher needs are fulfilled by experiences.

Businesses in industries going through the product-to-experience shift will have to adapt. In all cases, businesses will need to spend more time and resources on understanding the needs and psychology of their customers, and flexible office providers are conscious of this. At Workthere, we have found that the most important aspects of the coworking experience are feeling physically comfortable, which relates to factors like cleanliness and temperature, and best-in-class technology, such as fast Wi-Fi and reliable mobile signal. The flexible office industry, being relatively young, is more adaptable compared to many other industries that are decades, if not centuries, old and have long-established procedures in place. The products-to-experiences shift will continue to evolve for many years, and it is an exciting time for the flexible office industry, which is well placed to benefit from this monumental step-change.