Understanding the ‘Funflation’ Trend in Today’s Consumer Market

2/26/2024 April Masters

Welcome to the era of “funflation,” a new economic buzzword that isn’t just a playful spin on inflation — rather, it’s a reflection of shifting values in a tight economy. Despite the current squeeze on wallets, there’s a growing trend among some consumers to prioritize experiences they truly cherish over traditional big-ticket home purchases like electronics or furniture.

Here, in this excerpt from a recent Business to Human Podcast, we’ll take a deep dive into this funflation phenomenon — and uncover what it means for consumers as well as marketers.

The rise of the experience-driven economy

In a world where every penny counts, the mindset driving our purchases has evolved. According to RRD’s 2023 Awareness-to-Action Study, while 40% of consumers overall intend to cut back on treats or splurges, a significant 47% of Gen Xers are actively looking for more occasions to treat themselves or others. This speaks to a deeper narrative where, despite economic pressures, the desire for personal gratification persists, even in the face of financial stress.

That self-indulgence trend ties into a profound shift toward an experience-driven economy. Take, for example, the $579 million earned by Beyoncé’s Renaissance Tour, the $939 million pulled in by Elton John’s Farewell Yellow Brick Road tour, and Taylor Swift’s The Eras Tour, which earned more than $2 billion in gross ticket sales. These concert tours aren’t just events — they’re cultural phenomena where fans are willing to invest in the full experience, indicating a clear preference for creating lasting memories over acquiring tangible goods.

Deciphering consumer spending

How are consumers navigating their spending habits amid this funflation? The “share of wallet” concept provides a look into this dynamic. There’s a balancing act between essential needs and the desire to splurge on experiences, even when being thrifty is top of mind.

The market is responding to these consumer preferences — ticket prices for sporting events, for instance, are soaring by 25% as funflation takes hold. Consumers, however, aren’t just passively absorbing price increases — they’re actively choosing where to allocate their funds, with many opting to pay a premium for memorable experiences.

The aforementioned RRD study sheds light on a fascinating dichotomy when it comes to spending habits:

• Baby boomers (45%) as well as those under great financial stress (53%) lean toward spending only on essential items
• Gen Z (23%), parents (30%), and those with federal student loans (31%), however, indicate they are less likely to cut back
• 36% of all consumers report that they are splurging on purchases or restaurant dining, and this figure jumps to 49% among affluent consumers (household income >$100K)

Strategic implications for marketers

For marketing decision-makers, understanding and adapting to the funflation trend is crucial. This trend provides an opportunity to innovate how we connect with consumers, particularly those in the informational and evaluation stages of the purchase journey. It’s about meeting them where they are, with messaging that resonates with their desire for experiences worth their investment.

Funflation is far more than a mere buzzword — it refers to a shift in consumer spending that values experiences over possessions, even when money is tight. For marketers, this new direction in spending habits presents an opportunity to craft strategies that tap into the desire for meaningful experiences. In the economy of fun, it’s clear that the most impactful memories are not those we buy, but those we live.

Interested in learning more about funflation and other critical marketing trends? For consumer facts and predictions as well as seven insights shaping the marketing landscape, check out RRD’s 2024 Marketing Outlook Report and see how funflation could redefine your next campaign.