Blog: The 3bn Student opportunity

10 September 2012

CGA Chief Executive Jon Collin's gives us his view on the student market and the opportunity within...

One of the (many) joys of our pub, club and bar industry is that it is a market in perpetual change. If you think you have got things all worked out you are heading for a fall. Treat every day as a fresh challenge and a new learning opportunity and you are in with a chance of giving your customers what they want and making a profit.

Of course, that does not mean experience is worthless but rather that you need to be constantly re-evaluating how you apply that learning in an ever changing marketplace. Take the student market for example. One of the most easily labelled of consumers but, as a result, one of the most easily miss-targeted through application of an outdated stereotype.

“Familiarity breeds contempt” is a famous saying for a reason – it captures a global truth in just a few words. CGA research has found that many brand owners and operators are in real danger of showing ‘contempt’ for the student market precisely because they feel very familiar with it. Now that contempt is not going to manifest itself in overtly negative policies but it does show through in marketing spend, brand positioning and outlet offers that miss the mark.

Once upon a time the student was not particularly wanted in mainstream pubs and clubs. Rik, Vivian and Neil from The Young Ones were hardly going to fill the tills as they sat nursing a half of lager for as long as possible while gloomily nodding along to Morrissey on the jukebox. Then it was recognised that, actually, students like to party so they became the mainstay of many a nightclub’s mid-week session. Wednesday’s would be epic as clubs put on deals to tempt in the sports clubs. This coincided with my own student days when barely a Wednesday went by without witnessing the antics of the rugby team who found it all too hilarious to actually sit down on the dancefloor during James’ biggest hit.

The expansion of the late night economy throughout the 1990s meant there were many more spaces to fill in the UK’s new bars. Gradually, over time, students moved from being a valuable midweek boost to mainstay of the weekend session. Student Unions (SUs) needed to respond and, guided by the excellent team at NUSSL, respond they did. Design values were heightened, staff training developed and pricing and ranging improved. Add in a value food offer and SUs were primed to take back trading sessions from their competitors on the high street.

And so the journey has taken us from student ghettos and the margins of the trade to a mainstream stalwart and truly heterogeneous population. The student market has always been more diverse than many realised and that is more the case than ever today. As Kylie Poole, editor of CGA’s recently published report into the student market has noted:

“Students are a changed demographic. They’re a far cry from the traditional stereotype and they want more from their on trade experiences than ever before: better quality venues, premium products and truly special experiences”.

CGA Student Market Report, June 2012

A view backed up Ged Parker of NUS Services Ltd,

“Students now have a higher expectation of service and value, and shortfalls in either are rarely tolerated. Of course, the brand loyalties that are formed during university, just like the friendships that are forged, can last a lifetime”.

Students today are a viable market for all styles of operation across all trading sessions. Any operator pigeonholing them as a mid-week promotion led crowd is missing a significant trick. And the stakes are high for operators and brand owners alike with the latest CGA research quantifying for the first time the true value of student spend. That work puts the student term time spend on nights out at just north of £3.2billion per annum. And that spend is coming from an increasingly diverse student population with an expanding array of motivations and drivers: from the still ‘up for it’ teenaged first years to the mature foreign students, the debt conscious second years holding down a job while studying to the final year students targeting a first or 2:1 to put them at the front of the queue for employment.

Generally speaking, students will be more disposed to socialising than any other demographic or age group. That gives us a great starting point but it is only a starting point. Re-examining and modifying the student offer can create multiple trading sessions to appeal to different niche markets. This is particularly timely given that some of those niche areas of student life are becoming increasingly significant. Take, for example, the mature student sector for whom the more obvious student nights and cheap deals will hold little appeal. Mature students make up 1.1million of the 2.5 million students currently in higher education. A significant sector of the market that is much more likely to respond to attainable premium experiences in still lively but lower energy venues than the ‘up for anything’ freshers.

Another factor that is currently accelerating the pace of change in the student market is the rapid increase in students choosing (or more likely being forced through financial necessity) to live at home while undertaking their studies. Studying in your home town or ‘commuting’ to a nearby university or college will clearly alter the way you socialise. Spontaneous nights out become less possible while multiple sessions in a week are now apparent to parents making them less inclined to providing some spending money. As a result, behaviour is evolving to fit more in line with the wider night time economy. That means fewer visits during the week but with increased spend per visit. These nights out will also take more planning (as they will draw together people potentially studying elsewhere and in work rather than education). For venues, that means creating hooks for the occasion, subtly promoted through social media (enabling organisation) and with a more premium slant than has previously been the norm. With almost 1 in 5 students now remaining at home, operators and brand owners must not ignore this development.

A final word of warning. There are some brands out there right now that appear to be performing strongly in the student market. However, this performance is founded on a policy of discounting and deals. “Pound a Bottle” promotions will boost volumes in the short term but CGA’s research unmasks the underlying damage to brand equity from such activity. An over-reliance on cheap deals will pigeon hole your brand as the one to drink when times are tight but the one to leave behind when moving from the lecture theatre to the office.

For more information on CGA's student report, contact us here