Gen Z (roughly, twenty-somethings) is the first consumer group to grow up in an all-digital world—digital natives. Just like the cutting-edge technology that is their second nature, they are breaking rules and charting new lifestyles, a challenge for consumer-facing companies to target and plan for.
It matters more every year because, while Zs represent only 5% of US consumer spending today, in five or so years it will be closer to 20%, when they begin to enter their peak spending years and become about a third of the workforce. Which is why the number of headline-grabbing Gen Z studies and media reports is proliferating.
What do we know so far? Here are some examples of what researchers and retailers are saying:
Three out of four Gen Z adults prefer mobile shopping, and nearly half use Youtube to research products before they buy, according to Hubspot.
Retailers recruiting employees should know that Gen Z is the purpose-driven, sustainability-minded generation. A recent study by consulting giant Deloitte reported that 86% of Gen Zs say “having a sense of purpose is important to their overall job satisfaction.” Nearly 90% “are increasingly willing to reject assignments or employers who don’t align with their values.”
Gen Z is having an outsized influence on the purchase decisions of their parents, Gen X. Gen Z’s moms and dads are 42% more willing to pay extra for sustainable products, according to ecocart.
When it comes to talking about money, Gen Z aims to be honest and clear—“loud budgeting” is the lingo at the moment, according to The Motley Fool: “Loud budgeting is a way to openly discuss money, declare independence from ‘FOMO’ (fear of missing out), doom-spending, and regain control of your personal finances.”
A third of Gen Z say they have a shopping addiction, and one in five are on board with a “no-buy” pledge for 2024, according to a study commissioned by CreditKarma. The study also found that 43% of Zs are experiencing “money dysmorphia,” defined as a distorted negative view of one’s finances.
Gen Z is the TikTok generation, which means they have a powerful voice when they have a complaint. A recent report on CNBC noted that TikTok users scorched Walmart for its new digital shelf labels that allow the company to quickly raise and lower prices. Burger chain Wendy’s backpedaled its plan for dynamic pricing after a similar TikTok thrashing.
Sam’s Club is experiencing its highest growth rates from bargain-hunting Gen Zs—63% over a two-year period, according to Walmart.
A survey by Bank of America found that two-thirds of Zs are cutting back on dining out (43%), passing up events with friends (27%), and shopping at more affordable grocery stores (24%).
What does it all mean?
One takeaway may be that Gen Z is coming of age with an intense awareness of prices and value, a willingness to trade down or out (e.g., a no-buy year), and a rapid response to perceived injustices and gimmicks.
Much like the generation that came of age during the Great Depression, Gen Z is establishing habits and perceptions that will influence their decisions for the rest of their lives, and shape the future of retailing.
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