Generation Z, people born between the mid-90s and mid-00s (approximately 14 to 24 years old) account for roughly 26% of the U.S. population. Increasingly, companies will need to adapt to this generation’s preferences, as their purchasing power is growing and they’ll soon become primary household decision-makers. Currently, Gen Z spends $143 billion per year and influences an additional $460.5 billion in spending by others. These numbers are only going up.
Of course, we would be remiss if we didn’t include the caveat that there is a lot diversity within the cohort: from recent immigrants, to young urbanites, to multi-generational small-town and rural residents. So as a business, ymmv (your mileage may vary), as the kids say.
However, as more and more researchers study this group, some common themes are emerging
Gen Z’s grew up with the internet and ever-advancing tech—“nearly ¾ of teens have or have access to a smart phone”—so they’re savvy with devices and the myriad apps that run on them. This has made them fairly adaptable, accepting of new products and trends and able to acclimate with ease.
Social media has become ingrained in daily life for Gen Z. It is used as a way to keep up with friends, family, and role models (often called “influencers” in the social media sphere). Social media and the internet have increased both the sociability and mobility of this generation. Gen Z “watches up to four hours of digital content and picks up their phones more than 160 times a day.” They are used to immediacy when shopping; they are comfortable picking up their phones to quickly research, cross-shop, or price compare, if need be. In fact, 84% of Gen Z use mobile devices while shopping in stores.
Next, and largely owing to the fact that they were raised with easy access to information, Gen Z is one of the most well-informed generations. They have grown up reading about social issues and ills, but also reading about waves of fresh innovations designed to tackle these issues. Living through the Great Recession during their formative years and growing up in the era of disruptive technology, this generation is both keenly aware of problems and hopeful that there are solutions on the horizon. They believe in the value of hard work to solve problems and get what they want (62% would like to start their own companies). Gen Zs also expect a lot from the businesses they frequent and the brands they use. Gen Zs research brands more than any preceding generation—from their comparative price point to their production chain. Gen Z consumers want to know a company’s values before buying its product.
“[This generation] self-educates through content consumption. They’re the driving influence in household decision-making. They have more information, more expertise, more insight,” says Beautycon CEO Moj Mahdara.
While this generation tends be extremely liberal in their social values (understanding of different expressions of identity, gender, sexuality, race, religion, etc.), they to have more traditional views regarding work ethic and success (good education, strong finances, desire for career advancement).
How does this translate to Gen Z’s consumer preferences and shopping behavior?
- 79% agree, “The way I present myself (through fashion, hairstyle, makeup) is fundamental to who I am”
- 49% would pay extra for a product that is consistent with the image they want to present
- 60% will support brands that take a stand on issues they believe in regarding human rights, race and sexual orientation
- 60% support brands that take a stand on issues they believe in regarding human rights, race, and sexual orientation
- 77% like ads that show real people in real situations
- Rather than find cultural touchstones in celebrities as past generations did, 73% were more likely to turn to people more like them: the influencers on social media
- 78% say they have purchased items in stores as a direct result of seeing them on social media. Among them, YouTube is the most influential platform
- 76% say that physical stores provide a better shopping experience compared with online
- 63% indicate that even when buying online, it is important to them that the retailer has a physical store nearby
What does this mean for businesses?
Gen Zs think and operate differently. Products and marketing campaigns that have appealed to past generations likely won’t appeal to Gen Z. Businesses will need to adapt to this generation’s brand preferences and shopping behaviors.
“Trying to gain the loyalty of Gen Z via traditional loyalty programs, cards and promotions is a losing battle. No matter how we asked Gen Z, they are simply much less interested in these things. For instance, the percentage who say a loyalty program makes a store special to them drops from 45% for Millennials to 30% for Gen Zs. The drop-offs are even more dramatic for interest in shopper cards and special events,” according to a report by Ernst & Young on Gen Z consumer behavior. “Getting these consumers to be loyal to your brick and mortar will be more challenging than ever.”
Increasingly, businesses should look for ways to align with Gen Zs, but in an authentic way, as they are acutely aware of false or “phony” brand positioning. “Bombarded with messages, [they] can quickly detect whether or not something is relevant to them.” Businesses will want to focus less on advertising and more on building relationships.
For businesses to survive and thrive, they will need to understand their consumers on a much deeper level. Relationship building and authentic brand positioning begins with understanding the types of people that visit that store (or district) on a human level: who are they, what types of values do they hold, and what services and products do they need and can afford. From this, businesses can determine ways to authentically differentiate themselves (offering unique goods and services to appeal to Gen Z), increase meaningful customer interaction, highlight their businesses’ social values, and/or form strategic partnerships with organizations they and their Gen Z customers support.