By 2026, Generation Z will not only be the primary demographic in the retail sector but will also wield substantial spending power.
Born and raised in the digital age, this tech-savvy cohort brings with it exacting standards for the online experience.
With over 41 million Gen Z digital buyers in the US as of 2022, it's time for brands to sit up and take notice. After years of tailoring their approach to the millennial market, retailers are now presented with a new challenge. To stay ahead, they must swiftly align with Gen Z's digitally-oriented lifestyle, meeting and exceeding their online expectations.
So, let’s get to know this market.
Gen Z's Disconnect with Conventional Brands
Across the more-than 1,500 brands tracked by Morning Consult as part of its Most Trusted Brands report, Gen Z reported the lowest average *net trust compared to other generations.
The average net trust of Gen Z—a value of 11.26—was nearly half that of Gen X and Baby Boomers.
Looking at Morning Consult’s list of top 10 most trusted brands in the U.S. across all industries, the number of Gen Zers who said they trust each brand was lower than that of the total U.S. population across all brands.
*Morning Consult measures “net trust” as the share of people who trust a brand (people who said they trust a brand to do the right thing “a lot” or “some”) minus those who don’t (people who said they trust a brand to do the right thing “not much” or “not at all”).
Coming of age alongside the internet with all-access information at their fingertips, younger consumers can get to know brands more intimately than generations that came before them. This perpetual behind-the-scenes view can make consumers more skeptical of marketing efforts.
The Gen Z Profile
Digitally Native
Gen Z is the first true digital native generation, living their lives fully connected digitally. They do not consider technologies to be tools used to help achieve tasks, but rather as deeply integrated parts of everyday life.
Nicknames
Generation Z, also known as iGen, Centennials, or Zoomers, is the demographic cohort succeeding Millennials (and preceding Generation Alpha).
Population Power
They consist of approximately 70 million people born between 1997 and 2012.
Consists of about 20% of the US population.
Gen Z will become majority non-white in the US by 2026
Gen Z is set up to become the most educated generation in history. Part of the reason is that their parents are more educated, too. 44% of Gen Zs lived with a parent who had a bachelor’s degree or higher in 2019, compared to just 33% of millennials in 2003.
Values
44% of Gen Zs said they were concerned about climate change — the highest percentage on any issue.
Google searches for “climate risk” are up 487% over the past 5 years.
The Gen Z Consumer
All information below is based on Afterpay's Gen Z Report.
They are the most optimistic
A significant majority of Gen Z consumers, around 77%, anticipate a price hike in the coming 12 months.
Despite the expected price increase, only a fifth of these shoppers, or 20%, plan to reduce their shopping.
Contrarily, an additional 25% of Gen Z shoppers foresee an increase in their shopping activity in the next year.
This contrasts with other generations, as only 20% of millennials and a mere 10% of Gen X and older individuals plan to shop more in the upcoming year.
With these trends, Gen Z stands to become a critical revenue generator for businesses.
Transactions are personal
Gen Z consumers have a preference for eco-friendly products and sustainable brands.
They often forsake purchases from brands failing to meet their ethical standards.
In the past year, one-third of Gen Z consumers have discarded a brand due to its sustainability and ethical reputation.
Gen Z distinguishes itself from older generations by preferring direct shopping from brands, eliminating intermediaries.
This trend encourages businesses to establish their presence via online stores or social media platforms.
They're online -- looking for you
Gen Z, being digital natives, naturally gravitate towards online shopping more than other generations.
Approximately 40% of Gen Z consumers favor online over in-store shopping, compared to 35% of millennials and 27% of Gen X and older.
Gen Z's motives for choosing online shopping diverge significantly from other generations..
Gen Z finds online shopping more convenient for searching for desired products.
They appreciate the wider brand discovery opportunity online.
Online shopping offers Gen Z a more tailored shopping experience.
Key Takeaway: Brands need to establish a strong online presence and open communication channels to cater to Gen Z, who prioritize availability, accessibility, and trustworthiness in the brands they choose to be a part of.
What I’m chewing on
By 2030, millennials and Gen Z are predicted to rule the retail world, accounting for almost half of all retail
spending. It's a giant, neon-flashing sign for businesses everywhere - start paying serious attention to the Gen Z crowd.
My 3 Tips for creating a playbook to resonate with Gen Z:
Authenticity is key.
Display intentional effort to increase your "net trust." Ensure your brand values and actions align. No smoke and mirrors - they won't bite.
Make sustainability more than just a buzzword.
Implement tangible eco-friendly practices (one small step at a time) and show the receipts. Prove that your brand isn't just greenwashing.
Finally, optimize your online visibility and please, build a mobile version.
Invest in an intuitive, interactive digital presence. Don't make them search for you; be at the fingertips of their next search. SEO, social media engagement, mobile-friendly websites – these aren't options, they're essentials.
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