Gen Z is expected to shake retailers with over $ 143 billion in purchasing power.
Although many in Gen Z are earning their first paychecks, going to college, or just entering the world of work, studies have shown that generations shop and spend a lot differently than their millennial predecessor.
For example, while millennials mainly shop online, Gen Z – an age group that is even more connected to technology – surprisingly prefers shopping in stores. While millennials and previous generations were more loyal to brands, Gen Z is more interested in buying products that offer them the best value based on their price.
Why is Gen Z so budget conscious?
Why is Gen Z so conscientious about its spending habits? Increasing research suggests that age groups' thoughts about money are directly related to the economic age in which they grew up.
While millennials grew up in more stable financial times, most of Gen Z's earliest memories occurred during the US recession. Much of this generation grew up in high budget households or saw their families affected by economic problems.
Meanwhile, a large percentage of millennials as well as those in other age groups. can remember times when their economy was booming. Organizations like the Pew Research Center say that these epochs have shaped psychologically how every generation thinks about money differently. While researchers believe that both millennials and Gen Z are money-conscious to avoid financial instability, millennials are seen as "more optimistic" future finances.
As Gen Z ages, studies and buying habits indicate that they have been unable to shake off their concerns about financial instability. Many studies show that the offer for Gen Z must be so valuable that it can justify the purchase so that Gen Z can invest in a product or service.
In recent years, data about Gen Z buying habits have affected many brands and marketers, especially those who rely on frills and brand loyalty when selling their products. Many also asked, "If Gen Z is aimed at saving money, what will they actually buy?"
Fortunately, there is a lot of data showing which products are most valuable for Gen Z. This data can help marketers learn more about Gen Z’s buying motives and run campaigns that better understand how valuable their products can be for those in the age group.
Below is a list of five items, services, or product categories that brands are likely to invest in so that they can market to Gen Z when full purchasing power is achieved.
5 things Gen Z will spend money on
1. Gen Z will spend money on education.
While millennials are one of the best educated age groups, Gen Z is well on the way to achieving the best levels of education. At this point, Gen Z had already been shown to save college at a much younger age than millennials.
As generation members enroll or start spending their own money at college, news agencies have predicted and reported outbreaks of school-related purchases fueled by Generation Z buyers.
In addition to buying consumables, Gen Z will likely also invest in courses or educational programs to increase their future earnings. While 62% of Gen Z take classes or learn new skills if this improves their job, 59% do the same if this increases their salary.
Because of the rising cost of college, most of Gen Z has not prioritized essential purchases just to save money on academic investments.
Gen Z's interest in saving money and buying sparingly is not that shocking. A recent study assumes that three quarters of Gen Z will receive student loans upon graduation. It is also expected that more than 60% of the age group will have college debt of more than $ 25,000.
Ultimately, many researchers believe that Gen Z's interest in science is rooted in its need for financial stability. Many in the age group believe that good education will lead to a great job with high wages.
As a marketer, it's important to keep an eye on Gen Z's budget and educational goals. This generation wants to learn new things, save for college and prioritize investments that improve their future. You need to convince them that your product is worth buying – even if they put most of their money into college funds.
When creating your product promotion or campaign, consider how your product can support or leverage the experience of people who are planning for college, student, or young professional.
If your product isn't specifically educational, your campaigns can target how it can improve a college or work-life experience. For example, if you market furniture, you can create an advertisement that highlights products that fit into an apartment or dormitory. When you market a clothing company, you can also highlight items of clothing that can be worn in a job interview in a blog post on your website.
In addition to creating content that links your product directly to career interests or academics, you can also leverage Gen Z's need to learn new things by developing educational content that informs the audience about your industry. After viewing your educational content, viewers may want to learn more about your product and build more trust in your brand. If you later want to buy a product related to your brand's industry, you may consider your brand first.
If you want to use educational content, consider the age range of your audience. While younger Gen Z members may be primarily interested in B2C branded content due to their college or high school age, Gen Zer internships or staff may appreciate B2B educational content that shows them how they work in their industry can move forward.
2. Gen Z will gain experience.
Although associated with heavy use of social media, researchers say that most Gen Z like to take breaks from social media and screens from time to time.
In a recent study, 95% of Gen Z participants under the age of 24 said they felt "a little bit often" or "very often" feeling stressed. Participants then identified online activities, homework, and finances as triggers that caused physical or emotional signs of stress.
To reduce stress, many study participants stated that they had taken breaks from screen time, read books or left home to gain personal experience.
According to Snap Inc. and GlobalWebIndex, Gen Z is actually more fascinated by experience than by millennials. For example, Gen Z looks more like local art and tries adventure or extreme sports activities than millennials. Below are just a few of Gen Z's key interests:
While Gen Z values products and services that will benefit their future and help them solve important problems, they still like to plan time and money for experiences such as restaurants, local trips, or occasional trips.
Although Gen Z will invest in something that gives them positive life experiences, you should consider the age group's budget awareness when marketing something to them. Because they care about cost and value, Gen Z members may research a restaurant, trip, or travel service before spending money on it.
If you're a brand that sells excursions or personal experiences, you may not be simply placing a few colorful photos on your website for Gen Z. You may have to go a step further by adding detailed information to your offers and highlighting positive reviews and even starting a blog that offers more information and demonstrates your credibility.
If your brand sells physical items rather than field trips, consider creating messaging that highlights how your products can improve or improve the experience.
For example, if you sell coffee, you can create an ad that sips a tired young adult with a sip of coffee before a busy day out in the wild. When you sell clothes, your ads can also highlight how perfect they are for trips like vacation or nice dinners. Regardless of the product, tell a story about an experience Gen Z is interested in, and then explain how your product can help them.
3. Gen Z prioritizes essential products, services and utilities.
As with millennials, life experience and education are important for Gen Z. However, as a frugal generation, the age group wants to continue to ensure that they have enough money for important products such as food, health products and household goods.
Putting the clear budget first was a clear topic that Vice discovered when his journalists interviewed a handful of Gen Z members about their lifestyle and buying habits. Almost all participants stated that they would invest more in important products than buying products related to fun, entertainment, fashion or fan loyalty.
If your brand sells important products like food, cleaning supplies, or medication, there are two things you should do.
First, create marketing content that recognizes the Gen Z audience and reminds why your products are so important and worth budgeting for.
Second, keep in mind that Gen Zers may still examine them, read the box before purchase, or compare it to other items in the same aisle if your products are essential. Since many brands manufacture important products, you should create messages that state why your product is more effective or cheaper than all other versions.
If your brand is not selling an essential product, it is even more important to create marketing materials that identify a need for your product, how it can help customers solve everyday problems, and why it is worth the hard earned money of a Gen Z member. Keep in mind that Gen Z's first buying priority may not be your product, and then consider how you can still draw attention.
Not sure how to develop a feeling of need when your product is not essential? Below is an example of content from InfoArmor, an Allstate information security service. In the recently published tweet, InfoArmor shared a blog post about the dangers of information security when working remotely and how InfoArmor can protect remote employee information.
When reading the tweet or related blog post, a person in Gen Z or another age group can identify where they may encounter information security risks and consider buying the product to protect their information.
On average, Gen Z spends more than four hours a day online, surpassing past generations – including millennials. As the most networked generation to date, it's not shocking to think Gen Z will spend money on technology. However, being financially aware, many in the age group will prioritize buying the most important or useful technology. For example, almost 100% of Gen Z have a smartphone, 70% a computer and 30% a tablet.
Gen Z will invest in technology.
Aside from the technological basics, Gen Z will occasionally draw on technological experiences that help them have fun, such as: B. Video games. In fact, a 2019 study found that two-thirds of generation Z men say that gaming is a "core component" of who they are.
While you may be concerned that Gen Z isn't worth marketing because it doesn't pollute your products, this age group can certainly be persuaded to do larger purchases that offer fun experiences or improve their daily lives.
Even if you invest in higher-priced products, Gen Z must still be thoroughly convinced before you can pull out your wallets. As mentioned above, it is incredibly important for brands targeting Gen Z to create content that shows why the age group needs their product, how the product can solve daily boredom or problems, and why it is better than that of a competitor .
Although some consumers consider Fitbit fitness trackers to be frivolous, this brand excellently explains why their product can be a necessary tool for use in a fitness routine.
On social media, Fitbit gives facts about why walking and cardio – two activities that the bracelet can follow – are important for health. In a November blog post, Fitbit more closely connected its product to health needs by discussing how its reporting software can help people better communicate with their doctors.
While Fitbit does not claim that its product is necessary for health, the brand shows the public how the product can be used to track their fitness needs and progress.
When a pessimistic or budget-conscious Gen Z member examines Fitbit, they can find its content informative and helpful. If you're interested in a healthier lifestyle, you may find Fitbit is a credible brand that can help you with your fitness needs.
Gen Z prefers to buy inexpensive clothing.
A recent Business Insider report found that Gen Z can't easily be won over by a logo when it comes to clothing. Unlike other generations, brand loyalty is one of the last things you think about when you make a purchase decision. What the generation focuses on is price and value.
In the Business Insider report, a 20-year-old Amanda Chermin said: "I can't afford nicer clothing brands – I like to save and would rather have money in the bank than be broke."
Instead of opting for the hottest brand in New York Fashion Week, the age group, who also prefers to shop, tends to buy cheaper clothes that are either not from a well-known brand, when released, or sold on.
While not loyal to the same stores and brands that millennials are based in, Gen Z still feels the pressure to buy and wear clothing that is considered high quality or fashionable. In addition to buying affordable clothing, the need to look good has also led many in Gen Z to invest in clothing rental or pre-purchase shopping experiences.
Although Gen Z is expected to spend less on clothing than other generations, researchers believe they still feel the pressure to look good in front of their peers. This pressure, which may be caused by social media, school, work, or social environments, will continue to lead the age group to clothing stores or e-commerce websites. While retailers of this generation should expect changes in spending behavior, Gen Z will continue to buy clothing that looks good, is of good quality, and is affordable.
The issues related to the purchase of clothing are important even if you do not market clothing products. As we found, Gen Zers are always looking for good business, not just using a brand name to justify a purchase. Regardless of how popular or popular your brand is, you still need to highlight why your products are better than cheaper versions of competitors.
Although your Gen Z logo may not be tempting to buy your product, you can take advantage of authentic brand trust and popularity. Although Gen Z is budget conscious, they also care what their peers think of them. This means that you may still feel the need to deal with a product such as a garment if you know that people in your age group have it.
If you are marketing to Gen Z, you should ask popular influencers or happy young adult customers to discuss your product on social media. An authentic product review not only creates a sense of brand trust, it also shows Gen Z audiences that the product is popular and used by people they follow. From there, a Gen Z member can research or buy a product simply because it is more popular or has better ratings than a cheaper alternative.
Based on the research above, Gen Z is less likely to contaminate frivolous products or brand names. If you hear about these increasing studies as a marketer, you may get nervous.
But in the long run, the consumer trend of putting value in the first place shouldn't scare or shock you. In fact, it should motivate you to ask, "How can I offer my customers better value?"
While Gen Z seems more budget-conscious, it doesn't mean they won't buy anything from you at all. In fact, many of your most frugal potential customers will still buy, invest in, or use your brand's offerings if they appear valuable, help them resolve vulnerabilities, or provide a positive, memorable experience.
Ultimately, improving your brand, focusing on the customer experience and promoting positive company reviews will make a huge contribution to Gen Z and all other target groups.
Want to learn more about Gen Z? Check out these statistics on their demographics and workforce aspirations. You can also read more about their online consumption habits
If you want to learn more about Gen Z and Millennials, read this comparison piece.