Generation Z consumer behavior: What brands need to know

Marketers have eagerly anticipated the arrival of Gen Z, viewing it as a potential spending powerhouse.

But as these young consumers hit their mid-20s and begin flexing their economic muscles, they’re arriving with entirely different perspectives, preferences, and expectations than previous generations.

Brands need to understand Generation Z consumer behavior and adapt as soon as possible. While it’s still early days, trends about these new consumers are surfacing, and some may surprise you.

Generation Z consumer behavior takes shape

Do some quick math and that gives you roughly 2.47 billion people worldwide between 10 and 25 years old. That’s about a third of the world’s population, and its spending influence is likely to grow significantly in coming years.

Careful readers might point out those statistics include many children who probably don’t have money beyond the allowance their parents give them. And that would be true. However, reports find older Gen Zers account for about 40% of global consumer spending, which translates into roughly $143 billion of financial might. Dive deeper and you find $43 billion of that prowess comes from allowances (apparently, they have generous mothers and fathers).

Marketers have been planning for this group’s arrival in the hope that it would spend more freely. It’s too early to know whether this will be true in the long run, but Gen Zers (as well as millennials) reportedly spent more last year than they did before the pandemic.

Digital natives go for the old brick and mortar

Where and how Gen Zers spend, however, has changed since the pandemic’s onset with some interesting developments in their consumer behavior.

For example, two years ago most consumers split shopping time between brick-and-mortar stores and online sites. Online activity fit neatly into a model we call e-commerce. And as we know, e-commerce boomed at the expense of physical outlets when the world went into quarantine.

Since then, though, an odd thing has happened. Gen Zers, the first truly digitally native generation, and the one most comfortable with digital and mobile technology, helped lead the return to physical stores. Part of this may have been rebelling against online retail giants amassing too much influence. It could also have been a nostalgic draw to shopping live with friends in actual stores.

In fact, a CM Group study found they have a higher preference than millennials for in-store shopping in multiple categories, including electronic devices and clothing.

Other research has shown Gen Zers will ditch online shopping if retailers offer exceptional in-store experiences to draw them away.

Gen Z and smartphone shopping

Despite their attraction to brick and mortar shopping, Generation Z consumers still rely on their smartphones. Gen Zers, unlike previous generations, are more likely to shop from a smartphone as opposed to a tablet or computer.

This makes sense when you stop to consider a few statistics about their behavior, such as:

• 55% of Gen Zers use smartphones five or more hours each day, and 26% are on them more than 10 hours per day
• Nearly a third (31%) freak out if they can’t use their smartphone for at least 30 minutes a day
• More than 40% would rather lose their wallets than their smartphones

Driving social commerce growth

Another trend about Generation Z consumer behavior that’s become clear: They really like social commerce.

Social commerce, put simply, is the process of selling stuff through social media (duh). Apps such as Instagram, TikTok, Snapchat, Spotify, and Twitter have features enabling this. Older generations (like mine) may not be as inclined to take advantage of such capabilities. In fact, they might be annoyed by the incessant newsfeed interruptions and popup ads. But Gen Zers don’t mind.

• The vast majority (97%) of Gen Zers use social media as their top source of shopping inspiration
• Two in five (40%) follow brands they like on social media
• Nearly three in four (73%) of U.S. Gen Z shoppers want brands and retailers to connect with them about new products and promotions through Instagram and half (49%) prefer Snapchat interaction
• More than 60% of TikTokers purchase products advertised by brands on that site
• The global social commerce market was nearly $500 billion in 2020 and is expected to reach $3.4 trillion by 2028 – in North America, that’s driven largely by Gen Z and millennial spending

Gearing up for the next generation

So, what’s a marketer to take away from all of this – other than a need to focus on social and mobile commerce and omnichannel? Experts, such as CM Group, have a few recommendations:

1. Use data to unify commerce experiences. Gen Zers want the same deals everywhere they go. And they want it personalized to their needs. So long as retailers don’t go too far or get too creepy with their outreach, Gen Zers are likely to reciprocate and spend money with them
2. Stay current with preferred channels and devices. Constantly monitor shifting Gen Z sentiment to know if they’re moving beyond certain devices or social media sites. It can happen in the blink of an eye. Missing a swing can be disastrous for brand loyalty
3. Keep the supply chain flowing. Gen Zers aren’t particularly patient. If they can’t get a product shipped to them quickly and efficiently, they’ll move to retailers that don’t have that problem
4. Prioritize sustainability. Gen Zers care deeply about the planet. In fact, three-quarters of them view sustainability as more important than brand names when making purchases. Stocking environmentally friendly products will appeal to this generation, but only if it’s done with true commitment.
5. Reimagine physical store settings. Gen Z desire for in-person shopping experiences is strong, but its bar for such experiences is equally high. Retailers need to step up with unique experiences that they’ll value.

It’s too early to tell how influential Gen Zers will be in the long term to the world of commerce. But there are enough signals now for retail marketers to spot some trends.

And by aligning to those preferences now, it’s possible to connect, engage, and profitably adjust to their needs over time.