Gen Z (born 1995-2012) are a generation shaped by social media and raised in the aftermath of the 2008 global financial crisis. According to the latest report by Buy-Now-Pay-Later (BNPL) provider Afterpay, Gen Z are financially savvy; taking control of their finances at an earlier age than any generation before them and seeking financial tools that help them manage their cashflow and avoid debt.
Afterpay rose to giddy heights on the back of changing consumer behaviour (largely of Millennials), who have flocked to BNPL services to manage their cashflow and budget responsibly.
Just like Millennials and the financial crash of 2008, Gen Z are the generation that will feel the brunt of the pandemic for years to come; with under-25’s being 2.5 times more likely to have been working in a sector affected by lock-down according to a report by Fiscal Studies. They are responding by rejecting overt displays of wealth and prioritising their emotional and physical health over financial success.
Understanding the impact that Gen Z has on retail and spending will be crucial in the years to come. Each of these macro trends is worth examining as they contain some useful insights that brands can learn from, when marketing to Gen Z.
Anti-status money and ethical consumers
The role of money is being reassessed and has shifted into an interesting space for Gen Z. They are rejecting overt displays of wealth and are more financially aware and responsible than Boomers or Gen X. In Australia, apps like Raiz are gaining ground with consumers providing them with an entry-level platform for micro-investing.
They care about sustainability but also about convenience, creating a paradox. They seek an individualised aesthetic that is peer-approved, but they expect brands to embrace circular economy waste practices and ethical production.
Commerce has become a mix of entertainment and community as consumers increasingly look for alternative ways to exchange and access products online. Gen Z are the big drivers of the direct-to-consumer retail trend and a swag of new players are blending social media with retail and adopting mobile-first pathways to purchase.
The ability for Gen Z to shop from Instagram, TikTok, WeChat, Pinterest or YouTube is now a reality, so digital integration for brands and payment platforms is a requirement, rather than a nice-to-have.
Bubbling under the surface; and accelerated by COVID-19, are emerging technologies virtual reality and augmented reality. These tools are extending Gen Z’s experience of the world, offering them a new way to engage with brands, and each other, in a blended physical-digital world.
Less is more, when it comes to marketing to Gen Z
Having grown up with cancel-anytime subscription services like Netflix and Spotify, they are keen to lease, co-own, rent or share products or services, so brands that offer flexible (stress-less) solutions will get ahead with this cohort.
They are looking for brands to represent normal and diverse people in their imagery and rejecting glossy depictions of unattainable lifestyles. They care about sustainability, transparency and authenticity.
There is no doubt that COVID-19 has accelerated these trends, the full impact of this shift will be driven primarily by Gen Z. You can download the full report here.