Born between 1997 and 2012, the oldest members of Gen Z are finalizing their degrees and setting up homes, all while influencing the buying decisions of those within their current households, often GenX or young Baby Boomer parents and family members. Furthermore, Gen Z is anticipated to surpass millennials in spending power by 2031 and is projected to hit $33 trillion in overall income by 2030, so earning their loyalty now can position merchants well for the future.
Gen Z Spending Trends
Gen Z has grown up in a hyper-connected world and spends an average of 3 hours a day on mobile devices. They also have seen the financial struggles of millennials and are more fiscally responsible. These factors have influenced their spending trends, including:
- Influenced by Social Media
Gen Z is influenced by and makes purchases directly from social media platforms. In fact, 80 percent of shoppers have bought a product displayed within their feeds. Merchants whose brands are active on platforms and using social commerce tools like in-app checkout can see increased revenue growth from Gen Z buyers.
- Shop Online and In-store Equally
While Gen Z shoppers are naturally tech-savvy, and 95 percent of them enjoy shopping online, just as many report an affinity for shopping in-store, where they can see, touch, or try a product before buying it. Merchants should display their products on both online and in-store platforms and engineer user-friendly checkout experiences however shoppers engage.
- Spend the Most on Pets
Four-legged family members rise to the top when it comes to Gen Z spending habits. This demographic outpaces all other generations in the pet-related spending category, dishing out an average of $1,163 annually. It’s also no surprise that 47 percent of Gen Zers have made pet purchases from social media posts.
- Purchase Secondhand
Environmentally conscious individuals, Gen Z consumers are aware of the impact of their purchases. Therefore, 80 percent of Gen Zers are likely to buy previously used items or shop at consignments and other secondhand establishments.
- Save without Sacrifice
Having seen millennials’ financial trials and tribulations, Gen Z consumers place fiscal responsibility as a top concern, saving about one-third of their income. However, because of this, these consumers have the liquidity to make large purchases without sacrificing their lifestyles.
- Expect More From Loyalty Programs
Gen Z consumers are enamored by loyalty programs, with 60 percent of these consumers thinking all brands should offer them. However, this isn’t a program that appeals to baby boomers. Gen Z spending places value on things money can’t buy like personalized experiences and pay-it-forward charitable donations made by the merchant to causes they care about.
- Avid Users of Buy Now, Pay Later
About 60 percent of Gen Z prefers Buy Now, Pay Later (BNPL), a no-interest consumer credit product that allows consumers to pay for purchases through typically four equal payment installments over other credit card and financing options. Merchants should have the flexibility within their payment solutions to accept Buy Now, Pay Later to capitalize on this trend.
How to Help Retailers Prepare for Gen Z Holiday Shoppers
Solutions providers can help your clients successfully capture more Gen Z spending over their competitors by providing them with the right technology, for example:
Make sure retailers are ready to offer smooth in-store and online transactions, accepting a range of payment choices, from credit and debit to contactless and alternative payments. Most Gen Z consumers (60 percent) leverage their mobile devices as their payment method of choice, so online and in-store payment solutions that can accept payments via mobile wallets will be critical.
A must for the Gen Z consumer, programs that offer flexibility and personalization will capture more Gen Z spending over those that don’t. Furthermore, 66 percent of Gen Z want programs focusing only on pitching personal recommendations may fall flat.
Instead, Gen Z consumers respond to programs offering points or rewards for posting and tagging their experience post-purchase on a brand’s social platform or engaging post-purchase with a brand’s digital communications, like clicking on a personalized link within a marketing email. Ensure the loyalty solutions on your line card can provide the flexibility for merchants to build programs that will appeal to Gen Z consumers.
Social Selling Tools
Because Gen Z consumers spend an average of 4 or more hours per day on social media, helping merchants position themselves for social selling will be critical for success. Providing solutions that integrate with social commerce tools and accommodate online payment pages that can easily be linked to from social platforms will set your merchants up for growth in Gen Z purchases.
Build a Winning Strategy
Beyond providing the right technology solutions, build stronger relationships with your merchants by demonstrating that you’re watching Gen Z spending trends and how they impact merchants and their retail industries.
For example, some retail niches like pet stores, resale shops, and own-label products align more with Gen Z consumers’ spending habits. Help retailers maximize revenue for these products by strategically positioning them to this demographic. Additionally, helping merchants market their brand values will help their products resonate with sustainability-conscious Gen Z consumers. By educating your clients about Gen Z spending habits, you’ll set your merchants up for a successful Q4 and demonstrate your value as a long-time business partner.
Want to learn more about the solutions that can deliver the experiences Gen Z consumers want? Contact Datacap Systems.