Tag spending

How does Gen Z spend? Carefully.

spend

Gen Z has learned that they have to be careful with their money. And they are. According to McKinsey research, they are “willing to spend on experiences that enrich their daily lives” but they are not interested in going into debt to do it. Here are some of the reasons behind this generational phenomenon.

  • Gen Z has grown up in a time of financial upheaval. They lived through downs, ups and then downs again of the economy—they came of age through the Great Recession, followed by a decade of a bull market, and most recently lived through the global COVID-19 pandemic, accompanied by unprecedented levels of inflation. 
  • As digital natives, Gen Z is better informed about the current challenges to our economy than previous generations were at their age. Although some of their news sources can be somewhat suspect, they are aware of the drama occurring outside their teen bubble—student debt, bankruptcy, strikes, the war in Ukraine, the cost-of-living crisis, potential government shutdowns, etc.
  • They had the advantage and experience of being a generation that has grown up with access to many touchpoints—online research, social media, and online reviews—all of which they scrutinize before they spend their own money (Note: I’ve specifically highlighted the money they consider “theirs,” as I’ve observed that funds provided by parents tend to be spent with “less restraint” … based on my personal experience with my three teens!).
  • Their tastes seems to be reflective of their viewpoint. As we’ve discussed in our articles on Gen Z, thrift stores, which sell used merchandise at a fraction of the cost, are quite popular. Which came first the fashion choice or the fiscal responsibility?  We would suggest their frugality came first pushing this fashion trend to the forefront.

So, some quick thoughts on what this means to marketers. Given this fiscally sensitive generation, below are six considerations that brands should focus on:

  • Highlighting the value, affordability and, most importantly, quality/durability/longevity of their products or services
  • Being as adaptable as Gen Z is when it comes to the changing economic trends by offering flexible, adaptable, customizable services and products and solutions that can evolve with changing circumstances
  • Offering user-friendly, secure and ‘mobile-first’ digital payment solutions
  • Maintaining a strong online presence and actively managing their online reputation. This includes having an up-to-date and user- and mobile-friendly website, engaging on social media platforms and sustaining a two-way conversation—listening and responding to them and their reviews, good or bad!
  • Partnering authentically with influencers and highlighting user reviews both of which can lead to positive ‘word-of-mouse’ recommendations and increased credibility
  • Offer clearly communicated transparent pricing structures without hidden fees and charges. Discounts, even if short term, if they are genuine work too!

Gen Z likes to spend, but as Yoda would say “Spend carefully, they do.”

Young Consumers And This Year’s Holiday Spending: Are They Like Their Parents?

“The economy has scared me a bit, so I’ve cut back on spending all of my money. Instead, I have saved about 40% of it, so I’ll have something to fall back on later.” – 17-year-old girl from New York.

With the economy tanking, how will that impact the spending behavior of kids, teens, twenty-somethings?

Even though it is in the inherent nature of teens to do the opposite of what their parents tell them, they will likely follow step and spend less this holiday season. They really have no choice – for two reasons.

First, since their parents may be cutting back on allowance to conserve cash, young consumers are likely to have less to spend. Second, young consumers who usually have regular income from a job are likely to be earning less, if anything at all. When companies cut back on employment, jobs for teens and young adults are often the first to go.

That said, the downturn should not freeze spending entirely this holiday season. In fact, young consumers will continue to spend on their favorite items – technology is still at the top of the list. Young consumers will place an even greater premium on value and they are likely to allocate fewer of their precious dollars to others and focus more on themselves. The question that remains, however, is what happens once they have quickly gone through their savings? This will be the first time that a generation who has grown up in the economic boom years, will have to answer this question.