What Brands and Retailers Need to Know About the Gen Z Consumer

Gen Z – don’t forget about them.  

While artificial intelligence (AI) is a mega-hot topic and tool these days and brands and retailers are pinning their hopes on the tool for success in 2024 and beyond, understanding a cohort of consumers who will only continue to grab more spending power as they grow is also key.  

Here’s everything we know about Gen Z

Born in the late 1990s, Gen Z is recognized as the inaugural digitally-native generation, displaying a strong preference for online shopping and digital pursuits. Embracing social media as a platform for both shopping and brand exploration, they have become adept at navigating the digital landscape. 

Having come of age amid economic instability, Gen Z tends to be financially mindful, prioritizing value for their money. Consequently, they are inclined to compare prices online, actively seek discounts, and gravitate towards brands that provide a combination of quality and affordability. 

Last month, PYMNTS found that, due to inflation and economic instability, the majority of consumers across all age groups felt financially worse off than they were in 2022 — except for Gen Z. According to the latest “Paycheck to Paycheck Report,” from PYMNTS Intelligence, 41% of Gen Z consumers reported an improvement in their financial situation that year compared to 2022, while 31% expressed the opposite sentiment. 

Gen Z individuals were also the most inclined to mention a rise in income for that year, and this manifested in their increased spending on specific occasions. For instance, according to other research from PYMNTS Intelligence, Gen Z was the generation most likely to boost spending on gifts during the holiday season, showing a 55% increase compared to the previous year. 

Social media and shopping 

Gen Z shoppers use social media the most for browsing and shopping because they find products attractive there.  

According to PYMNTS Intelligence data, 68% of Gen Z consumers searched for products on social media, and 22% completed a purchase, the highest shopping rate across all generations. This trend seems to be lasting, with three out of four Gen Z consumers planning to make purchases on social media, compared to less than half of the overall sample. 

Instagram and TikTok are the main social networks for browsing and purchasing products for this generation, especially clothing, apparel, and beauty products. 

At the same time, they are the most likely to worry about overspending. When shopping online, they actively look for discounts and promotions. 

Payment of choice 

Gen Z mostly relies on credit cards, like other generations, but they use them less because many don’t have access to credit at a young age. According to PYMNTS Intelligence data, about 42% of Gen Z uses credit cards for payments, while it’s 74% for baby boomers and seniors. 

Aside from credit cards, Gen Z is getting into Buy Now, Pay Later (BNPL), with around 14% already using it. The high credit card rates in 2023 might have impacted Gen Z’s lower use of cards and personal loans, possibly leading to more people using BNPL. 

PYMNTS Intelligence found that 39% of Gen Z uses BNPL for buying clothes, the highest rate across products and generations. Electronics come second, suggesting that Gen Z tends to use credit options more for non-essential items. 

Card-linked offers 

PYMNTS research, in collaboration with Banyan, highlights insights from the study “Leveraging Item-Level Receipt Data: How Card-Linked Offers Drive Customer Loyalty.” Surveying over 2,000 U.S. consumers, the research reveals that 23% of Gen Zers used card-linked offer programs for specific products in the last 12 months, with 22% using them for merchants.  

Notably, Gen Z stands out as the age group that predominantly utilizes card-linked offers for products. Despite constituting only 13% of loyal shoppers and 19% of new customers, Gen Z presents a potential target for long-term brand relationships. Personalized rewards and relevant card-linked offers can attract and engage Gen Z, fostering loyalty and increasing sales. 

Read more: Gen Z Favors Brands vs Retailers for Card-Linked Offers 

 

The post What Brands and Retailers Need to Know About the Gen Z Consumer first appeared on PYMNTS.com.