Gen Z Spotlight: How and where they shop.
Despite not having reached their full economic potential, Gen Z (aka Zoomers) is already making waves in the retail world.
With $360 billion in spending power in the U.S. alone, this generation is fast becoming a key player in global consumer markets.
As Gen Z matures into its peak earning, retail brands will need to effectively connect with this group to fully capitalise on this very powerful, and fast growing market sector.
But are Gen Z’s spending habits truly different from those of other generations?
In this article, we explore interesting stats and key factors behind Gen Z’s spending behaviour.
Gen Z’s Social Behaviour
One unique aspect of Gen Z’s consumer behaviour is their socially conscious approach to spending. Gen Z cares deeply about where brands stand on social issues. Half of them believe companies should publicly take a stance on these issues.
This presents an interesting challenge for retailers. While 50% of Gen Z wants to see brands take a stand, not all generations agree. Brands must strike a delicate balance, understanding the values of their Gen Z consumers without alienating other segments.
Gen Z is also more willing than any other generation to pay 50%-100% more for sustainable products (CGS)
While 35% of consumer groups said they’d be willing to spend up to 25% more than the original price for a product that is sustainable. Gen Z were the most willing to spend big money to ensure they supported eco-friendly brands and products.
Materials used by brands were considered the most important indicator for sustainability followed by ethical practices.
60% of Gen Z also choose products because they are made by small businesses (HubSpot) 59% of Millennials also indicated they choose products because they are made by a small business. And, wait for it…. only 42% of Gen X and 20% of Boomers said the same. (Ouch!)
55% of Gen Z have rented clothing (MDP) As consumers turn away from fast fashion and overconsumption in the fashion world, fashion rental services either on a per-piece basis or as a monthly subscription, are exploding in popularity. The online clothing rental market reached $2.2 billion in 2023, according to IMARC Group.
80% of Gen Z regularly buy things second hand (eBay)
According to Thredup, the market for second-hand clothing will be worth $84 billion by 2030, over twice the size of fast fashion at $40 billion!
Saving is the main motivation for Gen Z to shop second-hand, but they are also much more likely than older generations to do so out of concern for the environment. 36% of Gen Z buy second-hand goods out of concerns for sustainability and the environment (eBay)
Gen Z’s Loyalty Toward Brands
61% of Gen Z follow brands on social media (Survey Monkey)
In comparison, just 34% of older generations follow the brands they like on social media.
29% of Gen Z are more likely to buy from brands with a social media presence (Survey Monkey)
Millennials were on par, with 30% indicating that a social media presence make them more likely to purchase from brands. In comparison, just 19% of Gen X and 11% of Boomers said they would do this.
Brand authenticity is important to 34% of Gen Z, compared to 24% of all shoppers (Survey Monkey)
Gen Z consumers also value brand transparency more than other generations. 25% of the generation says it is important in their buying decisions compared to 16% of all shoppers.
How does Gen Z Shop?
47% of Gen Z use social media as inspiration for their shopping (Survey Monkey)
Gen Z uses social media far more than other generations to guide their purchasing decisions. In comparison, 39% of Millennials said they used social media as inspiration for their purchases. Just 24% of Gen X, and 12% of Boomers do the same.
Gen Z like social media shopping, but they also still love browsing around brick-and-mortar store locations. 44% of Gen Z said they went to physical stores for shopping inspiration, more than any other generation (Survey Monkey)
41% of Gen Z consider short-form video their preferred way to discover new products on social media (HubSpot)
Short-form video (TikTok and Instagram Reels) was Gen Z’s preferred way to discover new products on social media. It was followed by ads or sponsored content at 36% and feed posts at 32%. The popularity of short-form video underpins the need for retail brands wanting to target Gen Z to invest in organic video marketing , opposed to purely relying on influencers or traditional forms of advertising .
17% of Gen Z use TikTok to research products before purchasing, far more than any other generation (Survey Monkey) In comparison, just 8% of Millennials, 3% of Gen X, 0% of Boomers, and 1% of the Silent Generation used the app.
28% of Gen Z are interested in virtual shopping, reflecting how AI and VR are reshaping the retail experience. The concept of virtually shopping with friends resonates most with this generation, given their deep connection to the online world. By comparison, 22% of all shoppers expressed interest in this emerging trend.
Gen Z’s Spending Motivators
46% of Gen Z want a quick and easy checkout when shopping (ICSC)
For Gen Z, the top priority in their shopping experience is ease and immediacy. Fast shipping ranked second at 45%, with 39% valuing the ability to get products in-store right away. Surprisingly, only 27% see customer service as important, highlighting a shift from in-person interactions to a more streamlined, independent, and often online shopping journey.
64% of Gen Z say they will pay more to shop at brands they are loyal to (eMarketer)
75% of Gen Z is also more likely to purchase something if they can customise it (Business Wire) In a world with more people than ever, in which influencers are everywhere, customisation is king. In order to capture Gen Z consumers eager to stand out from the crowd, brands need to consider how to personalise product ranges and shopping experiences.
60% of Gen Z use price to decide which brand to buy from (Business Insider)
Price was, by far, the most important factor determining where Gen Z spent their money. Trailing behind was shared values at 18%, social media presence at 9%, and the influence of friends at 7%.
Gen Z shows a bit more sales-savviness, with 76% of all this segment waiting for sales before making a purchase. This could be tied to their upbringing, as many of their early experiences were shaped by the financial impact of the Great Recession.
Just 8% of Gen Z always buy something at first sight if they want it (5WPR)
Millennials are the most willing to spend immediately, with 11% agreeing that they would purchase something they liked on first sight.
64% of Gen Z buy things second-hand to save money (eBay)
Gen Z were more likely than others to cite financial pressure as a reason for shopping pre-owned and selling their own goods on the resale marketplace.
Gen Z’s Preferred Payment Methods
52% of Gen Z prefer purchasing things with debit cards (Survey Monkey)
In comparison, just 19% prefer using credit to buy things. This preference for debit declines across generations, with older generations more likely to prefer credit to debit.
12% of Gen Z prefer using mobile payment services (Survey Monkey) and 74% of Gen Z prefer to shop on mobile (HubSpot)
Gen Z are the most likely to use alternative payment methods while shopping. That’s not surprising, as BNPL is a way for younger consumers without credit to finance certain purchases. Gen Z accounts for 14% of spending on Afterpay (Afterpay)
The concept of buying something now and paying for it later is growing among younger generations. While Millennials are the biggest users of buy now, pay later, Gen Z is the fastest growing group of Afterpay users. Fashion is by far the most popular category of purchase on Afterpay, accounting for 80% of the money Gen Z spends on the service.
What Gen Z Spend Their Money On
When they decide to spend, 52% of Gen Z prioritize purchasing technology (5WPR)
Gen Z diverges from older generations however, with its second choice: 37% chose health and wellness products, where other generations chose travel and experiences as their second choice for a splurge. 36% of Gen Z chose personal care items, like cosmetics, while older generations were more likely to splurge on dining out or home goods.
46% of Gen Z spent more on fashion than anything else in 2022 (5WPR)
Gen Z was the only generation to have clothing and fashion as their top spending category. 30% of Gen Z spent more on beauty and personal care than anything else, far more than any other generation.
75% of purchases made by Gen Z are in fashion (UKPOS) In comparison, 65% of purchases made by millennials are in the fashion industry.
Gen Z are 2.6 times more likely to buy clothing every week than other generations (Oliver Wyman)
Just 9% of Gen Z most often shop at luxury retailers (ICSC)
Conclusion: Gen Z, a Growing Force in Retail
Gen Z may still be a few years away from reaching its full spending potential, but it’s already a major influence that brands can’t ignore.
While their preferences have some overlap with older generations, like a continued interest in brick-and-mortar stores, they also have distinct priorities.
This generation expects brands to take a stand on social issues and values sustainability. They’re also highly engaged with short-form video and influenced by their online communities.
Want to learn more?
Check out these insightful articles on generational consumer habits from our partner Retail Pro:
Generational Consumer Habits Guide
Cracking the Gen Z Code
PricePoint IT are retail software specialists. We’ve been powering African retailers with innovative tech for over two decades. Get in touch today at sales@pricepointit.co.za for a demo, or scope our website at www.pricepointit.co.za
