Comprising 26 percent of the global population, Generation Z is a large demographic. But a new report from Fung Global Retail & Technology also reveals how, what and why they spend.
And in the U.S. alone, consumers spent $829.5 billion on Generation Z, “whose members have not yet all been born,” said report author Deborah Weinswig, managing director at the firm. “This is equivalent to 6.8 percent of total U.S. consumer spending last year, and was an 8.1 percent increase from 2014. We estimate that around $66 billion of the 2015 total was spent on discretionary categories, while most of it was spent on essential or semi-discretionary categories such as housing, food, clothing and transportation.”
One key finding of the research is the role of social media – not only from a use perspective, but how it impacts their behavior. As a generation that has grown up immersed in technology, Weinswig noted, they have been greatly influenced by it. As a result, Weinswig said this generation “tend to attach great importance to personal appearance: they are the first generation to grow up ‘in public’ online, i.e., documenting their lives on social media.”
“Evidence suggests that this is leading even young children to use beauty products and is raising body consciousness among young people,” Weinswig said in her report. “The pressures presented by social media are similarly encouraging Gen Zers to spend on leisure services, such as vacations, dining out and going out. The compulsion to be perceived on social media as living a fun, interesting, experience-rich life – and the consequent spending on leisure in support of that – is what we call ‘the Instagram effect.'”
The consumer trend of spending on “experiences” over “buying stuff” has taken a toll on the fashion apparel market over the past several years with teen retailers Pacific Sunwear, Quiksilver, Wet Seal, and more recently Aeropostale all filing for bankruptcy. Complicating these market conditions is the growth of the “on-demand” economy, which pressures apparel retailers as they deal with consumers who expect to shop for and buy goods whenever and where ever they want.
And this behavior is apparently the most notable for Gen Zers. “The on-demand economy, ranging from video-on-demand services such as Netflix to dates-on-demand apps such as Tinder, is making Gen Z the most demanding, least-patient generation ever; this is the ‘always-on, on-demand’ generation,” Weinswig said.
Helping to fuel this behavior is technology. “Gen Z’s innate familiarity with technology is not in itself especially important, although tech firms and online retailers are likely to benefit from the strong demand that this customer base will generate in the years ahead,” Weinswig noted. “What is more relevant for a wide range of industries is how Gen Zers’ experience growing up with this technology has affected their behaviors and attitudes.”
In her report, Weinswig cited some of the “significant hardware and software launches” that occurred during the Gen Z era. Here’s her list:
Major Consumer Tech Launches Since 2001
Year: Product or Service:
2001 Apple iPod
2004 Facebook, GrubHub
2005 YouTube, Amazon Prime
2007 Apple iPhone, Netflix streaming
2008 Airbnb, Spotify, EAT24, Android OS.
2009 Uber, Grindr
2010 Apple iPad, FaceTime, Instagram, WhatsApp
2011 Snapchat, Amazon Prime Video, WeChat
2012 YPlan, Tinder
2014 Uber Eats, Apple Pay, Amazon Prime Now
2015 Apple Watch, Periscope
2016 Pokémon Go, Oculus Rift