New research from Credit Karma says the current cost of living is sparking “failure to launch” for Gen Z, with nearly 30 percent of Gen Z, between the ages of 18 and 25, continuing to live at home with parents or relatives.
Saying it’s an expensive time to be alive would be putting it mildly, Credit Karma’s researchers say the financial impacts of the ongoing crisis are widespread, bringing up the cost of living in the U.S. and elsewhere in the world.
For those 27 percent of Gen Z consumers who are not living at home, this means living with a romantic partner, while 13 percent say they share rent with multiple roommates. Further, 32 percent of this age group say they spend half of their monthly income on housing. With this in mind, 28 percent of Gen Z reported they just aren’t able to save money right now and 37 percent of respondents also admitted to getting financial assistance from family or friends to pay for housing.
While many respondents (47 percent) cited not earning enough money as the cause for not being able to save money, another 40 percent said their income was not keeping pace with inflation and 39 percent blamed rising rent prices. However, Gen Z also has a desire to spend and has struggled to save because they’re spending more on things like shopping, travel and concerts.
“With the current economic conditions, it’s harder than ever for consumers, especially young people, to become financially independent,” said Colleen McCreary, chief people officer and financial advocate at Credit Karma. “With the current economic conditions, it’s harder than ever for consumers, especially young people, to become financially independent. Factors like inflation and the rising cost of living are making it more difficult for younger generations to make ends meet, especially when the temptation to spend on experiences, like concerts and shopping, remains high.”
There is however a cohort of Gen Z who say their spending has decreased. According to the company’s survey, 45 percent are cutting costs in dining out, groceries, experiences and travel.
Anecdotally, McCreary told WWD, “we’ve heard that Gen Z is being more vigilant about their spending by staying on top of their bank statements, which can help limit unnecessary or even duplicate subscription services, for example. This is exactly what consumers should be doing right now, building their budgets based on their priorities and getting crafty about how to allocate their money.”
Meanwhile, similar reports say Gen Z and Millennials are still shopping with a recent survey from ParcelLab finding that these consumers are waiting to shop for two key moments.
Perhaps unsurprisingly, the number-one sales moment for these groups was found to be the Black Friday and Cyber Monday weekend, with almost half (46 percent) saying they prefer to wait to purchase something in hopes that it will be on sale or discounted. ParcelLab notes that while Black Friday weekend sales have shown to have taken a hit in the last few years, especially taking supply chain issues into account, retailers are likely to see more attention given to the shopping holiday this year as inflation and labor shortages continue to negatively impact the retail industry.
The second notable sales moment for Gen Z and Millennial consumers is Amazon Prime Day. The company’s survey found that 31 percent of surveyed consumers plan to wait to purchase on this annual shopping holiday this year.
At the same time, ClearSale’s annual report, State of Consumer Attitudes on E-commerce, Fraud and CX 2021, found that during this current period of rapid disruption and digital transformation, Gen Z has accumulated high expectations for the shopping experience. Key factors include wanting good prices, security and frictionless shopping.
Notably, the authors of the report said it is important for retailers and brands to remember that Generation Z makes up the largest and most diverse consumers of any generation in history and as their buying power grows all of their needs will have to be taken into consideration to stay competitive in an increasingly complicated market.
Asking what Gen Z consumers want in an e-commerce shopping experience, ClearSale found four key takeaways as it relates to shopping behaviors.
The first takeaway is that these young consumers are continuing to do most of their shopping online. Almost half of the consumers surveyed said they shop online at least once a week and spend between $50 to $100 a month on online shopping, excluding food purchases, digital goods and airline tickets or hotel stays. Items they are most likely to purchase during these online shopping sessions were revealed as clothing and accessories, electronics and beauty supplies.
The second takeaway is that this consumer is looking for good prices, convenience and security. In fact, of the factors that keep Gen Z shoppers online instead of going in-store 74 percent said the price was the top reason, 66 percent said fast shipping and delivery options, and 51 percent said convenience. Something that would make a consumer go in-store, or potentially abandon a purchase, was the possibility of a scam (59 percent) or if they can’t be sure if the site is legitimate (53 percent).
The third takeaway was a preference to pay with digital wallets. Eighty-one percent of respondents said they would sometimes or even always use a digital wallet if given the option over entering their credit card information directly.
Lastly, ClearSale found Gen Z consumers do not like to be surprised at the end of making a purchase. Seventy-one percent of respondents found out that shipping was too expensive or would take too long has meant abandoned purchases and another 55 percent said they had abandoned a ready cart because of extra fees they were not previously aware of. Thirty-five percent of consumers also told the company they had left a website without a purchase because of a complicated checkout process.
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