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Generation Z—the 18 to 24 year old digital natives born who can’t recall a world without smartphones and rapid technology—now make up 20 percent of the U.S. population. Born after 1997, this cohort is making their mark in the economy as they spend an estimated $143 billion per year. The eldest members are in their early 20s, graduating college and entering the workforce for the first time.
This generation differs greatly from their predecessors in saving, spending and overall money management habits, as well as what they value most in the brands they interact with, the type of jobs they’re after, and their goals for the future.
Here are a few key characteristics of this generation:
- Their ability to find answers quickly by accessing information online enables them to make informed decisions and become smart shoppers.
- Many have called this generation the most financially savvy because of their keenness for saving paired with their thrifty, entrepreneurial spirits.
- Their sense of independence and self-reliance is partially because of the digital world they grew up in—many received their first mobile device by the age of 10.
Read on to learn more about Generation Z’s spending habits and their other financial patterns as we enter 2021.
How Generation Z Shops Online and Offline
Generation Z is known as the first digitally native generation and does not differentiate between online and offline channels. Having grown up in a hyperconnected world, they expect the same quality and speed of an online channel to translate to the physical stores they visit. They’re also much savvier with online shopping channels than their predecessors and aren’t easily swayed by gimmicks or celebrity influencers. Take a look at how Gen Z shops.
Online Shopping Habits
Since this generation never knew a world without the internet, they have high expectations for online channels and a low tolerance for any slowdowns or glitches. Members of this cohort place a high value on technology and having the information they need at their fingertips.
They’re also skeptical about giving away their information since they’ve grown up in an age of high-profile data breaches for major brands. Read through our stats below to learn how Gen Z behaves online:
- 26 percent of Gen Z report using social media to make a purchase in 2020. [Source: National Retail Federation]
- Only 25 percent of Gen Z said they feel in control of their data online in 2020. [Source: Global Web Index]
- 60 percent of Gen Z would prefer to keep their data over exchanging it for free services in 2020. [Source: Global Web Index]
- Gen Z reports spending around four and a half hours on their mobile devices per day in 2020. [Source: Global Web Index]
- Gen Z reports spending a little over three and a half hours per day on their laptops in 2020. [Source: Global Web Index]
- Gen Z spent over 8 hours a day online in 2020. [Source: Global Web Index]
- 28 percent of Gen Z consider a simple online checkout experience as a purchase driver in 2020. [Source: Global Web Index]
- 58 percent of Gen Z report free delivery as a major purchase driver in 2020. [Source: Global Web Index]
- 43 percent of Gen Z cite coupons and discounts as a major purchase driver in 2020. [Source: Global Web Index]
- 72 percent of Gen Z reports purchasing an item online in the last month at the time of being surveyed in 2019, whether on a computer or their mobile device. [Source: Global Web Index]
- 41 percent of Gen Z paid for a purchase using their mobile phone in 2019. [Source: Global Web Index]
- At the time of being surveyed in 2019, 80 percent of Gen Z said they browsed an online retail store in the last month using a mobile device. [Source: Global Web Index]
- At the time of being surveyed in 2019, 56 percent of Gen Z said they browsed an online retail store in the last month using a PC or laptop. [Source: Global Web Index]
- At the time of being surveyed in 2019, 73 percent of Gen Z said they used a mobile device in the last month to search for an item they wanted to buy. [Source: Global Web Index]
- At the time of being surveyed in 2019, 41 percent of Gen Z said they used a PC or laptop in the last month to search for an item they wanted to buy. [Source: Global Web Index]
- A poor shopping experience prevented 22 percent of Gen Z from making a purchase online at least three to four times in 2019. [Source: Kearney]
- 82 percent of Gen Z said that peer reviews were extremely important to them when shopping online in 2019. [Source: Kearney]
- 77 percent of Gen Z said that personalized recommendations were extremely important to them when shopping online in 2019. [Source: Kearney]
- 62 percent of Gen Z report being worried about how companies use their personal data in 2019. [Source: Global Web Index]
- At the time of being surveyed in 2019, 61 percent of Gen Z said they made a purchase online in the last month using a mobile device. [Source: Global Web Index]
- At the time of being surveyed in 2019, 32 percent of Gen Z said they made a purchase online in the last month using a PC or laptop. [Source: Global Web Index]
- 46 percent of Gen Z said they had used an ad-blocker in the last month at the time of being surveyed in 2020. [Source: Global Web Index]
- Only 26 percent of Gen Z said they were comfortable with their apps tracking their activity in 2020. [Source: Global Web Index]
- 62 percent of Gen Z reported using a private browsing window in the last month at the time of being surveyed in 2019. [Source: Global Web Index]
- 50 percent of Gen Z reported deleting cookies online in the last month at the time of being surveyed in 2019. [Source: Global Web Index]
- 33 percent of Gen Z reported using a VPN or Proxy Server in the last month at the time of being surveyed in 2020. [Source: Global Web Index]
- Of the Gen Z who used an ad-blocker in 2019, 49 percent report doing so because they thought there were too many ads online. [Source: Global Web Index]
- 23 percent of Gen Z said they blocked ads in 2019 because they were annoying or irrelevant. [Source: Global Web Index]
- 40 percent of Gen Z reported using another device to shop online while watching TV in 2019. [Source: Global Web Index]
Brick-and-Mortar Shopping Habits
Contrary to what you might think, the majority of Gen Z prefers to make purchases in store. One reason could be that they lack access to credit cards to make online purchases (although they do use debit cards.) We may see this preference change over time.
However, it’s important to note that members of Generation Z are not blinded by technological “bells and whistles” with any shopping channel. Their priorities lie in the basic retail experience: product availability, quality products and efficient service. While they may be swayed as long as any addition enhances the shopping experience, they have a low tolerance for negative or inefficient experiences while they shop. Read on to see what expectations Gen Z has for their brick-and-mortar shopping trips:
- Contrary to the nickname of “digital nomads” that many have dubbed them with, 81 percent of Gen Z still said they like shopping in-store in 2019. [Source: Kearney]
- 74 percent of Gen Z cited a “well curated store experience focused on a limited number of products” as either extremely or moderately important to them in 2019. [Source: Kearney]
- 73 percent of Gen Z said they utilize shopping in-store as a way to discover new products in 2019. [Source: Kearney]
- 65 percent of Gen Z said they preferred shopping at brick-and-mortar stores in order to trial purchases in 2019. [Source: Kearney]
- 55 percent of Gen said they planned to do their holiday shopping at brick-and-mortar stores in 2019. [Source: Shopkick via Retail Dive]
- When asked what they want in a brick-and-mortar store, 83 percent of Gen Z reported having access to things like maps and kiosks was either extremely or moderately important to them in 2019. [Source: Kearney]
- 79 percent of Gen Z believe that security elements (such as guards) are important in a brick-and-mortar environment. [Source: Kearney]
- 86 percent of Gen Z said they’re after special promotions, like free samples and giveaways, in the brick-and-mortar stores they visit. [Source: Kearney]
- A poor shopping experience prevented 24 percent of Gen Z from making a purchase in store at least three to four times in 2019. [Source: Kearney]
- 8 percent of Gen Z said a poor shopping experience prevented them from making a purchase in store at least five to ten times in 2019. [Source: Kearney]
- 66 percent of Gen Z said they’d be inclined to shop at physical stores offering technology that enhanced their shopping experience. [Source: Kearney]
- 72 percent of Gen Z want retail technology that can lessen the time they spend standing in line. [Source: Kearney]
- 61 percent of Gen Z would like retail technology that streamlines the process of finding the products they’re looking for in stores. [Source: Kearney]
- 58 percent of Gen Z said they use shopping in-store as a way to disconnect from social media in 2019. [Source: Kearney]
How Gen Z Views Brands
Members of Generation Z expect brands to be transparent, ethical and responsible in all aspects of their business. Neglecting to do so can result in a lost opportunity to collect information or lost business altogether from this generation.
Generation Z cares far more about the value and quality of their purchases than their loyalty to the brand that makes them, so brands need to work extra hard to keep Gen Z’s business around. Take a look at the different brand preferences Gen Z has and what they expect from today’s brands:
- 72 percent of Gen Z said they’d more readily make a purchase from brands they follow on social media in 2020. [Source: National Retail Federation]
- 47 percent of the Gen Zers following brands on Instagram in 2020 have purchased something directly through the platform. [Source: National Retail Federation]
- 23 percent of Gen Z report following social media accounts or brands they might make a purchase from in 2020. [Source: Global Web Index]
- A nod to their proposed lack of brand loyalty, Gen Z is 22 percent more likely to unfollow a brand online. [Source: Global Web Index]
- 75 percent of Gen Z said they engage with brands on Instagram in 2020. [Source: National Retail Federation]
- Only 15 percent of Gen Z feel represented in the brand advertisements they see in 2020. [Source: Global Web Index]
- 56 percent of Gen Z believe brands should be innovative in 2020. [Source: Global Web Index]
- 38 percent of Gen Z believes brands should be young in 2020. [Source: Global Web Index]
- 42 percent of Gen Z believe brands should be trendy or cool in 2020. [Source: Global Web Index]
- 40 percent of Gen Z believe brands should make you feel valued in 2020. [Source: Global Web Index]
- 35 percent of Gen Z believe brands should offer customized products that are personalized to their needs in 2020. [Source: Global Web Index]
- 33 percent of Gen Z believe brands should support charities in 2020. [Source: Global Web Index]
- 58 percent of Gen Z prefer their purchases to come in eco-friendly packaging. [Source: Kearney]
- 60 percent of Gen Z said that endorsements on social media from non-celebrities were extremely important to them when shopping online in 2019. [Source: Kearney]
- 51 percent of Gen Z said that endorsements on social media from celebrities were extremely important to them when shopping online in 2019. [Source: Kearney]
- 83 percent of Gen Z said no matter what level of trust they hold for a brand, they still do their research before purchasing from them. [Source: IBM]
- 57 percent of Gen Z said they want their purchases to be environmentally sustainable in 2019. [Source: Kearney]
- 50 percent of Gen Z said they’re after locally sourced products in 2019. [Source: Kearney]
- 79 percent of Gen Z cited health and wellness benefits as important to them when choosing what to buy. [Source: IBM]
- 71 percent of Gen Z cited natural or organic ingredients as important to them when choosing what to buy. [Source: IBM]
Financial Habits
Despite their young age, Generation Z holds $34 billion in buying power alone in 2020, and influenced household spending to the tune of $600 billion. In addition to their own dollars, they also exercise a lot of influence over their households. Their digital savviness comes into play once again in this area. Their expertise enables them to guide their families through different purchase phases, from initial product evaluation to the final purchase itself.
Members of Gen Z are also financially savvy and keen on earning money, even at their young age. Freedom and flexibility at work are key values of this generation, and the job opportunities they flock to will be those that offer work-life balance and some level of autonomy over their schedule.
- Gen Z had an average of $115 in spending money each month in 2020. [Source: YPulse]
- 36 percent of the 2020 workforce was projected to be made up by Gen Z employees. [Source: Financial Executives International]
- 68 percent of Gen Z used some form of budgeting system in 2020. [Source: Nerd Wallet]
- 30 percent of Gen Z had credit card debt in 2020. [Source: Nerd Wallet]
- 87 percent of parents said their Gen Z children had a level of influence over the purchases they made in 2019, whether for the household or for their children. Source: [National Retail Federation]
- Gen Z kids influenced 48 percent of purchases their parents made for them in 2019. [Source: National Retail Federation]
- Gen Z kids influenced 36 percent of household purchases made by their parents in 2019. [Source: National Retail Federation]
- Gen Z reported wanting to work in interactive work environments that provide flexibility and work life balance in 2019. [Source: Workforce Institute]
- 32 percent of Gen Z said they’re the hardest working generation in 2019. [Source: Workforce Institute]
- 26 percent of Gen Z said they’d be willing to work longer hours in return for a flexible work schedule in 2019. [Source: Workforce Institute]
- 31 percent of Gen Z reported feeling hopeful about their future of work in the U.S. in 2019. [Source: Workforce Institute]
- 57 percent of Gen Z reported expectations of being promoted at least once per year in 2019. [Source: Workforce Institute]
- 44 percent of Gen Z said they value good healthcare coverage from their employer over paid time off in 2019. [Source: Workforce Institute]
- Many Gen Z cohorts say they would prefer to do gig work, and 46 percent of them took on some form of gig work in 2019. [Source: Workforce Institute]
- Only 10 percent of Gen Z solely worked gig jobs in 2019. [Source: Workforce Institute]
- 18 percent of Gen Z worked part time gig work in 2019. [Source: Workforce Institute]
- 18 percent of Gen Z took on gig work in addition to another job in 2019. [Source: Workforce Institute]
Gen Z vs. Millennials
Millennials have been center stage for many years, and understandably so—they recently became America’s largest generation, reaching 72.1 million, surpassing the 70 million Baby Boomers living in the U.S. As Millennials begin to age out, however, Generation Z is beginning to capture the world’s attention with their different spending, saving and earning habits. Millennial spending habits differ quite a bit from their Gen Z counterparts. This is partially because Gen Z is very price conscious and focuses on overall value when making buying decisions. We can see these differences when comparing preferences and priorities with different products and services.
- While 55 percent of Gen Z said they planned to do their holiday shopping at brick-and-mortar stores, 32 percent of Millennials said they planned to do their holiday shopping through their mobile phones. [Source: Shopkick via Retail Dive]
- 75 percent of millennials are willing to pay more for great customer experiences compared to 69 percent of Gen Z. [Source: Salesforce]
- While 76 percent of Millennials cited natural or organic ingredients as important in the products they purchase, only 71 percent of Gen Z said the same. [Source: IBM]
- While 79 percent of Millennials cited sustainability as important in the products they purchase, only 75 percent of Gen Z said the same. [Source: IBM]
- While 81 percent of Millennials cited purchasing “clean” products as important to them, only 75 percent of Gen Z said the same. [Source: IBM]
- While 78 percent of Millennials cited purchasing products that support recycling as important to them, only 72 percent of Gen Z said the same. [Source: IBM]
- Millennials and Gen Z share similar habits when it comes to data privacy: 31 percent of Millennials and 33 percent of Gen Z said they used a VPN or Proxy Server inthe last month at the time of being surveyed in 2020. [Source: Global Web Index]
- Similarly, 45 of Millennials and 46 percent of Gen Z said they used an ad-blocker in the last month at the time of being surveyed in 2020. [Source: Global Web Index]
The 67.7 billion members of this generation are a group to watch as they grow up and enter the workforce. Their financial management looks to be off to a strong start thanks to their frugal mindsets and entrepreneurial attitudes. They’ve proven so far that they’re ready to responsibly make and manage their money, and that they have high expectations when it comes to what they spend it on.
Teens and young adults who are after a financially successful future should not only make plans to keep down debt, but also learn how to build and manage their credit. This includes applying for credit cards, keeping payments down and checking your credit report often to make sure everything is accurate. If you do find any inaccuracies on your credit report like an account you don’t recognize, you can call to learn about how Lexington Law’s credit repair services can help clean up your credit report.
Source: lexingtonlaw.com