If you haven’t been bombarded by statistics about next-gen cautious shopping behavior lately, then you’re probably in a news blackout orbiting around our planet on SpaceX alongside its overlord, Elon. The statistics are everywhere. What isn’t reported, however, is a cohesive explanation of overarching next gen purchasing patterns, mindsets and behaviors.
A good-looking product is just the first step. And we’re not talking about fake optics. One of the biggest challenges for legacy business/brand owners about Gen Z is the diligent brand research they do before every purchase. Gen Zers are painfully aware of company ethos; if it doesn’t meet expectations and their standards, they won’t convert.
That’s where we come in. We’re living in a time when analyzing consumer behavior as a standalone makes very little sense. So, let’s look at the why behind the numbers volleyed around next gen purchasing behavior. What community, peer and individual mindsets inform them? What is the path forward for retailers to successfully navigate this strange new world?
Cautious Spending Doesn’t Mean No Spending
We can’t talk about “cautious spending” without first deflating the balloon of the pervasive belief that next gens aren’t spending any money at all. Were this true (some analysts say next gens steer 93 percent of household spending), we’d be in a far worse economic crisis than the one that we’re currently experiencing.
The truth is complex. Gen Z is the largest generation, and they also make more unplanned purchases than any other generation. But selling impulse purchases to Gen Z isn’t as cut and dried as it is with their predecessors. Here are just a few reasons:
- Hearsay: Reviews are ubiquitous now and they’re an essential touchpoint along the online impulse shopping journey. If you leave bad reviews unattended, they will turn customers off before they ever get to “add to cart.”
- Sustainability: Gen Z customers expect actionable guidance to support the claim. They also want retailers to balance low prices with eco-friendly brand practices.
- One World: Gen Z is the most diverse consumer demographic, and they expect to see this diversity reflected in workforce staffing, not just in the stores, but also in the C-suite of the brands they love.
- Toxicity: Next gens are more health conscious than their predecessors, meaning the toxic ingredients used in fast fashion will deter many of them from purchasing.
Bottom line? They want every purchase they make to be valuable, affordable, good for their bodies, good for the planet, and good for the employees of the companies they patronize.
It’s important to note that while we’re talking only about Gen Z, the rest of the next gens are already driving the lion’s share of household purchases motivated by their values. Sometimes, all it takes is one heart-to-heart with grandma about how the plastic from her Pepsi bottles is making the world increasingly uninhabitable; a values-driven young customer is a powerful influence for boomers and older consumers to start thinking differently.
Breaking Down the Fourth Wall
The global strategy consultancy, L.E.K., reports that 92 percent of Gen Zers do online research before they make a purchase and that includes reading online reviews and Better Business Bureau ratings, checking with friends and family, confirming that the brand is aligned with their values, and fact-checking product information to make sure it lives up to the hype.
A good-looking product is just the first step. And we’re not talking about fake optics. One of the biggest challenges for legacy business/brand owners about Gen Z is the diligent brand research they do before every purchase. Gen Zers are painfully aware of company ethos; if it doesn’t meet expectations and their standards, they won’t convert.
While it’s true that Gen Z prefers in-store shopping, they don’t always have time for it. But, make no mistake, when they’re shopping in-store. they’re still scouring the web on their phones to uncover the backstories of brands and your store’s position on any matter of issues. Retailer beware, if someone has called your company out for unethical practices on Instagram, they’ll be the first to know about it and they’ll modify their shopping behavior accordingly. Social media has become one of the primary means of building trust with young consumers. But don’t try any tricks with AI; authenticity and transparency are table stakes.
Gen Z is sitting on big bucks with $450 billion in spending power and by 2030 will represent 17 percent of global retail spend. Let’s take a quick look at four stats compiled by Exploding Topics that enlighten what Gen Z expects to find when they do their shopping research:
- 49 percent of Gen Z choose products because the brand is owned by a person of color. Think about the implications of this shopping preference.
- 84 percent of Gen Z are more likely to buy from a company that treats its workers well.
- 20 percent of Gen Z stopped buying from a brand in 2023 due to its reputation for sustainability and ethics.
- 50 percent of Gen Z believe companies should take a stance on social issues, and 69 percent want companies to take a stance on racial justice.
- 36 percent of Gen Z buy secondhand goods out of concern for sustainability and the environment.
Product Discovery Process
Micro-influencer marketing agencies like Stack Influence have long been touting the importance of sharing real reviews from real people in reaching modern consumers. But what makes someone “real?” As we discussed in my article about Flip, how can product reviews be “real” if the reviewer makes money only if brands highlight their videos? Stack assumes social media posts are going to give positive reviews of a free product to deplete your inventory. Otherwise, you face the headache of printing out a return label and sending the products back to the brand without being compensated for your time. So, we have to ask if paid influencers, no matter how “human” they come across, are trustworthy product reviewers.
Contrary to the chaos of online practices, there are no shortcuts in targeted, customized marketing to next gens. Sure, one could pay millions to get Taylor Swift’s latest bf to wear your product to an event. But if the product isn’t high quality, ethically made, and from a company with a diverse C-suite, they won’t just boycott your company––they’ll call out T-Swift’s boyfriend and the viral starlet, too. In today’s world, consumers using social media provide their own system of checks and balances for the retail industry.
The idea of business for profit’s sake alone doesn’t resonate with idealistic next gen consumers. The ultimate challenge is to help legacy brand owners understand that offerings that were once compelling as standalones are not a compelling reason for next gens to buy. Instead, retailers need to look at their business holistically from the next gen’s perspective: investing in an ethical supply chain, ensuring diversity and inclusion, and marketing based on trust. To continue selling the same product that was a hit ten years ago is irrelevant today. Because it’s not just about the product anymore. It’s about what’s behind the product and your credibility as a retailer to sell it.
