For some retailers, Generation Z is already a significant part of their customer base. For others, this cohort represents the customer of the future. But who is Gen Z, and how is it different from the generations that came before?
A trio of new reports sheds light on this question.
According to one study conducted by the Centre for Generational Kinetics, on behalf of WP Engine, Gen Z is the most internet-dependent of any generation, and in the vanguard of technology usage across all age groups.
Companies that reimagine physical activities for these digitally savvy customers will be the ones that succeed in future. The past few weeks of lockdown have provided a preview of this, the report said, with many people discovering that home workouts and order-ahead grocery pickups are more enjoyable and convenient than their offline equivalents.
“Gen Z are digital pioneers and have charted the path for the rest of the world to go fully digital,” said WP Engine Country Manager for ANZ Mark Randall.
“In Australia, lockdown has caused a profound change in the way we do everything, from shopping to eating to engaging with friends and family.
“Gen Z was already comfortable in that new paradigm, so if you meet the digital needs of Gen Z, you now meet the needs of the rest of the world.”
How do you meet these needs? Simple: Be fun and authentic, contribute to social causes, and provide a personalised experience using customer data.
Much like the Millennial market they follow, Gen Z puts a big focus on brand authenticity, with 82 per cent being more likely to trust a brand if it uses actual customers in ads, as is 75 per cent more likely to buy from a brand that contributes socially.
A recent McKinsey report on Gen Z in the APAC region drills into this even further.
Gen Z tends to be more environmentally conscious in APAC as a whole, but only in Australia are consumers in this cohort willing to pay for brands that are environmentally responsible.
The generation also is swayed by social media, with 50-60 per cent of brand decisions coming from social media – especially video.
And, while 40 per cent prefer brands that are popular, they also want brands that are unique and “set them apart”.
“For companies looking to win over Generation Z, brands need to be agile and stable, regionally aware and locally focused, environmentally sound and acutely price conscious, social-media savvy and respectful of privacy, and authentic and able to tell a compelling story,” said McKinsey’s consumer packaged goods and retail practices leader Thomas Rüdiger-Smith.
“They will also need to react to how the impact of the Covid-19 crisis is changing the attitudes and behaviours of Generation Z. It’s complicated, but as Generation Z’s affluence and influence rises, it’s well worth the effort.”
Another report on Gen Z by Afterpay suggests this generation, raised in the aftermath of the 2008 financial crisis, is more cautious about spending money they don’t have.
A whopping 94 per cent of Gen Z Afterpay users use their own money for purchases, linking the buy now, pay later service to a debit card, the report found.
“As a generation who has a firm grasp of the role finance plays in their lives, Gen Z Aussies are emerging as a self-motivated generation that pay, play and save differently from the Millennials that came before them,” Afterpay co-founder Nick Molnar said.