Gen Z “Surprisingly Financially Resilient” but Harder to Reach than Previous Generations

Australian consumers are faced with a stark financial reality. Inflation means that prices are rising and a recession might be on the way. As a result, many are predicting that consumer spending will decrease over the next year.

However, while older consumers are less confident and are expecting to shop less, Aussie zoomers seem to be less fazed by the prospect of looming economic uncertainty.

“Having grown up during the 2008 GFC and now living through a pandemic and the current cost of living crisis, Gen Z are a surprisingly financially resilient and optimistic generation,” said Kellie Clenton, global head of Afterpay SMB account management.

“Young Aussie consumers know they are facing a difficult economic environment with over three quarters (78 per cent) expecting prices to rise over the next 12 months, but despite this they remain optimistic, with over a third (36 per cent) expecting to do more shopping in the coming 12 months.”

For brands and marketers, tapping into this younger cohort will be essential. But, with changing shopping habits, it seems likely that brands will have to take a novel approach to marketing.

Resilient Zoomers

Clenton, who looked into the changing ways that Aussies are discovering and buying products as part of the Afterpay Gen Z: Shaping the Future of Shopping report, believes that, despite depictions in much of the press, Gen Z are tough cookies.

“While some may perceive this as naivety, we think it is a resilience they’ve built through necessity. Gen Z have faced economic adversity – this isn’t the first economic ‘crisis’ they’ve seen – and they’ve sought the necessary information, with the rise of financial influencers and online education helping improve financial literacy,” said Clenton.

According to Clenton and Afterpay, Gen Z are also aware that their “prime earning years” have yet to come, giving another cause for optimism.

“One reason for the optimism and appetite for risk we see in Gen Z is their knowledge that their prime earning years are ahead of them, and while they currently only make up six per cent of the global share of retail spend, this is expected to grow to 16 per cent by 2030,” Clenton explained.

“While the older generations are more cautious about spending, the Afterpay Gen Z report found that only one-in-five (21 per cent) young Australians expect to do less shopping over the next 12 months (compared to one-in-three Gen X Aussies).

“This shows us that Gen Z feels more confident about the future than those in older cohorts, and this optimism translates into less concern about inflationary pressures and more bullishness about their own future spending capacity.”

As a result, marketers, rather than shunning the group for their currently limited spending power, should be starting to try and win the hearts and minds of zoomers in order to solidify their brand’s economic futures.

“With the upside offering a more optimistic consumer today – and one that will only represent a larger slice of the economic pie tomorrow,” said Clenton.

Of course, as they enter the workforce, there is a chance that Gen Z, rather than continuing as the bright-eyed and bushy-tailed buyers of tomorrow, will become jaded and cynical like their older and much maligned millennial counterparts.

“As more enter the workforce, it will be interesting to see whether optimism and risk taking is replaced by pragmatism or even pessimism and cautiousness,” explained Clenton.

“Regardless of those attitudes, we can expect the prominence of their preferred shopping behaviours to be heightened as they make up a bigger portion of the employed population. Brands should prepare by tracking Gen Z shopping preferences and adapting their accessibility to cater for the growing consumer audience.

Reaching Out

Getting in the minds of zoomer consumers might seem easy — post a few TikToks and you’re halfway there. But the reality will be more complex. Sure, Gen Z love to shop through social media apps, but those apps can, and will, change. Plus, there are new emerging shopping methods that will become more popular.

“While social media usage will continue to grow across all generations, it’s likely the younger generations will continue to lead adoption. Just as Millennials led the shift from shopping brick-and-mortar stores to online, Gen Z is driving the change from shopping websites to social media,” said Clenton.

“That’s because Gen Z are digital natives to social platforms, often undertaking their full shopping journey – from discovery and inspiration to research and purchase – all on social media.

“As existing platforms expand their functionality – and new apps launch – the use-cases for social media will attract wider audiences and more users in older generations.”

What’s more, Gen Z are likely to become more au fait with previously under-utilised or completely unused channels.

“Almost half of Gen Z (45 per cent) and Millennials (46 per cent) having tried voice shopping in the last 12 months,” said Clenton.

“While voice shopping wasn’t as popular among older Aussies (only a quarter opted to shop via voice) the proliferation of voice assistant-enabled devices such as Amazon’s Alexa, Apple’s Siri and Google Assistant indicates a trend we will see increasing in the future.”

Voice shopping is only the start, however.

“Outside of voice, 50 per cent of Australians believe the metaverse will be a part of their lives within the next 10 years, and three quarters (73 per cent) of Gen Z are interested in buying real world items in the metaverse – so we can certainly expect high-tech shopping to continue to grow in popularity,” explained Clenton.

Gen Z are also likely to be more demanding of their favourite brands and hold them to greater levels of scrutiny than any other preceding generation. This, as has been seen with the fallout between Hancock Prospecting and the Australian Netball team, can have devastating and unnecessary consequences for brands.

“Having grown up with the impacts of climate change, Gen Z are one of the most socially conscious generations and aren’t afraid to put their money where their morals are,” explains Clenton.

“Brands are already starting to see the impact of this, with over half (57 per cent) of Gen Z’s buying eco-friendly and sustainable products when they can. Furthermore, our research found that Gen Z are more likely to abandon brands who don’t meet their ethical standards, with one-in-five 5 abandoning a brand in the last 12 months based on their reputation for sustainability and ethics.

“The good news is that seven-in-10 young consumers are willing to forgive a brand who they previously abandoned, if they fix their practices and adopt more sustainable and ethical ways.”

Convenience Versus Community

Gen Z prefer to shop directly from brands, rather than with retailers.

The idea of the one-stop-shop multi-brand retailer simply doesn’t exist for Gen Z. This could be due the increased prevalence of strong single brands and increased engagement through social media and other platforms.

For large retailers, this might be a problem. However, for single brands, this presents an opportunity too good to pass up.

“There is definitely a big opportunity for brands to embrace the way consumers are currently shopping,” said Clenton.

“Online is still winning out over in-store due to it being available 24/7 (62 per cent) and available anywhere (58 per cent). This doesn’t mean Aussies don’t like to shop in-store, with a quarter (25 per cent) of Gen Z’s stating they will shop more in-store over the next 12 months.

“Another area where brands could look to seize the growing opportunity is in social – with over half (51 per cent) of Gen Z respondents noting they like to shop directly on social media and 70 per cent stating they like to use technology when they shop.”

Whilst going to a department store to buy a whole host of things in one go used to be de rigueur for older generations, Gen Z expect their shopping to be where they are, when they want it. As a result, there is an increased focus on ordering online and speedy delivery.

“Regardless of the channel, what is clear is that Gen Z feels that access and convenience are two key components to their preferred shopping experience. This means brands need to be more cognisant of where, when and how Gen Z wants to shop. The quicker brands are able to adapt to that the more likely they are to attract the next generation of shoppers,” said Clenton.