They used tablets as pacifiers, went to school on Zoom, and came of age during the 2008 housing crash. With a once-in-a-lifetime pandemic as yet another shared crisis, this generation’s shopping habits are entrenched and will impact brands for decades to come.
This is Generation Z, or Gen Z for short, the cohort born between 1997 and 2012, according to the Pew Research Center. How might this rising generation impact brands that are marketing to this cohort?
People assume that Gen Zs are super millennials, referencing the generational cohort that precedes them. They’re not, says Corey Seemiller, PhD, author, researcher, and leading expert on characteristics of Generation Z. On Coveo’s Ecom Edge podcast, she was speaking with Diane Burley, the company’s head of content and communications.
“There’s been a lot of references to them as the recession babies kind of born on/around the time of the recession or at least were growing up as little kids. They have a saving mentality; ‘I’m going to just save it … for a rainy day,’” says Seemiller. “And then all of a sudden, we have COVID and these kids are now seeing that there really are rainy days, I really do need to put my money aside, and I need to be really mindful about having that backup plan.
Marketers and retailers need to know these events drive the mindsets of the 68 million youth in the U.S. and roughly 2.5 billion worldwide as they become decision makers for families, businesses, government, and academia.
The COVID-19 years will have “a profound impact on how those individuals see and navigate the world for the rest of their lives,” Seemiller says.
The pandemic hit when this generation was in its formative stage, interrupting their education and social lives in unprecedented ways. Multiple studies have shown that Gen Zs suffered more psychologically during the pandemic than older generations.
The Deloitte Global 2022 Gen Z & Millennial Survey queried more than 14,000 Gen Zs globally in late 2021/early 2022 and found that 46% were feeling stressed “all or most of the time,” as compared to 38% of millennials. An EY study of U.S. Gen Zs fielded in March/April 2021 found that 67% were “moderately” to “extremely” worried about their physical and mental health.
Unlike prior generations, however, young people want mental health issues and healthcare needs to be recognized. Even brands “should be encouraging open discussions about mental health,” according to 69% of Gen Zs and millennials (aged 13-39) surveyed for YPulse’s Mental Health Report.
Inclusion, Diversity, Equity, Social Justice Are Key
Seemiller characterizes Gen Zs as “values-driven,” and their loyalty to brands is based, at least in part, on how companies reflect their values. “Once the Gen Z shopper finds companies they believe in, they will continue to buy products from the brand, rather than being loyal to particular products,” she says.
Almost half (48%) of Gen Zs fall into racial or ethnic minorities, and 21% of Gen Z adults (born between 1997 and 2003) self-identify as LBGT, according to Gallup.
A Wattpad youth (aged 13-24) panel survey explored how Gen Zs want to see people represented in marketing and advertising, and 62% strongly agreed that “it’s important for me to see authentic representation of diverse and minority identities, even if I don’t belong to these groups myself.”
More than half (58%) of the Wattpad respondents strongly agreed that “there should be more natural, unretouched images of people in media and advertising,” and 53% said they stopped supporting one or more brands because they disliked the way companies handled representation in their marketing and advertising.
“There are two values that the vast majority of Gen Zs are not willing to budge on,” Seemiller says. “One is inclusion, diversity, equity, and social justice. The other is environmental policies and practices that align with saving the planet.”
Jeff Fromm, another leading expert on Generation Z and Millenials, also advises brands to take a distinct point of view – that is transparent to stakeholders and customers.
Three-quarters of Gen Zs agree that the world is at a tipping point in responding to climate change, Deloitte found, and 57% of Gen Zs surveyed by Ernst & Young (EY) think it is “very” or “extremely” important to buy from brands that protect and preserve the environment.
The youngest Gen Zs expect corporations and the government to help preserve the environment. More than 80% of teens (aged 13-19) responding to a survey by 4-H and the Harris Poll said responsibility for the planet “falls on everyone.”
Trusted Referrals Are Key
In Coveo’s Ecommerce Relevance Report 2022 of 4,000 consumers, 33% of Gen Z discovers products via social media.
This contrasts with 29% overall, and 10% of people over 55. However, Seemiller was quick to point out though, that influencer marketing will fall flat. If Generation Z is influenced by social media, it will be from people who are in their inner circles — including from a seemingly unlikely source.
The two top influencers are “number one … parents, number two being peers. So when asked if they are influenced by things like celebrities, politicians, or professional athletes, they’re like, ‘No. Not at all.’ And that’s because they trust who they know.
“I always make the joke like they could get on Yelp and find a restaurant that has 500 five-star reviews and their best friend says, “No. They have terrible burgers,” and they’re like, ‘Okay. I won’t go.’ Because they put so much more weight in the people that know them.”
Growing Up Mobile, Social, and Gaming
Gen Zs’ childhoods were indelibly marked by the mobile device revolution and the dawn of social media networks. Apple’s iPhone launched in January 2007, ushering in an era in which a phone was no longer a device for talking but an always-connected computer perfectly designed for little hands.
YouTube launched in late 2005 and Facebook opened to the public in September 2006, so Gen Zs cannot remember a time before people all over the world were sharing their personal lives and opinions online.
Gen Zs also learned early that real-world money could be turned into digital dollars, paving the way for their more recent adoption of cryptocurrency and non-fungible tokens (NFTs). For example, youngsters learned by playing FarmVille, introduced in 2009, that they could earn Farm Coins by doing digital work, like planting and plowing, or they could buy them with mom or dad’s credit card.
By 2021, 65% of Gen Zs had spent money on virtual items within a game, VoxBurner found. Spending on virtual goods will burgeon in the coming years. According to eMarketer projections, mobile gamers will spend $18.8 billion on virtual goods in 2022 and $21.8 billion by 2026.
How Gen Z Spends and Saves Money
Although the oldest Gen Zs were still very young when the U.S. fell into the Great Recession of 2007-2009, families focused on saving during the “jobless recovery” that followed.
Taught to put money aside for a rainy day, Gen Zs saw how important that was when COVID came along, Seemiller says. In her own study of 30,000 Gen Zs globally, she found that “the number one thing they did during the pandemic was to sock money away.”
This cohort is focused on saving money “in a way we haven’t seen since the GI generation”— that is, the people who grew up during World War II—but “that doesn’t mean they won’t spend money,” she adds. “We know that getting a good product for a reasonable price matters to this generation.”
Gen Zs are more entrepreneurial than other recent generations, too. ABC’s popular TV series “Shark Tank,” which debuted in 2009, showed youngsters how ideas could be turned into businesses and featured numerous teen contestants. In EY’s survey, 45% of Gen Zs reported they were “very” or “extremely” likely to start their own businesses in the future.
In a December 2021 Junior Achievement USA survey of teens aged 13-17, 60% reported that they would be more interested in starting a business of their own than having a traditional job. In a teen survey in October 2018, only 41% said they would consider entrepreneurship as a career option.
Digital Natives Shop and Search Differently
Gen Zs “don’t suffer bad websites,” says Coveo’s Burley. Sixty percent of Gen Zs globally who were surveyed by the IBM Institute for Business Value said they would not use an app or website that is too slow to load, and 62% said they would not use an app that is hard to navigate.
Brands must work to win Gen Zs’ loyalty, but they can easily lose it.
If retailers make a mistake, 38% of Gen Zs responding to a Sitecore/Advanis survey would allow them only one more chance before they switched, and 74% would go to another retailer if the first one is out of stock. Although 46% of respondents want retailers to remember their shopping preferences and 43% want personalized suggestions, Gen Zs will withdraw from companies that misuse or overuse their personal data.
Coveo’s Ecommerce Relevance Report 2022 found Gen Z respondents were willing to pay more to find products quicker (60%), discover something new (54%), and receive tailored recommendations (53%). All of those percentages exceeded those of survey respondents overall.
Seemiller says Gen Zs would spend money to save time hunting for products because they’re busy. More than millennials at their age, they are likely to work while in school, and as many as 43% have a second part- or full-time job in addition to their primary job, according to Deloitte.
Discovering something new and receiving tailored recommendations align with Gen Zs’ desire for authenticity in how they present themselves, Seemiller adds.
Gen Zs have embraced web-based self-service more than other generations, according to the Zendesk Customer Experience Trends Report. Thirty percent said “not being able to find the information I need online” is one of the most frustrating aspects of their customer experiences.
Similarly, Coveo’s Service Relevance Report 2022 found that 40% of Gen Z respondents will abandon a brand if they can’t resolve a customer service issue on their own online.
Gen Z searches for online content differently from other generations, according to Hubspot, citing research that shows Gen Zs’ tendency to use more long-tail keywords.
They will plug an average of five words into an internet search box, compared to the average search length of 4.2 words. They search using the words “how to” (64%), “best” (56%), and “cheap” (46%) more than other generations.
5 Recommendations for Marketing to Gen Zs
1. Commit to diverse representation.
Gen Zs can see through advertising and marketing content that includes blacks, people of color, and the LGBTQ+ community just to tick a “diversity” box. They want to see images, narratives, and authentic situations that incorporate the full gamut of skin shades, gender and sexual expressions, physical heights and weights, abilities and disabilities, cultural backgrounds, and ways individuals choose to express themselves, such as with tattoos and body piercings.
2. Make sure actions back up stated values.
Whether it’s a social media post, a public relations statement, or marketing campaign, Gen Zs aren’t satisfied with words in support of issues that matter to them, such as racial justice, the environment, or a news event that stirs them emotionally.
They want to know what actions a brand or company will take, and they will use the web and social media to verify those actions and hold organizations accountable.
3. Stay on top of evolving technology.
Good website and mobile app performance are table stakes for these digital natives, and functions like site search, recommendations, user reviews, and customer service chat must not only work, but they also must evolve as technology improves.
Although the “metaverse” is still more theory than reality, brands should be testing technologies and tactics on platforms like Roblox, Fortnite, Decentraland, and Horizon Worlds, a platform used with Meta’s VR headsets that will be extended to web and mobile platforms.
See how luxury brands are showing up in the metaverse here.
4. Find environmentally friendly options.
What can you do as a brand or retailer to make your products and services more sustainable? Can you reduce packaging or make it with recyclable or compostable materials? Can you reduce carbon emissions through solar panels, electric vehicles, or using less energy overall?
Brands must be honest about everything they do and make it easy for Gen Zs to find the information—because they will check.
5. Practice r-e-s-p-e-c-t.
Gen Zs don’t inherently trust companies’ intentions, so brands must earn their trust. Fewer than half (45%) agree that business is having a positive impact on society, and that percentage has shrunken every year for five years, according to Deloitte.
In addition to the prior suggestions, brands can show respect by asking Gen Zs what they want directly through surveys and panels, using social media to create a dialog with customers, and being transparent, even when it hurts.
“Rather than trying to cover up or change the subject when they mess up, Gen Z wants companies to say, ‘We’ve learned from this and will do better,’” Seemiller says.
And consider marketing to their parents.
Looking for more demographic insights to streamline or focus marketing efforts? Check out our Ecommerce Relevance Report 2022 for a deep dive.