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Gen-Z’s Evolving Retail Priorities

Equipped with raw consumer data and an expansive market view, payment solutions provider Afterpay shares its insights on the spending priorities of the elusive Gen-Z consumer. Here, BoF identifies its key findings.
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  • BoF Team
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MELBOURNE, Australia — With over 48,400 retail partners spanning several categories and footholds in the US, UK and Australian markets, payment solutions provider Afterpay possesses unique insight into emerging consumer behaviour. Indeed, as the appetite for flexible payment has taken hold, the company's userbase was quick to expand beyond its Millennial origins, reflecting the rising autonomous spending power and influence of Gen-Z consumers.

A new report created by Afterpay, in partnership with trends forecasting agency The Future Laboratory, combines raw consumer data with industry expertise and trend analysis to provide a comprehensive view of Gen-Z's approach to and impact on retail.

Examining how Gen-Z's retail priorities are evolving, from their preference for purpose-driven brands to a rejection of old ideals of wealth and status, the report identifies three macro-trends that Afterpay data indicates are transforming how younger consumers interact with product and what motivates their purchasing decisions.

Below, BoF highlights the most impactful insights relevant to our community.

Discover how Afterpay supports its community of retail partners and access the report in full by clicking here to download.

Macrotrend 1: Anti-Status Money

Gen-Z are re-assessing the role of money and ownership in their lives, rejecting overt displays of wealth and embracing flexibility and financial wellness.

Money was once a status symbol, but Gen-Z are rejecting old ideals of wealth and status. This cohort are looking at money more holistically and re-assessing its role in their lives, ready to make more considered purchases.

Like Millennials during the 2008 financial crisis before them, Gen-Z are watching the current economic and health crisis unfold and witnessing peers, parents and friends lose work and income.

Debt-Avoidance and Financial Wellness

This cohort are turning away from credit products in their droves. Ninety-four percent of Afterpay’s Gen-Z customers link their account to a debit card, showing a desire for financial wellness over aspirational spending. In the UK, 52 percent of Gen-Z do not have a credit card, yet 72 percent have a savings or ISA account. It’s a similar story in the US: only 41 percent of Gen-Z owned a credit card in 2019 and seek long-term security— 52 percent of this cohort want to own a home.

Money and financials are already a significant cause of stress for the Gen-Z consumer. More than eight in 10 (81 percent) of Gen-Z aged between 18 and 21 in the US report money as a source of significant stress. Savings and considered expenditure are therefore front of mind.

Avoiding credit, Gen-Z are looking for financial tools that help them manage their cashflow and budget their income, but they want brands to do this in conversational, collaborative, creative and emotionally empowering ways.

In the UK, First Direct is the first bank to directly address this need, with its Money Wellness campaign designed to appeal to a younger, anxious consumer. In Australia, micro-investing is tapping into this mindset, with apps like Raiz offering consumers a way of making entry-level investments.

Macrotrend 2: Community Commerce

A new wave of decentralised retail concepts is transforming e-commerce into a mix of community, entertainment and shopping.

Consumers are increasingly looking for alternative ways to access and exchange products and services online — and Gen-Z are at the helm. As this consumer group come of age, a new wave of retail concepts is coming into focus, fostered by mobile-first mindsets and offering a new path to the Gen-Z consumer.

Gen-Z are at the fore of a wider shift towards true "direct-to-consumer" retail. Within that, the power of resale and selling to peers continues to build. At Depop, 80 percent of its British users are aged 13 to 24, and its top sellers can make more than £150,000 a year selling online.

Anti-Aspiration Advertising and Purpose-Driven Purchases

While social media is a tool used by Millennials to broadcast, it is used by Gen-Z to converse and collude in ways that have turned social media channels into social selling ones. Gen-Z view brands as “friends” in this collaborative landscape, but they expect them to be honest and transparent, open to debate and discussion.

Beyond peer-to-peer, Gen-Z want to interact with brands that understand them, collaborate and become micro-influencers. In Australia, some 68 percent of people come to Instagram to interact with creators, according to Omnicore and Instagram.

This desire for authentic touchpoints with brands and consumers extends to marketing. Some 56 percent of 1,000 Australians surveyed said a lack of diversity would affect their perception of a brand. In the UK, 63 percent of Gen-Z customers prefer to see real people in advertisements, whereas only 37 percent of Millennials feel the same. Gen-Z, in particular, are looking for diversity in advertising. In the US, this is an established issue, with 47 percent of Gen-Z consumers reporting that they do not feel represented in today’s branding and marketing.

Products are being bought for what they represent over the products themselves. Gen-Z’s purpose-focused shopping extends to ethical causes, as this cohort embraces circular economy opportunities. Early adopters are launching initatives that speak to this sentiment. There is a huge boost in supporting women-owned businesses, with popular brands like Outdoor Voices and Dôen using this as a selling point.

Macrotrend 3: Programmable Realities

The cognitive separation between digital and physical realities is becoming far less pronounced.

New tools are extending Gen-Z’s experience of the world and facilitating an entirely new way of engaging with products — and with each other. Covid-19 has been an accelerative force, as the digital world hosts more and more of our social lives and cultural events.

Super-Creatives and Privacy Hardware

Over the next decade, advances in mixed reality (MR) technology and the proliferation of cheap, high-res sensors will see the digital sphere become seamlessly integrated into our lives. As “super-creatives,” Gen-Z are set to embrace this. Brands will need to harness the potential of this real-time, “phygital” movement and embed it into every aspect of their offering and become integrated into every element of consumer life.

US brands are embracing phygital experiences. For Gen-Z — known for their 8-second attention span, according to Forbes — activations like Nike Maker Experience at the Nike By You Studio, where you can have a customised pair of shoes delivered in under 90 minutes, aim to deliver experiences quickly.

Consumers, facilitated by brands, will create their own versions of reality. The blend of physical and digital has created a modified sense of ownership, where owning digital objects has gained value.

A growing emphasis on digital means larger data footprints, with consumers exchanging information for access to services such as social media. Now, Gen-Z are asking brands to be accountable for how this data is used. As digital privacy and data breaches become pertinent issues, physical tools and devices are being designed to shield citizens’ identities.

In the UK, 16 to 34-year-olds are the most likely age group to request their personal information be deleted by an organisation, to find out what personal data is held on them by an organisation. They are savvy when it comes to managing their data share too, with 33 percent in the UK taking an active role in configuring data preferences on social networks.

However, rather than being suspicious of AI, robotics, VR and the ongoing threat of big data, Gen-Z more readily regard these as opportunities rather than challenges, as new ways to remake the world.

Discover how Afterpay supports its community of retail partners and access the report in full, by clicking here to download.

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