LONDON, United Kingdom — With increasingly autonomous spending power and a purpose-driven approach to consumption, effectively connecting with Gen-Z consumers is now both a nuanced and critical consideration for retailers and brands alike.
In a special digital live event presented by Afterpay, BoF interviewed the payment solutions provider’s Co-Founder Nick Molnar, along with the co-founder and creative director of cult accessories brand Manu Atelier, Merve Manastir, to discover insights on building an authentic connection to the industry’s most valuable consumer segment.
Both entrepreneurs launched their businesses in their mid-twenties on the back of their inherent understanding of the then-emerging Millennial consumer cohort. They have since successfully evolved their communication strategies and product offerings to speak to the younger Gen-Z consumers.
By providing flexible payment solutions to consumers across global markets, Afterpay has unique insight into Gen-Z shopper behaviour, with 55,400 merchant partners across fashion, luxury, lifestyle and beauty categories. Operating a business model built on transparency and a “win-win-economy” for all, Molnar shares his insight into “a systemic, mainstream shift towards financial wellbeing,” before identifying the positive performance of purpose driven brands during the pandemic, as well as other key findings from his company’s recent report, created in partnership with the Future Laboratory.
Sustainable and purpose-driven brands have held strong.
Manastir’s brand grew in tandem with the rise of social media, through which she developed a native fluency in communicating with younger consumer cohorts directly through visual platforms and holistic brand activations, now encompassing everything from career development talks led by female entrepreneurs to psychic readings. Today, she believes there are three key measures of Gen-Z spending: “consumption as access, rather than possession; spending as an expression of their identity; and consumption as a measure of ethical concerns.”
Here, BoF shares five insights from the conversation on how to understand and unlock impactful relationships with Gen-Z consumers.
A Systemic Shift Prioritising Financial Wellbeing Is Occurring
“Of course, we have seen a huge shift to online — an 8-week period [during Covid-19] showed the same amount of online growth as 11 years. But — far less known — is how Covid has accelerated Gen-Z’s shift to debit,” says Molnar.
Spending as an expression of identity; and consumption as a measure of ethical concern.
“Gen-Z are watching current crises have real-time impact on their parents and peers, and now 94 percent of Gen-Z using Afterpay are using a debit card. A double compounding effect is happening. This is a systemic, mainstream shift towards financial wellbeing. It’s evident in Visa’s numbers for May, where credit card spend was down 31 percent. As a Millennial, 18 years old when the 2008 financial crisis hit, I understand the need to not spend money you don’t have. Young consumers’ aversion to credit has underpinned our product’s mission, vision and values. Afterpay wants to empower a win-win economy by flipping the traditional payment solutions model on its head.”
View Consumption as an Expression of Identity
“There are three key measures of Gen-Z spending: consumption as access, rather than possession; spending as an expression of their identity; and consumption as a measure of ethical concerns,” says Manastir. “Gen-Z define themselves in multiple ways. They want to see different products and then a real story behind those products and behind the brand itself. They think more analytically before investing.”
“Gen-Z feel most comfortable when they can communicate and connect with brands. Within our ‘Manu’s People’ community, we want to build a bond with our consumers,” adds Manastir. “Our recent livestreams have been business-focused but have also featured psychics from Los Angeles discussing spirituality. Our customers feel more connected to these topics and to the brand itself — it strengthens both sales and culture.”
Brand Values Matter More Than Ever
“Authenticity is a big data point. New age brands have rolled out authenticity, held it across all their channels. Today, your authentic identity has to hit all the different [customer] touchpoints. While we’ve seen different results in different regions depending on where they were in the pandemic’s cycle, sustainable and purpose-driven brands have held strong,” says Molnar.
“A recent Afterpay report revealed that 56 percent of 1,000 respondents said a lack of diversity would affect their perception of a brand. However, with regards to authenticity, you’re not transparent if you have to say it — it should be in your DNA. The small business space is holding GMV (gross merchandise value) at a far greater level than enterprise businesses. Local brands that have built real relationships and have deeply engrained values are enduring,” he continues.
Authenticity Powers Influence
“If you’re trying to create a consumer base by working with influencers, and tapping into their audiences, you need to consider the fit with your brand’s feeling and attitude,” said Manastir.
“We always believed that the right influencers will create the community of [Manu Atelier]. It must be done very organically. We have built a ‘fashion family,’ featuring stronger relationships that go beyond one-off projects. We build real relationships [with influencers] — we know how they live, the philosophy behind their lifestyles. We searched slowly for people we want to carry our designs. We always believed in the right people creating the community of the brand.”
Drops With Purpose Drive Volume
“A relationship that is built over a sustained period of time before involving commerce creates trust and a sustained period of relevance for a brand. To this end, the one trend that is driving immense volumes is exclusive drops. It’s a strong means of becoming deeply engaged with younger cohorts, from meaningful events through to providing access and holding onto that relevance,” explains Molnar.
“There are a variety of retailers, from childrenswear to athleisure retailers like Gymshark — businesses with followers in the single millions as opposed to the hundreds of millions — that are doing very meaningful events and drops. This is about access and exclusivity, staying on trend and expressing yourself. A lot of this comes down to how the brand represents the drop, whether there is a purpose behind it [and if that] is beyond building hype and actually creates a sustained period of relevance that can then flow through the fashion eco-system.”
Discover how Afterpay supports its community of retail partners and access the report in full, by clicking here to download.