Cowen’s third annual Gen Z and Millennial survey found sustainability and social impact among the high-level themes increasingly resonating with 18-to-34-year-old consumers and their purchase decisions.

The study, “Gen Z And Millennials Are The Driving Force In Scaling Digital And Sustainability,” was based on a survey of 1,200 U.S. consumers between the ages of 18 and 34 exploring lifestyle, attitudes and preferences toward social media, shopping, search and discovery, along with preferences toward brands and retailers. The findings were benchmarked versus a survey of 1,500 consumers between the ages of 35-to-55.

Sustainability and social impact were cited when purchasing apparel, footwear and accessories to be either “very important” or “somewhat important” by 76 percent of 18-to-34-year-olds, up 13 percent compared to a similar survey in 2018, and compared to only 45 percent for the 35-to 55-year-old demographic.

The levels of “very important” around a brand’s sustainability and social impact increased for most age groups over their 2019 results, which were 33 percent for 18-to-24-year-olds and 34 percent for 25-to-34-year-olds.

“Brands and retailers that are investing behind sustainability and the circular economy stand to be best positioned among younger cohorts, a segment of the population that places rising importance on what their brands stand for and how they are manufactured,” wrote John Kernan, Cowen’s retail & consumer brands analyst, in the study. “As the spending power of these cohorts increases over time, it will be all the more critical for brands to have as much transparency as possible with their practices, supply chain and messaging.”

Resale Seen As Significant Opportunity Among Gen Z And Millennials
One major beneficiary as sustainability scales is the resale marketplaces for apparel, footwear and accessories as attitudes around “second hand” items, or secondary markets, have turned favorable. The June survey found purchasing on resale marketplaces increased 28 percent for Gen Z consumers and 19 percent year-over-year for Millennials, to 33 percent of each population having purchased.

“Themes underpinning this market include digital communities, data analytics, product scarcity, and network effects,” said Kernan. “The network effects of each marketplace are significant with data, and more users/community participating in the market creating more trading, more hype/storytelling around product launches and enabling brands to create customized, limited-edition product at premium prices and high sell-throughs. This ultimately can circle back and help to drive primary market sell-through for brands depending upon brand heat in the secondary market.”

Within the investment firm’s athletic sector coverage, Cowen sees Nike and Jordan Brand dominating the resale market with an estimated share of more than 90 percent, followed by Adidas with its Yeezy brand.

Among platforms, Poshmark and StockX ranked highest among Gen Z and Millennials based on Cowen’s 2020 survey data with 32 percent of 18-to-24-year-olds and 36 percent of 25-to-34-year-olds citing Poshmark. StockX garnered a 25 percent share of 18-to-24-year-olds and 27 percent of 25-to-34-year-olds.

Younger Consumers Embrace Conscious Consumption
However, beyond issues such as product sourcing and manufacturing, brand messaging and “all-around values” are likely increasingly playing a part in shopping decisions for both younger age groups.

Social messaging also carries risks. The survey, for example, found 32 percent of 18-to-24-year-olds viewed capitalism either very favorably or favorably versus 27 percent that viewed capitalism unfavorably — a stark contrast versus older consumers.

“Understanding social issues and which values you communicate to acquire new consumers and increase engagement with your highest customer lifetime value consumers is now a daily dynamic for consumer-facing companies,” Cowen’s study stated. “This leads to opportunities to create value but also risk of silence or miscommunication with key stakeholders and consumers.”

Nike Rated High On Social Values And Beliefs
When respondents were asked which apparel and footwear brands most align with their social values and beliefs around sustainability, providing a random list of multiple choices, Nike was ranked first across the board of age ranges, growing to 35 percent of 18-to-24-year-olds in 2020 from 31 percent in 2019, and reaching 28 percent of 25-to-34-year-olds.

Adidas was a distant second at 16 percent for 18-to-24-year-olds and ticking up slightly to 14 percent in 2020 from 13 percent for 25-to-34-year-olds. Vans was 11 percent for 18-to-24-year olds, down from 15 percent last year, but grew to 10 percent from 8 percent among 25-to-34-year-olds. The North Face grew to 8 percent from 6 percent for 18-to-24-year-olds but contracted to 8 percent from 10 percent among 25-to-34-year-olds.

Among 25-to-34-year-olds, 7 percent indicated Columbia and Under Armour aligned with their social values and beliefs around sustainability. Lululemon and New Balance were at 5 percent.

Other overlying themes found in the study:

  • Digital Shift: From January 2020 (pre-COVID-19) through August 2020 (the first COVID-19 peak in North America), penetration of online conversion increased to 72 percent from 64 percent among Gen Z and Millennials, over-indexing versus the total survey population at 64 percent and 35-to-54-year-olds at 63 percent and 55+-year-olds at 47 percent. Cowen wrote, “The shift to digital commerce creates a multi-year period of mix shift for leading brands and retailers. For vendors with leading digital capabilities, as units shift out of less differentiated wholesale channels to directly operated e-commerce platforms and apps, there will be a powerful shift in revenue recognition, gross profit and EBIT dollars.”
  • Amazon Dominates Path To Purchase: 73 percent of respondents ages 18-to-34 and 58 percent of those ages 35-to-54 indicated that Amazon was their preferred shopping channel over physical stores and retailer/brand websites (versus 61 percent and 55 percent respectively in 2019). Cowen wrote, “AMZN has emerged as the most important resource along a consumer’s journey from initial search, to product research to completing a purchase for every age cohort under 55.”
  • Instagram Leads In Social Discovery: Forty percent of Instagram users in the June survey of 18-to-34-year-olds indicated they purchased a product from a brand they discovered on the platform. More than 70 percent of Instagram users in the survey follow a brand on the platform, and of those users that follow a brand, over 50 percent have made a purchase from one of the brands they follow in the past three months.
  • Suburbanization boom: In the June survey, 49 percent of respondents ages 18-to-24 cited living in a suburban area, up from 41 percent in 2019. Similarly, respondents in the 25-to-34-year-old age range that live in a suburban area increased to 48 percent in 2020 from 44 percent in 2019. The survey’s June time frame may have affected responses due to current living situations in the wake of COVID-19, but Cowen also noted that the suburbanization trend has been slowly occurring since 2017 and that the COVID-19 disruption is expected to accelerate the shift.
  • Brand preference: Nike continues to dominate Gen Z And Millennial share preference for casual lifestyle apparel but gave back a slight share for both age cohorts. Adidas gained significant share preference among Gen Z respondents compared to 2019 along with Champion and Lululemon. Gen Z And Millennial’s heavily favor Nike when shopping for athletic footwear. Nike commanded 42 percent and 39 percent share preference among Gen Z and Millennial respondents respectively, more than 20 percent above Adidas, the next preferred brand. Including the Nike-owned Jordan brand, that difference moves to a 30 percent gap.

Photos courtesy Reuters, Ad Week