The latest International Council of Shopping Centers (ICSC) study, “The Rise of the Gen Z Consumer,” shows a generation keenly aware of the state of the U.S. economy as the demographic’s spending power grows and balances being cost-conscious with the willingness to pay for convenience and quality.
The ICSC report examined the shopping habits, behaviors and factors influencing how Gen Z interacts with retailers, the marketplaces industry, and the economy.
“Gen Z is an increasingly important demographic as more of them graduate from school, transition to their first full-time job and mature into more spending power,” said Tom McGee, president and CEO of ICSC. “Our study found that many of the stereotypes and preconceived notions attached to this cohort are unfounded; however, their habits will influence retail strategy, marketplace makeup and broader economic trends for years to come.”
Seventy-eight percent of respondents noted concern about the state of the U.S. economy, which increased to 84 percent among the older representatives of Gen Z, those ages 23 to 26, compared to 71 percent of 16- and 17-year-olds. This concern mirrors their habits around discount shopping, as 48 percent of said they prefer off-price and discount retailers; however, the Gen Z consumer is willing to pay for what they want, particularly speed and convenience. Nearly half, 48 percent, said they would pay a premium to have online orders delivered more quickly.
Beyond their sentiment around economic concerns and its impact on their shopping habits, Gen Z also shirked stereotypes regarding their priorities. Despite having a reputation for prioritizing leisure and personal interests, Gen Z are five times more likely to value successful careers over having the newest items.
The survey results show a generation-wide inclination for planning for times of uncertainty, with more Gen Z consumers (41 percent) reporting that they save more than they spend compared to those who spend more than they save (36 percent). Responsible financial habits are also reflected in their credit usage, as 45 percent of Gen Z report using debit cards as their primary payment source, ahead of cash (21 percent) and credit cards (17 percent). Even buy now, pay later options are rarely used, with only 3 percent of respondents saying they use these services often.
Gen Z is brand loyal, driven by value, omnichannel offerings, and a proclivity for brands whose values align with theirs. While price and convenience are the number-one drivers of their behavior, Gen Z is not afraid to champion their values, reflected in their shopping habits.
More than half (56 percent) of respondents said they are willing to spend more for sustainably sourced products. When asked about their top concerns and causes, they cite mental health (53 percent), climate change and sustainability (47 percent), racial and gender equity (47 percent), and LGBTQ+ rights (26 percent). Two in five respondents said ethical labor practices are “essential” when choosing to support a company.
While Gen Z is often viewed as a generation that grew up shopping online, nearly all respondents (97 percent) shop at brick-and-mortar stores, driven by the immediacy with which they can walk away with a product and the ability to see, touch and try merchandise before buying. However, this group is heavily influenced by social media when it comes to shopping, with 85 percent of respondents citing the medium impacts their purchasing decisions, naming Instagram and TikTok (45 percent, respectively) as their preferred platforms. Influencers, however, are not the primary influence on Gen Z when shopping for a new product; instead, 56 percent of respondents said that recommendations from friends and family carry the most weight, followed by reviews on product websites (54 percent), interactions with store employees, and seeing products in person (43 percent). Influencers play a role, but only 39 percent cite them among their top three deciding factors.
“Our survey shows that despite being ‘digital natives,’ Gen Z is an omnichannel generation,” said McGee. “The percentage of respondents who shop online versus in-person are nearly identical, demonstrating that focusing on a particular channel is no longer the priority. Rather, retailers that can successfully offer convenience, quality, and speed, and have a diversified presence across in-store and digital, will be well-positioned to capture the loyalty of this demographic.”
To read ICSC’s latest Gen Z study, go here.
Photo courtesy NIQ
