Gen Z’s buying power is causing retailers to pay attention to this upcoming demographic.
Market research firm Packaged Facts found that U.S. Gen Z teens and young adults have a buying power exceeding $500 billion, a number comparable to the GDP (gross domestic product) of several countries, including Belgium, Poland, Sweden, Thailand and Venezuela.
Packaged Fact’s report “Looking Ahead to Gen Z: Demographic Patterns and Spending Trends” provides a comprehensive look at Generation Z (defined as encompassing ages 13-24), which comprises 52 million Americans and represents 16% of the U.S. population Between the money they have and the money their parents spend on them, Gen Z is already having a significant impact on the American economy.
Gen Z’s potential as consumers is a factor that retailers should not overlook. While they grew up with modern technology, many Gen Z consumers employ a more “old-fashioned” approach to shopping: 67% of them prefer to make a purchase in a store as opposed to shopping online, or to shop using an app, the report found. Brick-and-mortar clothing retailers may want to consider targeting them as significant consumers as Gen Z seems to also favor shopping for clothes and shoes. Gen Z young men spend 53% more money on apparel than their Millennial counterparts.
Generation Z also enjoys experiencing entertainment outside of the home more than their Millennial counterparts, with many Gen Z young people regularly attending movies and concerts or other live performances, perhaps because they are much less likely to have children.
“Gen Z is anything but monolithic or expected,” said David Sprinkle, research director for Packaged Facts. “A common thread between the diverse array of Gen Z kids seems to be their tendency to weave social media and digital experiences into their physical, everyday lives. For a brand to be big with Gen Z, having brick-and-mortar store locations and a strong online presence are both essential to generating business and buzz.”