What Will Gen Z Spend Money On & Why Do Marketers Need to Care?

A new generation of spenders is here! Studies have shown that Generation Z spends its money and shops differently compared to its millennial predecessors. When deciding where to shop, Gen Z’s primary motivator is buying products that give them the best value for the price they pay. On the other hand, millennials and previous generations were more loyal to brands themselves over actual cost.

 Currently, Gen Z accounts for 5% of the total spending on social media platforms. This percentage is expected to grow as more Gen Z’s enter the workforce. And, on top of it, Gen Z are trend setters with 74% of those ages 18-24 choosing mobile platforms first for shopping and purchasing. Online shopping allows them to discover/support small businesses that they wouldn’t find in person. Gen Z also spends a lot of time on YouTube, Snapchat, and TikTok where nearly 47% of Gen Z research products they are interested in before buying. Additionally, this generation is passionate about buying products from brands that align with their own social and political beliefs and they are more likely to purchase items recommended by their favorite influencer.

 Marketers must know how to cater to the specific needs of their audience, so we compiled a list of what we expect Generation Z to invest in this year:

Electronics and Technology 
Gen Z occasionally likes to splurge on electronics and technology. This age group can easily be persuaded into making big purchases that can offer them a fun experience or improve their daily lives. If you are a brand targeting Gen Z it is important to create content that explains why they need the product, how the product can solve their boredom and why it’s better than its competitors.

Discounted Goods
Gen Z is very conscious about their spending habits because of the economic era they were raised in. Almost 80% of Gen Z prefer to wait for an item to go on sale before purchasing it. Although Gen Z might spend less compared to its millennial predecessors, researchers believe that they feel pressure to look good in front of their peers because of social media. This pressure has also influenced Gen Z to invest in clothing rental services and try-before-you-buy shopping experiences. If you are a brand trying to market to Gen Z consider working with a popular influencer to promote your product on social media. Gen Z likes to see authentic product reviews from influencers that they follow.

Health and Wellness
Mental Health is a popular topic among Gen Z because the mental wellness of the younger population enlightens us on healthcare trends, workforce needs, and the well-being of our future generations. Studies have shown that Gen Z invests more money into wellness than Millennials do. Health and wellness is the second highest category that Gen Z spends their money on. This group is the leader in the wellness movement, which promotes mental health awareness, ethical food sourcing, and other wellness issues. When marketing to Gen Z you can convince them to purchase your product by revealing how beneficial the product is to your health and well-being.

Small Businesses
Small business spending has increased more than 260% for Gen Z, according to the 2021 Afterpay Next Gen Index. This percentage is 80% higher than Millennials. In the past three months, 60% of Gen Zers chose a product based on it being made by a small business. This decision was driven by the ability to build a connection between consumers and contribute to the local economy. Consumers are also more willing to share their data with small businesses for discounts compared to larger businesses. As a small business, it’s important to be transparent and not be afraid to show what’s happening behind the scenes of your business. These small adjustments to your business are what will attract Gen Z to your products.

Education
Gen Z is on track to have the highest level of education. Studies have shown that Gen Z began saving money for college at a younger age compared to millennials. Gen Z is also more likely to invest in courses or educational programs to advance their future earnings. Researchers believe that Gen Z’s interest in education stems from their need for financial stability. They believe that having an education will lead to a great job with higher pay. When marketing your product to Gen Z it’s important to keep their educational goals in mind. You have to convince them that your product is worth buying by showing them how the product can benefit the experiences of someone planning for college, college students, or young professionals.

A big takeaway is that Gen Z is less likely to splurge on brand names because they care more about putting value first over brand loyalty. This should motivate companies to ask themselves how they can provide better value to their Gen Z customers. In order to appeal to Gen Z, a marketer should focus on Electronics + Technology, Discounted Goods, Health + Wellness, Small Businesses, and Education this coming year.

Source: “5 Things Gen Z Will Spend Money on & Why Marketers Need to Care.” by Pamela Bump