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Millennial and Gen Z’s global share of retail spend is projected to increase to 48% by 2030, giving retailers a good reason to take a closer look at the world’s youngest consumer cohort — Gen Z shoppers.
Gen Z, currently aged 10–25, are native technology users. They’re more ethically minded and optimistic about spending than consumers born before them, and growing up in a world of technology-powered options, they won’t hesitate to abandon a purchase that they find too expensive, too slow, or too difficult.
Based on findings from Afterpay’s Gen Z report, here’s what all businesses need to know about Gen Z consumers, what matters to them, and their purchasing habits in 2023.
1. Gen Z is the most optimistic about spending.
Out of all generations, Gen Z shoppers are the most optimistic about the future of shopping. While most Gen Z consumers (77%) expect prices to rise over the next 12 months, only 20% of these shoppers expect to shop less. Another 25% plan to shop even more in the coming year.
Compared to the 20% of Millennials and 10% of Gen X and older that plan to shop more in the coming year, Gen Z is poised to be a driver of revenue for businesses.
2. They prefer to shop directly from brands.
Gen Z is known to favor eco-friendly products from sustainable brands, and, as consumers, they’re more likely to abandon a purchase from brands that don’t meet their ethical standards. One in three Gen Z consumers have abandoned a brand in the last 12 months based on that brand’s reputation for sustainability and ethics.
But a major factor differentiating Gen Z shoppers from older generations is that they prefer to cut out the middleman and shop directly from brands themselves, giving businesses reason to be present through an online store or on social media platforms.
3. They care about personalization and online discovery.
Navigating digital information, online stores, and social platforms is native for Gen Z, so it makes sense that they prefer to shop online more than any other generation. Forty percent of Gen Z consumers said they prefer online shopping to in-store shopping, versus 35% of Millennials and 27% of Gen X and older.
But Gen Z’s reasons for shopping online differ from other generations in notable ways. While millennials and Gen X prefer online shopping because it’s available to them 24/7, Gen Z prefers online shopping because it’s easier to search for what they want online, easier to discover more brands online, and online shopping offers them a more personalized experience.
4. Social commerce is essential to reaching them.
As the first generation to grow up with smartphones, social media is ingrained in Gen Z’s daily habits. Roughly 88% of Gen Z uses at least one social media platform multiple times a day, ranking YouTube as the most popular platform for daily use (67%) followed closely by Instagram (65%).
Gen Z uses social media to communicate, follow trends, and build identity, but social platforms also hold significant conversion power: 43% of young consumers said they’re willing to purchase a product based on an influencer’s recommendation, and 49% said they like shopping directly on social media. As most Gen Z consumers (63%) report using social platforms to keep up with trends, brands are uniquely positioned to reach this demographic of shoppers through social commerce strategies.
5. In-store retail is still a part of their shopping habits.
Online shopping is a major driver of purchases for Gen Z, but it turns out they want to shop in store, too. Twenty-six percent of Gen Z consumers said they plan to shop in-store more often in the next 12 months, compared to 21% of Millennials and just 15% of Gen X and older.
Over half (51%) of Gen Z shoppers prefer to shop in-store to avoid waiting for delivery, and 48% prefer in-store purchases to avoid delivery fees. Other popular reasons for Gen Z’s in-person shopping were because an item is only available in-store or to be able to see, feel, and try an item before buying.
6. Omnichannel shopping options are key.
Whether they’re making a purchase online, in-store, or on social channels, omnichannel retail options are necessary for reaching Gen Z. It’s essential for businesses and brands to be present where Gen Z is shopping and to offer them options when they get there — whether that means keeping up with trends or offering new payment options.
More than half of Gen Z shoppers have used voice shopping on platforms like Alexa, Siri, or Google Assistant in the last 12 months, and one in five Gen Z shoppers have abandoned a purchase because a business didn’t offer their preferred payment method — which for many Gen Z consumers is buy now, pay later.
7. Reviews, incentives, and return policies drive their purchasing decisions.
Gen Z is motivated by environmentally-minded and socially-responsible brands, and won’t hesitate to abandon a purchase that is too expensive, too slow, or too difficult at checkout. But like generations before them, they too care about sales, reviews, and ease of purchasing and returning, and they’re often loyal to brands that meet these criteria.
Top reasons that Gen Z shoppers abandoned a purchase in the last 12 months were due to delivery being too slow or expensive, no discount or sale being offered, a lack of product reviews, or poor return options.
What keeps Gen Z loyal to a brand? Shoppers said offering good discounts and sales, allowing online purchases to be returned in store, and offering both online and offline stores keeps them coming back.
8. They’re open to a real and virtual shopping future.
The most attuned to technology of any consumer cohort, it’s no surprise that Gen Z envisions a future of shopping in the metaverse. The majority of Gen Z consumers (54%) think the metaverse will be part of daily life in the next 10 years, with 72% of Gen Z consumers interested in buying real-world items in the metaverse and 65% interested in buying virtual items.