by Niki Blois December 8, 2020

Last Updated: December 8, 2020

This year, Generation Z accounts for more than 40% of American consumers. Defined as the generation born after 1995, Gen Z is known for being digitally native, progressive, individualistic, and entrepreneurial.

In 2020, the oldest member of Gen Z is around 25 years old. These consumers are exiting college, entering the workforce, and beginning their careers. Together, they account for between $29 and $143 billion in direct spending.

Merchants can’t afford to ignore the sales potential of Gen Z. Whether your business is B2C or B2B, you need to understand the trends and buying habits that shape this generation. Once you do, you’ll sell more, meet your business goals, and increase your bottom line.

1. Gen Z is frugal

Much like the Millennial generation, Gen Z is known for being money-conscious and frugal. Experts say growing up during the 2008 recession influenced Gen Z’s buying behaviors, encouraging them to focus on quality, value, and thriftiness when making buying decisions.

This frugality translates into a lack of brand loyalty. Unlike previous generations, Gen Z doesn’t place high value on sticking with brands. Instead, they shop for the best deal, and about 65% of Gen Z values coupons, discounts, and reward programs.

However, Gen Z doesn’t always shy away from paying full price. When they believe a product is high quality with good longevity, they’ll splurge on pricier products for the long-term cost savings. 66% of Gen Z says high quality is the most important factor when buying.

MERCHANTS:

Merchants can cater to Gen Z’s frugality by offering products at low prices, regularly advertising discounts and coupons, or increasing the quality and longevity of their products. In a B2B or service-oriented business, merchants can highlight the cost-effectiveness of their services, how their pricing compares with competitors, or how they save customers money in the long run.

2. Gen Z is mobile-first

From smartphones to social media, Gen Z is fully immersed in digital culture. They’ve grown up with a constantly updating stream of information, news, and entertainment at their fingertips. The internet is an integral component of their daily lives, and they expect to be able to accomplish tasks through digital means.

For most Gen Z consumers, the smartphone reigns supreme. About 75% of this generation uses a smartphone over laptops, computers, and other devices, and over 32% of Gen Z transactions happen on a mobile device. Gen Z members enjoy the convenience and connectivity of smartphones; they love the ability to stream video, stay up to date with celebrity news and trends, and make purchases all from the same device.

MERCHANTS:

For merchants, this proclivity for mobile devices means they have to design brand experiences, web pages, ads, social content, and more with a mobile-first mentality. Every brand touchpoint should be accessible and functional via mobile. eCommerce retailers must deliver a seamless mobile checkout experience, or they’ll lose sales.

B2B or service-focused businesses must ensure their websites are easily readable and navigable via mobile. Many B2B consumers conduct extensive research before making a purchase, so to avoid losing a significant portion of their potential audience, B2B businesses should keep mobile-first in mind when creating educational content for prospects.

3. Gen Z is omnichannel

Despite being known as the digital generation, Gen Z still likes to shop in physical stores. 80% enjoy shopping in brick and mortar stores to see what’s in style and experience products firsthand. However, that doesn’t mean Gen Z consumers shop like other generations.

88% of Gen Z wants omnichannel shopping experiences that blend digital and physical channels. In other words, Gen Z shoppers want to be able to seamlessly move between digital and physical channels without any friction.

For example, a Gen Z shopper might see an ad for a product on Instagram, watch a few videos on YouTube, research the product online, and then go to a store to purchase. Or maybe they browse a physical store, find a product they like, see an influencer promote it, and then click on a Facebook ad a week later to purchase.

Whatever the customer journey, an omnichannel approach supports the customer by giving them a smooth, cohesive roadmap to follow across multiple channels.

MERCHANTS:

Merchants can provide an omnichannel experience for Gen Z shoppers by:

  • Connecting all marketing and sales channels so they work together
  • Ensuring all brand touchpoints have a cohesive voice, messaging, and visual identity
  • Tracking sales, inventory, customer activity, and more in real time
  • Investing in innovative payment options, like digital wallets and contactless payments

4. Gen Z is social

Gen Z spends about three hours a day on social media, the most time out of any other generation, and the way they’re using social media is unique.

Gen Z is shopping direct from social platforms, streaming more video than ever before, and closely following celebrity and influencer endorsements.

MERCHANTS:

With so many potential buyers spending significant time on social media every day, merchants can’t dismiss these platforms. Merchants must be aware of which platforms Gen Zers use every day and how these platforms can support their business goals, from brand awareness to lead generation to customer retention and loyalty.

Merchants who want to capitalize on Gen Z spending power have to make social strategy a priority. From maintaining an active presence on relevant platforms to creating video content to working with influencers, businesses of all types can use social media to engage and sell to Gen Z consumers.

5. Gen Z shops social

Gen Zers spend two to three times more on social-driven shopping than the average customer, with most of those purchases happening on Instagram and Snapchat.

Snapchat allows users to virtually try on clothing items with augmented reality, while Instagram has a native “shop now” button and Facebook allows businesses to tag products in images. These features, among many others, allow social media users to interact with products without ever leaving the platform, leading to more purchases.

Which of the following places have you purchased from in the last 6 months?

MERCHANTS:

Merchants can tap into the social shopping trend by ensuring their products and services are available to buy via social media and by using native selling tools to add a whole new sales channel to the business.

6. Gen Z streams video

More than previous generations, Gen Z enjoys watching video content online. Platforms like TikTok and YouTube can attribute a large portion of their success to the Gen Z users who stream about 23 hours of video every week and the 71% that spend at least three hours every day watching videos online.

MERCHANTS:

Merchants can take advantage of this streaming behavior by advertising on and creating content for video platforms. YouTube, TikTok, and Twitch are three of the most popular streaming platforms for Gen Z, and they each feature countless examples of successful B2C and B2B advertising and content.

While it may be easier for B2C merchants to get creative with video, B2B businesses can still make engaging content, from educational videos to customer testimonials to demos. Regardless of your industry, the most important thing is to create content your audience will care about and connect with.

7. Gen Z follows influencers

An astonishing 75% of Gen Z uses social media to follow celebrities and influencers—24% more than the typical internet user. Gen Z is more open to influencer marketing than older generations, as they perceive product recommendations from their favorite personalities to be more organic and personable than direct ads. 44% of Gen Z has made a purchase because of influencer marketing, compared with only 26% of the general population.

MERCHANTS:

Merchants can leverage this attitude by partnering with influencers to share their products and services. Even micro-influencers—defined as online personalities with audiences between 1,000 and 10,000—can have a significant impact on sales: 82% of consumers said they’d follow a micro-influencer’s recommendation.

And not every influencer has to be an Instagram lifestyle guru. B2B businesses can get in on the action by working with trusted voices and leaders in their industry.

Conclusion

Although Gen Z is still young, merchants shouldn’t write them off. Gen Z represents a significant sector of the market with ever-increasing buying potential. If businesses want to optimize their sales, they’ll have to consider the wants and needs of this dynamic generation.

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