When prices rise, Gen Z finds other ways to buy products

Following the second edition of the Price Inflation Study, there was a demand for an analysis focused on the purchasing behaviour of Generation Z. We were curious about how Generation Z (“Gen Z” or “Zoomers” in short) is affected by the current economic situation. Do Zoomers have different feelings, emotions, or behaviours toward the ongoing price inflation? This is especially important for marketers who are targeting Gen Z with their products or services. As a result, we analyzed the differences and similarities between GenZ and the other (older) generations.

Overall, both Gen Z and non-Gen Z consumers try to save within the same top 5 categories however, non-Gen Z consumers try to cut their spending more than Gen Z. The significant differences between these demographic groups occurred in the types of saving strategies. Consumers older than 26 preferred to delay their purchases and put effort into saving money through comparing offers, buying cheaper alternatives, going to the discounter, etc., while Generation Z tended to seek alternative solutions on how to buy the product affordably.

Who is Gen Z?

Firstly, it is good to clear out the definition of Gen Z. It is a demographic group following Millennials and preceding Generation Alpha. Researchers and popular media place the beginning of this generation in the mid-to-late 1990s and the end in the early 2010s hence this generation consists of people between the ages of 12 and 26. In this research, we examined the age group of 18 – 26-year-olds (since 12–17-year old’s were out of scope) and compared the data with the non-Gen Z segment, those older than 26.

Gen Z is optimistic about the future economic situation

Both Gen Z and non-Gen Z feel that the current price inflation affects them emotionally, around two-thirds of both groups feel this. Also, the perceived impact on the personal financial situation is equally strong among both groups.

However, compared to those older than 26, Zoomers feel that price inflation affects their daily life less. Almost half of the respondents (40%) feel more positive about the global economic and financial situation and believe that it will remain the same or improve in the future when compared to non-Gen Z. Non-Gen Z is more sceptical as only 2 out of 10 believe in the optimistic development of the economic situation.

Interestingly, we see that Generation Z likes to reward themselves with something small to compensate for the fact that they can’t afford that many big purchases right now such as household, clothing, leisure, and entertainment expenditures.

Henceforth, marketing campaigns aimed at Gen-Z should address this topic in a positive way, focusing on what is possible and affordable and nudging them to reward themselves with something small rather than pointing out the negative aspects or limitations that price inflation brings.

Fashion over groceries

Based on the results, compared to non-Gen Z consumers, Zoomers care more about making the right choice when choosing a service or product and give more importance to categories like clothing, shoes & accessories, electronic devices, media & streaming, cosmetics, sports, and investments. “The less important categories,” such as health services, housing, G/W/E, insurance, and daily groceries are where Generation Z finds the easiest to cut their expenses.

Generation Z plans smaller budget cuts

When it comes to cutting budgets, both Gen Z and non-Gen Z already did and plan on saving even more in the same five categories:

1. clothing & shoes & accessories
2. ordering food
3. holidays & trips
4. social activities
5. daily groceries

The only difference found was that social activities, pharmaceuticals & diet supplements were among the top 10 categories on which Gen Z planned to cut back their expenses, whereas non-Gen Z is more likely to save on gifts and holidays & trips. Surprisingly, the percentage of Gen Z who indicated they save less or no longer save was higher in almost every measured category when compared to non-Gen Z.

Smart saving in categories that Gen Z enjoys

The study recognised different saving strategies between Gen Z versus non-Gen Z. Overall, non-Gen Z´s go-to savings strategy was to delay the purchase or buy less while Generation Z opts for affordable ways to buy a certain product. For instance, regarding categories that Gen Z enjoys, such as travelling, home improvements and clothing, Zoomers tend to find alternative solutions on how to affordably buy products instead of delaying their purchase. For holiday or travel trips, booking the deal online, choosing more package deals, travelling in (bigger) groups, and travelling on a budget became popular savings strategies. Clothing, shoes and accessories are bought online, in bulk or second-hand which is not commonly used by non-Gen Z who rather buys less of these products in order to save. In terms of home improvements and renovations, DIY projects, asking for help from friends/ family, using auctions or re-selling websites, and choosing different payment options belong to Gen Z´s saving strategies in this category.

In terms of pharmaceuticals and diet supplements, we see that non-Gen Z is less likely to buy products just for the prevention of illness compared to Gen Z. On the other hand, Zoomers will compare offers, save on expensive/ luxury products, explore the special offer section, make use of third-party offers, and go for retailer brands. Regarding electronic devices for personal use and household appliances, we found that Generation Z is less willing to delay the purchase (only 35% Gen Z compared to 55% non-Gen Z).

SUMMARY AND IMPLICATIONS

We can conclude that it is worth it considering Gen Z as a separate group with its own emotions, attitudes, and saving strategies regarding price inflation. The results and implications can be summarized followingly:

• Although both age groups are affected emotionally by the current price inflation and feel that it is impacting their personal financial situation, Gen Z finds their daily lives less influenced and has a more positive attitude towards future development. Companies and marketers targeting Zoomers should take this topic seriously but from a positive perspective by, for example, focusing on what is possible, and talking about rewarding yourself with something small rather than bringing out the negative side or the limitations of price inflation.
• The top saving categories of the past 6 months and categories in which consumers plan to save in the next 6 months are comparable for Gen Z and non-Gen Z. However, the percentage of Generation Z consumers saving on these categories is lower compared to the older age group. Meaning, Gen Z is more positive about the situation than the older generation: the percentage of Gen Z that indicates saving less or no longer saving is higher for almost all measured categories compared to non-Gen Z.
• When it comes to “bigger” purchases like holidays, clothing, and home improvements, Generation Z is much less willing to delay expenses, a common saving strategy applied by non-Gen Z. Instead, Gen finds ways to realise the purchase by for example finding cheaper options online, thrifting or using package deals. On the other hand, for daily groceries, Gen Z is less willing to make efforts than non-Gen Z (comparing offers, buying cheaper alternatives, going to the discounter, etc.).
• For marketers of bigger purchases or for Gen Z´s important purchases this provides nice opportunities to guide and aid Gen-Z on their consumer journey.

Article by Sonja van den Berg & Sasha Perozo Alberti & Veronika Čeladníková