While Millennials currently hold the most purchasing power, this dynamic will change by 2031 when Generation Z becomes the age group with the most income. By that time, Gen Z will increase their income by five times, growing to over $2 trillion. As such, many companies find themselves gravitating towards this younger generation that continues to grow in global importance.
Who is Gen Z?
Gen Z accounts for roughly 2 billion people worldwide and is on pace to be one of the most well-educated and highest-earning generations. As this generation moves into the professional workforce, their income will increase dramatically in the coming decade. With a new influx of disposable income, the consumers of Generation Z will have to decide where and how to spend their money. Brands who look to the future will soon try to attract the attention and business of this important upcoming generation.
Currently, Gen Z’s favorite brands (in order) are Google, Netflix, and YouTube. Clearly a technology focused age group, Gen Z relies on social media to connect with not just each other, but businesses as well. And given that roughly half of Gen Zers get their news from social media, businesses who promote themselves online have a direct pipeline to this increasingly important target audience.
What Gen Z Values About Brands
There is more to a brand than just a strong social media presence. Gen Z, more than any other age group, cares more about a company’s values than the product or price tag. These values include environmentalism and diversity, among others. In fact, 73% of Gen Z consumers said they would pay more money for a sustainably sourced product, more than any other generation. Ethical business models are paramount to a brand’s success, as large corporations are under the watchful eye of Generation Z consumers.
Inclusivity is also important to Gen Z, as more than half of them want brands to support wider inclusivity initiatives. This makes sense, given that Gen Z is by far the most diverse generation in terms of both race and sexual orientation. If brands can connect to this diverse community, they will have a far easier time creating long lasting business relationships with these young consumers.
With the increase in online shopping, connecting technology and business is a clear route to the ever-important Generation Z. Nearly half of all teens in the United States are online more than 10 hours a day, and two out of three are interested in making a purchase through social media directly.
While this new business model may be a difficult adaptation for some brands, these changes are essential as the younger generation accumulates global wealth. The online world is the best method of connection between businesses and consumers, as social media platforms act as a two-way street of communication. Businesses can target digital advertisements to the best audience for them; and with 44% of Gen Z consumers purposefully interacting with posts to influence the algorithm and reach the content they are looking for, young consumers are able to find the brands that align best with their own values.