Gen Z gets talked about for a lot of reasons. Stories about their savvy with social media platforms, including TikTok; their contributions to social justice reform and grassroots activism; and their novel influences on fashion trends and the cultural lexicon appear in many the recent headlines available in popular news media.

But Gen Z is also a financially savvy cohort, with a significant amount of purchasing power. They are expected to represent 20 percent of U.S. consumer spending by 2029, as these young people enter their peak spending years. Furthermore, Gen Z will constitute about one-third of the workforce by that point. In response, retailers have begun paying close attention and studying this consumer demographic in greater depth, leading to some new insights into their unique preferences. A few of these insights reflect key consumer behaviors, such as:

• A significant preference for shopping on digital platforms, such that three-quarters of Gen Z adults express their desire to shop on their phones.
• A strong and distinctive focus on sustainability, signaling preferences for brands that align with their social values. This influence also has notable indirect effects, in that Gen Z has influenced their parents’ generation (Gen X). In turn, research shows a 42 percent increase among Gen X in being willing to pay more for sustainable products.
• Willingness to discuss money openly, with practices like “loud budgeting” and advocating for close monitoring of their personal finances. Seemingly in accordance with these views, pricing transparency and financial literacy appear crucial to this generation, potentially as a response to their first-row seats to witnessing the effects of global recessions and pandemics during their formative years.

In response to these distinctive consumer behaviors, retailers have begun implementing strategies targeted at increasing Gen Z engagement in particular. For example, companies like Wendy’s have experimented with dynamic pricing, testing how digital boards and rapid price adjustments might attract cost-conscious customers during slow periods. Other brands have reiterated or increased their emphasis on sustainability practices, often balancing this messaging with affordability. Regardless of the strategic initiatives they embrace, companies attempting to appeal to Gen Z usually spread their messages on social media, to ensure that they leverage the same platforms that Gen Z typically uses to share their word of mouth, voice their complaints, or offer product recommendations.

Even as they target this generation though, companies still must navigate shifting consumer preferences carefully, balancing their appeal to younger customers with their dedication to existing customer bases and looking forward to even younger generations who promise to be their customers in the future. To achieve such multifold goals, continuous market research is required, combined with ongoing research, development, and testing of new marketing strategies, to keep pace with Gen Z’s evolving preferences and the constant shifts in consumer populations.

Discussion Questions

1. Is it short-sighted of retailers to change their focus and target Gen Z so strongly and specifically? Explain your answer.
2. Which characteristics of Gen Z seem likely to remain true for future generations? Which of them might change for coming generations?

Sources: Greg Petro, “Gen-Z May Be the Most-Studied Consumer in History. Here’s What We Know So Far,” Forbes, July 12, 2024; Liz Hilton Segel and Homayoun Hatami, “Mind the Gap: Now versus Next: How Gen Z Is Challenging Consumer Sector Norms,” McKinsey, January 2024; Monique Thomas, “5 Gen Z Marketing Strategies to Implement in 2024,” Later, December 12, 2023; OpenAI ChatGPT, “Assistance with Research on Gen-Z Marketing Strategies,” ChatGPT, August 8, 2024.