Oh, Gen Z, your retail trends just ‘hit different’. That’s Gen Z speak for unique and special. They’ve brought back claw clips and low-rise jeans (sigh). They’re impulse buying rosemary oil on TikTok. And they’re turning to social for answers instead of Google.
Love ‘em or hate ‘em (millennials, we’re looking at you), Gen Z’s retail trends are making serious waves. And nowhere is this more palpable than in the US.
Brands and agencies, prepare to take notes. We’re about to dive into the shopping habits of Gen Z in America – one of the hardest consumer groups to keep tabs on. We’ll be answering key questions marketers need to know when targeting today’s “it” consumer:
- How does Gen Z make purchasing decisions?
- Does Gen Z still shop at traditional stores?
- What makes Gen Z buy a product?
- How is Gen Z shopping?
- What does Gen Z expect from an online retail experience?
US Gen Z retail trends: How are Gen Z shopping in 2023
To help you get the full picture of this generation, we’re gonna slice and dice Gen Z’s shopping habits into 3 neat buckets. We’re talking about:
- How they shop: Online vs in-store, buy now pay later, and social media
- Why they shop: Buying motivations, loyalty, and the cost of living crisis
- What they buy: Vacations, pre-loved items, and own-label products
How does Gen Z shop? Online vs in-store, impulsive shopping, and social media
If there’s one thing that brands in the digital era need to know, it’s how consumers shop. And this is especially true for Gen Z – do these digital natives prefer to shop online or in-store? Well, it’s a mixed bag, and nearly split 50/50.
Our data shows that 52% of Gen Z in the US prefer to shop online, while 48% prefer to shop in-store. But – and it’s a big but – looking at the data retrospectively shows a bit of a trend emerging. Love for online shopping is growing. In fact, the number of Gen Z who purchase products online at least weekly has increased 20% since Q2 2020, which means their Covid shopping habits have stuck around, and actually become more ingrained than they were during the height of the pandemic.
With buy now pay later (BNPL) services taking over online retailers by storm, it’s no wonder brands want to know whether Gen Z are cashing in on the opportunity. Surprisingly, it’s not as common as you might think. 11% of Gen Z have used a buy now pay later service in the last week, which isn’t as high as the rate of millennials (13%), but it is higher than the number of Gen X (8%) and baby boomers (4%). It seems if Gen Z’s can’t afford something right now, they tend to just stick to their budget.
Perhaps one of the biggest Gen Z retail trends brands ought to know about is their love for impulse shopping. 25% of Gen Z say they often make impulse purchases, which has actually grown by 8% YoY. Plus, Gen Z are the least likely generation to say they usually research products online before buying them. Spontaneity is their bag.
Globally, this is a behavior driven by social media (and TikTok specifically), and something we explore in Connecting the dots. Social media has become the first stop on many people’s buying journeys.
Consumers no longer go looking for things to buy. Instead, brands meet consumers at their hangout spots while they’re looking for inspiration.
Around the world, 3 in 10 Gen Z say they use social media as a place for inspiration – it’s becoming a one-stop-shop for their purchase journey. They want to be inspired, rather than simply informed, and social media platforms like TikTok fill this role nicely. Think of it as a mindset shift from “I know what I want to find/search for” to “I want to explore and find things I didn’t even know I needed”.
It’s no surprise then to hear that the top ways Gen Z hear about new products and services is typically through social media, whether it’s through ads on social media (38%) or social media posts (33%).
Why does Gen Z shop? Loyalty, the cost of living crisis, and buying motivations
Let’s face it, it’s a cluttered and competitive marketplace for brands right now. Everyone’s fighting for a slice of attention. So what ignites that spark for Gen Z in America? And how is the cost of living crisis impacting their buying behavior?
Well, to put it bluntly, Gen Z are looking for bargains right now. 71% would rather wait for a product to be on sale, while just 29% would prefer to buy a product now at full price. And familiarity isn’t everything. While 55% would rather pay more for a brand they know, 45% are happy to pay less for a cheaper own-brand product.
When we look at brand affinity, status is key to Gen Z in the US. In fact, the most distinctive things they want brands to do is to run customer communities/forums and to improve their status, so being hot on social, focusing on that collective sense of community, and shining a spotlight on buyers is pivotal to getting in with Gen Z. One brand that nails this is Motel Rocks. The online clothes retailer has a section at the bottom of every page titled ‘Motel Girls Rocking It’, which pulls through Instagram posts of customers rocking the Motel look.
On top of this, 35% of US Gen Z describe themselves as ambitious, and they’re 43% more likely to describe themselves this way compared to the average consumer. Aspirational content that empowers them to be their best self and achieve their full potential is likely to land. It’s no surprise then that Glossier (a holy grail of the Gen Z ‘no-makeup makeup’ look) shapes its blog Into the Gloss with articles like How To Be A Person Who Has Their Life Together and What’s Everyone Reading?
So what’s the sitch when it comes to Gen Z and brand loyalty? Well, it’s not promising.
American Gen Zs don’t view their favorite brands in a ride or die light.
In fact, under half (41%) say they’re loyal to brands they like, which is a smaller proportion compared to older generations. But there’s some untapped potential according to our data: loyalty points. 34% of Gen Z use loyalty or reward programs – which, okay bear with us – is a smaller proportion compared to other generations like millennials (45%) and baby boomers (62%) – but a growing trend is emerging.
The number of Gen Z in America who say loyalty points are important when shopping in-store has increased 17% since Q4 2021, which makes it their fastest growing in-store influencer. On top of that, the number of Gen Z who say loyalty points are important to them when shopping online has increased 22% since Q4 2021, making it the second fastest growing influencer after a repeat order function (+24%).
So what? Well, loyalty points have typically been something older consumers prefer. But generally speaking, younger people have the least savings, the least purchasing power, and the least financial security. Gen Z are looking for help, and loyalty rewards can do just that. One place to start might be by rewarding mobile payments – as over 70% of US Gen Zs pay on their mobiles weekly.
What does Gen Z buy? Vacations, pre-loved items, and own-label products
Across America as a whole, crisis fatigue is setting in. Sustainability, in particular, is in flux. The number of US consumers who want brands to be eco-friendly is down 8% YOY. Sure, 8% might not sound much, but that’s a lot of people in a country as big as the US.
It’s important to note that many Americans still say they take steps to minimize their impact on the environment, so it’s not that they don’t care at all. It’s more a case of prioritization as more immediate crises come to the forefront. For example, the number of Gen Z who would prefer to pay more for an eco-friendly product has dropped 8% in the past year as they prioritize how they spend their money during the cost of living crisis.
Ultimately, it’s never been more important for brands to consider how consumers are collectively feeling and keep in mind the impact crisis overload is having on many people. Messaging around sustainability initiatives needs to be more actionable and meaningful, otherwise it’s just noise.
So what exactly are Gen Z prioritizing? Well, it’s experiences and travel.
54% of Gen Z would prefer to spend money on an experience, while 46% would rather spend money on a product.
Meanwhile, the number of Gen Z in the US who have bought a vacation abroad in the last 6 months has increased 30% YOY. There’s also been a 5% increase in the number buying travel tickets, so it appears that Gen Z are still looking that R&R break even during the cost of living crisis.
On top of this, they’re vibing with the secondhand market, so apps like Depop are well-positioned to ride this pre-loved wave. In fact, Gen Z’s fastest-growing retail attitude year-on-year is that they’re comfortable buying pre-owned items rather than new ones.
Another trend on the shopping front is the newfound preference for own-label products – with more Gen Z now opting for these budget items than this time last year. This is especially palpable on the baking and household front, with own-label baked items climbing 19%, and own-label household staples up 15%.
They’re saving candy/chocolates as a treat though, with the number choosing own-label versions down 6% in the same time period. It just goes to show that quality, branding, and familiarity still matters across some spending categories.
Generally though, as the cost of living continues to bear down, more will be on the lookout for ways to cut costs without sacrificing their favorite products. There’s plenty of opportunities for retailers to leverage their own-label brands, and increase brand loyalty during an increasingly fragile time.