Gen Z Shopping Habits – Things to Know as a Small Business

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Small Business

Understanding different demographics is an essential part of running a small business. Consumer trends and statistics offer valuable insights for companies and knowing what makes different age groups tick is a must for generating leads and sales. Generation Z is the latest generation to enter the workforce, so businesses of all sizes are making a note of their shopping habits, product engagement, and purchasing tendencies. This information can be used to tailor products, services, and customer journeys. Here are some things small businesses need to know about Gen Z. 

Who is Generation Z?

Born between 1997 and 2012, Generation Z is the youngest demographic to graduate from university and enter the workforce, with disposable income to spend on products and services. They tend to value product quality over experience, which is a change from the attitude millennials hold, and are more interested in fair-trade, sustainability, ethical practices and localised products than previous generations. Gen Z is happy to pay up to 10% more for products of higher quality and ethical status. Social media is their go-to communication channel and serves as the primary marketing channel companies use to reach out to Gen Z consumers. 

In-store shopping

It would seem logical that having grown up surrounded by high-speed internet and smartphones, Gen Z would purchase most of their products online. Surprisingly though, younger people favour in-store shopping much more than millennials, though they are nowhere near as keen on physical settings as boomers. Gen Z also asks a lot from face-to-face customer service – be prepared to field questions about sourcing, sustainability and ethics. Oddly, the shift back towards bricks and mortar shopping may have digital roots – as apps such as Instagram appeal visually to consumers, physical shops with shared aesthetics increase in appeal, too.  

DTC shopping

Like millennials before them, Gen Z prefers to buy direct from e-commerce brands, favouring them over third-party marketplace platforms. This trend towards direct-to-consumer (DTC) solutions shows that younger people value a highly personalised shopping experience, despite the ease of use with which marketplace platforms draw in business from. DTC trends also mean direct communication with brands via social media – the preferred channel for Gen Z. 

Sourcing products

More than ever before, young people source products to purchase using social media. It’s reported that 97% of Gen Z consumers say that they use social media platforms such as Instagram, Snapchat, TikTok, and Facebook to find out about products, and 62% buy directly from their social feeds. Social media has become the most effective channel for small businesses to market their products and services – the platforms are cost-effective, easy to use, and increase the chance of marketing messages being shared. Small companies can also communicate directly with their customers, driving the personalisation that Gen Z shoppers love. 

Cash and credit

Interestingly, Gen Z consumers don’t rely on more traditional forms of credit – in fact, an overwhelming majority of them report not possessing a credit card at all. While the amount of people who carry physical cash is dwindling, for Gen Z “cash” means having immediate access to their funds via digital wallets and other cash apps. It’s becoming essential for small businesses to use up-to-date payment methods to secure the custom of Gen Z. Despite shunning traditional lines of credit, younger consumers are not frugal, and just as likely to impulse buy as previous generations, with ‘buy now, pay later’ options becoming de rigueur for companies of all sizes. 

Influencers

Gen Z consumers are less likely to trust marketing messages from companies, preferring to rely on customer reviews, product demonstrations on video-sharing platforms like YouTube and TikTok, and endorsements from influencers. While building brand trust is as important as it has ever been, placing products in the hands of influential online personalities and celebrities. Online influencers hold more sway over Gen Z consumers than traditional celebrity endorsements, as younger people can relate directly to them (rather than an airbrushed movie star in a commercial). 

With their focus on product over experience, ethics over pricing, and social media outreach, Generation Z have a different set of demands than millennials. It’s vital for small businesses to adapt their approach to their products and marketing messages to suit these new consumers entering the marketplace.

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