Phil Lempert of The Robin Report explains that the financial pressures faced by Generation Z inevitably affect their spending habits, and that’s a wakeup call for CPG brands and all retailers. He writes:
Generation Z, born between the late 1990s and early 2010s, and about 67 million strong here in the U.S., is stepping into adulthood at a rocky time. Globally, this generation accounts for approximately 32 percent of the world’s population, making them one of the largest and most important cohorts for retailers and CPG brands. They are inheriting a complex economic landscape marked by escalating costs of living, staggering student debt, and a precarious job market that has hit this generation particularly hard. Despite being the most educated generation, they face significant financial hurdles that threaten to impact their spending on essentials such as food, clothing, and rent and compel them to be more budget-conscious.
“The financial pressures faced by Generation Z inevitably affect their spending habits and that’s a wakeup call for CPG brands and all retailers. With a significant portion of their income dedicated to debt repayment and high living costs, discretionary spending on non-essential items such as clothing, gourmet foods and entertainment is often curtailed. Any wonder why ALDI and Grocery Outlet are doing so well with this cohort?” […]
Responding to Gen Z Consumers
Gen Z’s financial woes are shaping a generation of careful, informed, and socially conscious consumers. The opportunity exists for retailers and CPG brands to develop products, services and retail experiences that are focused on delivering true value to this financially under-siege generation. Here are three strategies that are “must-haves” for Gen Z retail and CPG marketing:
- Price-Sensitivity. Gen Z is highly price-sensitive, often opting for generic or store-brand items instead of premium brands to stretch their dollars further.
- Digital Tools. Leveraging technology, they frequently use their screens to compare prices, search for discounts, and find the best deals (both in-store and in preparing for their shopping trips).
- Sustainability and Ethics. Despite financial constraints, many Gen Z consumers prioritize sustainable and ethically sourced products, which will influence their purchasing decisions even if these items come at a higher cost.
There is little doubt that Generation Z is facing significant financial challenges as they navigate the transition to adulthood, their purchasing decisions will reflect a balance between financial necessity and personal values. Does your marketing plan align?
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