When it comes to Generation Z, their influence is seen and felt throughout the entire retail and fashion industry. Especially with the rise of social media, and despite only making up 15 percent of the U.S. population, the cohort is a unique market segment with complex consumer spending patterns.
A recent report published by EY, “2023 EY Generation Z Segmentation Study,” notes a major factor of what sets Gen Z apart is the power of persuasion is available at their fingertips — they are the first generation to grow up with 24/7 access to the internet since their birth.
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Another unique trait is that Gen Z in America has lived through an unparalleled number of unprecedented events at the turn of the century: the Sept. 11, 2001 attacks, widespread school gun violence, a large-scale recession from 2007 to 2009, a global coronavirus pandemic — with more unforeseen circumstances developing.
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And when it comes to retail and brands, they often fail to meet the standards/criteria of what this generation’s needs are.
“Understanding what motivates Gen Z, what turns them off, and what they truly want and expect requires more than assumptions,” said Marcie Merriman, cultural insights and customer strategy leader for Americas at EY. “It requires a genuine willingness to listen, adapt and help build the safe, secure and fulfilling social and physical future that Gen Z is so desperately trying to create for themselves and their loved ones. As with any complex problem, the only path forward is through continuous learning.”
Merriman said despite EY’s continuous analysis for the past decade, they continue to surprise researchers in “new and inspiring ways.” She notes that although the company was aware of the pragmatic nature of Gen Z, the monetization shift that occurred from the generation of active participants driving change in society was spotlighted through this research.
“This pragmatic need to get ahead is changing how they view work, how they approach savings, and when and how they choose to spend their money,” said Merriman.
Furthermore, Merriman said she was not surprised by the elevated concerns of Gen Z during the pandemic, as the firm’s research saw a shift over the past decade in caring for others. She attributes this shift in tandem with the increased awareness others faced during a time when historically disadvantaged people were hit the hardest. “Gen Z tends to act on their concerns, and we see this reflected in their consumer behavior and as they are making decisions.”
Here, Merriman sat down with WWD to talk about how Gen Z is fulfilling their own needs if brands are falling short, making guilty purchases such as fast fashion, the cohort’s surprising and ever-changing consumer behavior habits and more.
WWD: In what ways are Gen Z consumers fulfilling their own needs if brands are falling short of meeting their expectations?
Marcie Merriman: Gen Z is fueled by crowdsourced knowledge. They recognize that who and what they can trust on the internet has always been a gray area. To compensate, they turn to their family and friends — including those in their social media network — to guide them in the right direction.
They struggle to trust large businesses (with U.S. youth believing they can trust large companies to do what is right only 34 percent of the time, compared to 71 percent for small businesses). They seek the truth from truth-tellers alongside the people they know to learn about brands and products worthy of their time and wallet. It is harder than ever for businesses to win their trust and loyalty. Proactive transparency about internal practices and policies is a baseline requirement in this battle.
WWD: Despite recent studies, why do you think that we are seeing this trend of Gen Z admitting to making purchases that make them feel guilty, such as purchasing fast fashion?
M.M.: Social media and the 24/7 news cycle held in the palm of their hands have made today’s youth more aware of the consequences of their actions. As a result, they are turning out to be a pragmatic generation always looking for ways to do more with less, whether with their money, time or the natural resources available to us all.
Many within the generation, especially the authentic activists’ segment within our research, feel an obligation to do better — to do things that help improve our environment, or at the very least not contribute to the crisis. When they “slip” and do things, they know to be harmful we see the guilt factor surface. This guilt factor is rising along with the number of environmental crises.
WWD: Why do you think Gen Z is starting to move away from guilt-driven habits by looking to other options such as charity stores?
M.M.: Gen Z’s pragmatic approach to nearly everything in their lives includes their approach to consumerism. They are always looking for ways to maximize their time, energy and the resources available to us all. Whether through the rise of pre-owned clothing apps that they have helped push into mainstream popularity or walking into a physical secondhand or charity store — they have a desire and an awareness to do so for the betterment of society.
They have made the “not new” market cool, so much so that globally, 46 percent of Gen Z expect to buy more secondhand products in the next three years. Sixty-six percent of Gen Z globally said they repair things rather than replace them. They are aware of the longevity of their purchases and are intentional in their spending choices. Additionally, these outlets provide Gen Z with the opportunity to make extra money by selling products back and further limiting the environmental impact of their activities.
WWD: What does this mean for retailers and brands moving forward?
M.M.: Retailers and brands moving forward are hopefully beginning to understand that there will be no return to normal. The pace of change we are already experiencing will only increase. Youth have always been the drivers of change when it comes to fashion, music, social issues and emerging technologies — but today’s youth accelerate the influence of change in just a few clicks. Brands of tomorrow will recognize that they need to continue to be a part of the conversation moving forward, rather than resisting the continued change ahead.