Generation Z — a cohort whose oldest members are working, in college or both, and whose youngest are helping drive spending at home — represents a key demographic for retailers, thanks in part to its size and spending power. Gen Zers hold an estimated $44 billion in spending power from their family allowances alone, according to research from BI Intelligence emailed to Retail Dive.
That goes even further when you take into account their families' spending: In the U.S., families spent roughly $830 billion on their Gen Z members in 2015, with $66 billion of that on discretionary items (non-essential items), according to data from Fung Global Retail & Technology cited in the report. That could increase as members of the generation become consumers in their own right — they're slated to become the largest consumer group globally.
At the moment, Gen Z spends the most money on apparel, footwear, books, music and apps, the BI Intelligence study found. They're almost always connected, with the heaviest mobile users checking their smartphones 30 times each hour, and many are prolific content creators and sharers, according to other research from CommScope emailed to Retail Dive. More than half of the Gen Zers in CommScope's study said that internet access affects who they socialize with and nearly half (49%) say it influences what they buy.
Gen Z (defined by most as being born roughly between between 1995 and 2014) continues to emerge as a connected, savvy and powerful group, with an already formidable level of spending power.
Most marketers have heard how huge the millennial generation is — bigger than their parents, the baby boomers — but Gen Z is poised to be even larger, by most measures, coming in at about 2.6 billion members globally. About 60 million members of Gen Z reside in the U.S., a million more than millennials, according to demographic data firm Social Explorer researcher Susan Weber, and their ranks are diverse: 55% of Generation Z members nationwide are non-Hispanic Caucasians, 24% are Hispanic, 14% are African-American, 4% are Asian, and 4% are multiracial or other, according to marketing consultancy Magid.
The group also has a technology fix: they convert twice as much on mobile as any other generation, 80% of them are influenced by social media and they care twice as much about social as they do about deals. Despite living in a world that has always had the internet and mobile phones, though, Gen Z continues to favor brick and mortar, as they did at the holidays this year. These young people also tend be aware of the dearth of privacy in the mobile internet age, but they're knowledgeable about — and keen on — protecting their privacy as they see fit, to the extent that they can, according to CommScope.
Members of Gen Z are "tech intimates that check their devices every three minutes on average, [and] are set to shape how we live, work and play in the future," Fiona Nolan, CommScope senior vice president of Global Marketing, said in a statement. "Their attitudes and usage of technology will have a big impact on society, paving the way for significant social, political and technological changes."
And their spending power is at a profound level, especially considering that most of them have yet to start working. That may explain their influence on luxury spending: a July study from InMarket suggests that the youngest generation is even more likely than millennials to buy luxury products. Those numbers bode well if luxury brands are looking to keep in touch with a younger customer base as Gen Z's get older — and more independent.