Data shows that Millennials, Zoomers, and even Gen X are all buying less. We’re seeing that free income is being spent more on experiences than objects. It’s easy to look at that and assume that things are less important to these cohorts, but that isn’t true.
Younger generations are making less than their older counterparts did. Inflation and rising cost of living are reducing the amount of disposable income available to these consumers. In 2022, Gen Z had less than half of the disposable income that Gen X consumers had.
That means that these consumers are more discriminating in their spending habits. This makes their purchases harder for brands to earn.
Young shoppers are buying less, saving more, but splurging more than older consumers. That may sound counterintuitive, but once you understand the math these customers are performing while shopping, it makes perfect sense.
Things Still Matter
Buying less doesn’t mean that things matter less to recent generations. It means the opposite. Things actually matter more, which leads to people spending their money on a few things instead of a lot of things.
Recent generations are skipping the cheap and flashy things that once made up a large part of consumer goods spending. They are less concerned with the newest, and more concerned with the best.
The abandonment of rampant consumerism doesn’t mean that folks aren’t consuming. They’re just consuming smarter. There are a few things that matter most to these buyers.
Value, Not Bargains
Younger consumers are far more concerned with getting better quality for their dollar. They want consumer goods that are going to last longer, look better, and improve quality of life.
They’re also bargain hunters, but they’re more likely to spend a little more for a high quality product rather than the lowest price they can find. This spending behavior is very different from bargain seeking. They’ll be looking for reasonable prices on quality items rather than just the lowest price they can find.
They’re less likely to spend on things that don’t matter, and more likely to spend on things that do, like ecofriendly cleaners and organic pet food.
Thrifty, but not Cheap
Younger generations are more likely to shop at thrift stores or second hand shops than others.
They do save money, but they do it by spending on quality used items rather than new, poor quality ones. That means bamboo dish racks rather than plastic ones. Vintage clothing rather than fast fashion brands. Old, great quality cookware by the piece rather than brand new sets.
Young folks know that they don’t need an entire set of cookware. They need at least one skillet and one pot. Their needs vary from person to person, so a one-size-fits-all set fits none.
Which brings us to a huge trend among younger shoppers: they want personalized product offerings.
That’s why we’re seeing a rise in things like personalized makeup palettes, personalized hair care systems and skincare systems, and pick-your-own bundles.
People have individual wants and needs, and younger generations are less willing to spend money on sets that have pieces they don’t need and won’t use. If they’re going to splurge, they want to splurge on something that fits their needs as closely as possible.
Brands and Identity Needs
Young adults are more likely to try to fulfill identity needs through brands.
We’re seeing that younger shoppers are more interested in spending their precious dollars with brands that share their political and ideological values.
Brands like TomboyX play heavily into those identity needs, offering underwear for all genders. Grove Co offers less plastic and ecofriendly branding for household goods, as well as the opportunity to customize their carts while saving a little money.
Folks are choosing goods that display their core identity in different ways than they used to. Sexuality, religion, and politics are no longer forbidden topics; they are proudly displayed on bodies, in cars, in homes.
Turning away from mass market brands is a part of this hunt for value, quality, personalization, and identity. Young consumers are moving to niche brands, and that means that they’re big social shoppers.
Moving away from mass market brands means that they’re looking for smaller brands, and they hear about these smaller brands online and by word of mouth. They shop on social media sites. They read reviews. They talk about brands with friends and families.
When I say they shop on social media, I don’t just mean that they use social shopping features.
People are posting their experiences with brands on social media more, and their friends and contacts are listening.
To appeal to these shoppers, brands have to dedicate themselves to quality, value, personalization, and identity. That means committing to a segment.
Brands have to be forthright and authentic about their values, and take accountability when they make mistakes.
Brands have to find these consumers where they live; on the internet. Social media, online content, and SEO are more important than ever.