Will it always be about price for Gen Z?

Discussion
Mar 20, 2018
Matthew Stern

In a session at Shoptalk in Las Vegas, Lynn Gillis, principal at IRI, presented some insights into the shopping habits of Generation Z which could inform brands and retailers hoping to win them as customers now and in the future.

“I guarantee you that this group of people are not miniature Millennials,” Ms. Gillis said. “In fact, they are an entirely new Zeneration and I guarantee you they will change everything.”

Ms. Gillis said that Generation Z’s average $17 per week allowance adds up to an aggregate $44 billion of purchasing power. While kids getting allowances isn’t a new development, Generation Zers are distinctive with regard to the liberty with which they spend. About 59 percent of them have no family rules on how they spend their money.

Gen Z may, however, be getting more lessons about financial responsibility than generations before them because of how easy it is to spend.

“They want everything instantly,” said Ms. Gillis. “One of the things their parents are doing to try and help balance that is to teach them the value of waiting and the value of money.”

Ms. Gillis showed a video in which a young Gen Zer described spending time with her mother grocery shopping and being taught about financial responsibility during the process — much different, Ms. Gillis believes, than how Millennials were taught to treat money.

“Those kids know the value of money,” said Ms. Gillis. “And that shows up in terms of what motivates their buying.”

Two-thirds of Gen Zers said price was their major influencer in buying. Other generational characteristics Ms. Gillis explored as prime influencers of Gen Z buying behavior were diversity, tech-savviness and overall awareness of the dangers of the world.

And the older portion of Generation Z is having a big impact on areas like grocery shopping as they reach the age where more may be starting families. Half of 18-to-21-year olds are participating in family grocery shopping, and one in five are their family’s primary grocery shopper.

DISCUSSION QUESTIONS: Do you agree that characteristics like being price-oriented and appreciative of the value of money will define Gen Z? How should retailers and brands respond to Gen Z’s tendency to be more financially responsible?

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"Gen Z is absolutely financially responsible. But, that isn’t necessarily a bad thing for retail."
"Instant gratification and digital distraction are serious challenges for Gen Z."
"Gen Z also wants a hand in creating the products they purchase..."

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18 Comments on "Will it always be about price for Gen Z?"


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Dave Bruno
BrainTrust

Centennials began coming of age during the Great Recession of 2008-2010, and many family incomes have still not fully recovered to pre-recession levels. These young people have first-hand knowledge of the true value of money, and much of the research I have read indicates that they already have a sophisticated grasp of the difference between price and value. I believe (and hope) that their experiences will shape their relationship to money — and will impact their consumption habits — for the rest of their lives.

Paula Rosenblum
BrainTrust

Well, I don’t have children, so I’m looking from afar. But I do worry that making long-term assumptions about a young generation is a poor idea. We had all our theories about Millennials, and now they seem to be taking their place in society.

The irony of all of this is that retailers are overwhelmingly run by and for Gen X. Our data has told us this 2 years on a row. So we talk a lot about these generational differences and then do … not much about it.

Max Goldberg
Guest

Gen Z, like Millennials and Boomers before them, do not easily fall into one set of behavioral characteristics. After the Great Recession, most consumers became price-oriented, a characteristic that lingers to this day. As they grow older and start families, Gen Z will adapt to the current economic circumstances. I’m glad that they seem to appreciate the value of money and that they are politically active. It will be interesting to watch them grow.

Dick Seesel
BrainTrust

Shoppers regardless of age are more price-conscious and value-oriented than ever. Some of this is residue from the Great Recession, and some of this results from the “empowered shopper” with plenty of price data as close as the nearest cell phone.

I wouldn’t describe Gen Z as uniquely price-oriented. I’ve taught a college-level retailing class for ten years, and it’s always a challenge to discuss retailers that the students can’t afford to buy from. (And today’s college students fall right into the Gen Z age profile.) These are mostly students who are working through college while taking on significant debt, so it’s no wonder that they visit TJMaxx instead of Nordstrom. But their spending power will change as they form households and grow their career earnings potential.

David Katz
BrainTrust

Instant gratification and digital distraction are serious challenges for Gen Z.

Studies show that delayed gratification is one of the most effective personal traits of successful people. People who learn how to manage their need to be satisfied in the moment thrive more in their careers, relationships, health, and finances than people who give in to it.

The famous “marshmallow” studies by psychologist Walter Mischel, illustrated the long-term effects of self-control and delayed gratification. He showed what happened to preschool-aged kids who could pass up a temptation in the short run, in the study, a marshmallow sitting right in front of them, for three marshmallows down the line.

Kids who had that level of willpower experienced some surprising outcomes: including higher SAT scores a decade later, coping with stress, higher incomes as adults, than their peers who couldn’t wait.

Meaghan Brophy
BrainTrust
Meaghan Brophy
Senior Retail Writer
1 year 10 months ago

Gen Z is absolutely financially responsible. But, that isn’t necessarily a bad thing for retail. Millennials were known for overspending on experiences, and underspending in traditional retail. And, there is a difference between products having a good value and having a low price, which I think is the key for Gen Z.

Chris Buecker
BrainTrust

Generation Z is the first generation that really grew up with a mobile device as their first source. Their world is Instagram and Snapchat. This generation likes to spend their money very selectively, considering also subscription-based (Netflix, etc.) and sharing-based models (car-sharing, etc.). Retailers and brands will need to become much more active on social media to position themselves as a “cool” brand. I am sure that in future they will allocate much more marketing spend in this increasing marketing channel.

Brandon Rael
BrainTrust

Financial responsibility is not the main defining characteristic for Generation Z. From my perspective, and having two young children that are part of the segment, the defining trait of this generation is their consciousness and awareness of the world. It’s not simply about money or budgeting, but what is most interesting is their overall concern about the state of the world, the environment, and larger social issues.

Although the world is literally at their fingertips, Generation Z is overall passionate about experiences, time shared, and the value of relationships. Getting this mix right will be key for retailers, as they shift to an experience first showroom hybrid retail model. The store and in-person interactions will always be relevant for this generation, so it’s not simply about the financial aspects that are the motivating factors.

Peter Fader
BrainTrust

Most of this generational marketing stuff is utter nonsense. At best, marketers are just making up harmless stereotypes, but at worst, these one-size-fits-all pronouncements become destructive self-fulfilling prophecies.

Given the quality of the data and analytical capabilities that we have today, why are we still legitimizing this kind of broad-based stereotyping — and making big decisions based on it?

Neil Saunders
BrainTrust

To be honest, I get tired of sweeping generalizations about different age cohorts. Sure, I recognize that there are common traits, but these are often part and parcel of wider changes affecting all groups. Moreover, there a lot of differences within age groups that are too often overlooked.

Ricardo Belmar
BrainTrust

Each generation has shown us that they are truly different from the last and that holds true for shopping behaviors as well. While it may be convenient for retailers to make assumptions about generational shopping habits, it just doesn’t work out that way in the end. Gen Z will no doubt continue to look squarely at the overall value of a purchase before making a decision. Value, not just price, will be king. And where we usually expect Millennials to be all about convenience, I expect we’ll see a good sprinkling of that from Gen Z as well, so long as the value is still present.

Jasmine Glasheen
BrainTrust

Retailers that are able to offer sustainability at attainable price points will win with Gen Z consumers. Gen Z also wants a hand in creating the products they purchase … and brands that meet this trifecta of demands for next-gen consumers without losing their personal touch deserve their place in the spotlight.

Kai Clarke
BrainTrust

Yes, becoming more price oriented and appreciate of the value of money will better define Gen Z. It will also give credence to the author’s position that this generation will further define themselves from Gen X based upon their fiscal responsibility and how they approach the spending of their resources. Furthermore, what they spend their monies on will be different from Gen X as their values are more demanding on instant gratification and of course the role that price plays in their value supposition.

Georganne Bender
BrainTrust

Having witnessed the kids of Gen Z blow through their allowance in seconds flat, I tend to think that being price conscious is something that happens to every generation as we come of age. Gen Z will change the world as we know it and take the rest of us right along with them. I am encouraged that they are said to be on target to emulate the Greatest Generation. We need to add loyalty, hard work, empathy, and yes, value to their list of traits.

Celeste C. Giampetro
Guest

Making assumptions about Gen Z is risky IMHO. The more we as marketers talk to — and listen to — our target audiences, the better.

Craig Sundstrom
Guest

“…they will change everything….”

Yeah. Whatever. Normally I don’t pay much mind to people who are as fluent in clichés as English, but it’s possible Ms. Gillis is on to something. The trauma of the Great Generation shaped the behavior of the generation(s) that experienced it throughout the remainder of their lives, to some extent at least (and of course Gen Z isn’t exactly experiencing Depression 2.0). What characteristics they retain will likely correspond to how that $17 week grows … if it’s into not much more than $17/hr or less then yes, they’ll remain price-oriented.

Doug Garnett
BrainTrust

I’m going to offer a contrarian view — what a surprise. 🙂

The description above is pretty much the truth about every generation while they are in phases when they have limited money. Purchase power expands as they grow up and as they earn more money.

So this pronouncement by IRI seems quite overblown. Yes, the speaker claimed to compare with Millennials. But we also know most pronouncements about Millennials were overblown as well.

So, for further reading, let me offer Bob Hoffman’s post today: “Preparing for Generation Z.”

Retailers would do well to take this Gen Z pitch with a grain of salt — after all over 50% of purchase power in the US is with those over 50. Big numbers don’t always mean much.

Mike Osorio
BrainTrust

While the author’s observations on likely Gen Z future behaviors may or may not prove to be true “on average,” generalizations have never been less important. In a world with ever more sophisticated data analytics, along with one on one touch points available through both digital and in-person experiences, the winning formula will be around personalizing the experience (and often the product itself) for the individual.

wpDiscuz
Braintrust
"Gen Z is absolutely financially responsible. But, that isn’t necessarily a bad thing for retail."
"Instant gratification and digital distraction are serious challenges for Gen Z."
"Gen Z also wants a hand in creating the products they purchase..."

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