Gen Z shoppers prefer off-price, discount retail; value speed; credit-averse
When it comes to shopping, Gen Z consumers are truly omnichannel. They also defy stereotypes.
Nearly all (97%) Gen Z consumer shop at brick-and-mortar stores, driven by the immediacy with which they can walk away with a product, as well as the ability to see, touch and try items before buying, according to a new ICSC study, “The Rise of the Gen Z Consumer.” An almost equal number — 95% — shop online.
The study results depict a generation that is keenly aware of the state of the economy — and one that balances being cost-conscious with being willing to pay for convenience and quality.
While 48% of respondents prefer off-price and discount retailers, they are also willing to pay for what they want — particularly speed and convenience. Nearly half say they would pay a premium to have online orders delivered more quickly.
“Our survey shows that despite being ‘digital natives,’ Gen Z is an omnichannel generation,” said Tom McGee, president and CEO, ICSC. “The percentage of respondents who shop online versus in-person are nearly identical, demonstrating that focusing on a particular channel is no longer the priority. Rather, retailers that can successfully offer convenience, quality, and speed, and have a diversified presence across in-store and digital, will be well-positioned to capture the loyalty of this demographic.”
While price and convenience remain the number-one driver of their behavior, Gen Z is unafraid to champion their values, which are reflected in their shopping habits. More than half (56%) say they are willing to spend more for sustainably sourced products.
When asked about their top concerns and causes, they cite mental health (53%), climate change and sustainability (47%), racial and gender equity (47%) and LGBTQ+ rights (26%). Also, two in five say ethical labor practices are an “essential” when choosing to support a company.
Other results from the ICSC survey are below.
•Eighty-five percent say that social media impacts their purchasing decisions, with Instagram and TikTok (45%, respectively) as their preferred platforms.
•Influencers are not the primary influence on Gen Z when they seek out a new product — 56% say recommendations from friends and family carry the most weight, followed by reviews on product websites (54%), and interactions with store associates and seeing the product in person (43%). Influencers play a role, but only 39% cite them among their top three deciding factors.
•An overwhelming 78% of respondents are concerned about the state of the U.S. economy – a number that increased to 84% amongst the older representatives of Gen Z, those ages 23 – 26, compared to 71% of 16- and 17-year-olds.
•Gen Z members are five times as likely to value successful careers over having the newest items.
•More Gen Z consumers (41%) reporting that they save more than they spend compared to those who spend more than they save (36%).
•Responsible financial habits are also reflected in their credit usage, as 45% of Gen Z report using debit cards as their primary source of payment, ahead of cash (21%) and credit cards (17%). Only 3% say they use buy now, pay later options often.
“Gen Z is an increasingly important demographic as more of them graduate from school, transition to their first full-time job, and mature into more spending power,” said McGee. “Our study found that many of the stereotypes and preconceived notions attached to this cohort are unfounded, however, their habits will influence retail strategy, marketplace makeup, and broader economic trends for years to come.”
To view The Rise of the Gen Z Consumer report, click here.
Methodology
From March 2 to March 8, 2023, ICSC and Big Village, conducted a national survey of 1,008 respondents from Generation Z, ages 16 to 26. The survey reflected a cross-section of part-time workers, full-time workers, and students, as well as living situations – including those living at home with family or guardians, renters, homeowners, and college or university housing.