Recent changes in millennials and gen z shopping habits have resulted in significant changes to the retail landscape. Once thought of as the main disruptors, millennials with a spending power of $2.5 trillion, have now made room for Generation Z shopping behavior, who bring their distinct buying habits to the table.
In light of the pandemic, nearly half of millennials prioritized supporting small and local businesses, and Generation Z's influence is growing, so brands need to continuously adjust their strategies to meet changing consumer demands.
As a result, we have included; understanding online shopping behaviors and purchase intentions amongst millennials as well as gen z, to help you guide through their unique tastes and actions in the retail industry.
What is the Difference between Millennials and Gen Z?
Who are Millennials and Gen Z specifically? Since Millennials were born between 1981 and 1996, their current age ranges roughly correspond to 28 to 43. In contrast, Gen Z comprises individuals who were born between 1997 and 2012, ranging in age from 12 to 27 as of right now.
Although everybody in both groups grew up with technology, including tablets, smartphones, and the Internet, millennials may not recall a time before all this technology. Millennials report using social media at a higher rate than older generations (86% vs. 65%), as they embraced smartphones and video games quickly.
On the flip side, Gen Z has never known a world without the internet. 53% of Gen Z consumers say they prefer to shop via mobile apps, and 77% of them use their smartphones for at least three hours every day. For them, it is an inherent part of life!
Now, since e-commerce is as common as breathing to both generations, their shopping habits are greatly impacted by their tech-savvy upbringing. The surprising thing is that, despite their extreme tech knowledge, they are growing increasingly wary of online marketing ploys.
Therefore, even though gen z spending habits and millennials' shopping behavior are connected to the digital world, it is more difficult to persuade them to click "buy" than it once was.
Understanding Basic Millennials and Gen Z Shopping Habits?
One shopping habit that brings both generations together is that both Gen Z and Millennials enjoy shopping on their phones, with 87% of consumers saying they like browsing new products on their gadgets.
Despite this common behavior, marketers have a great opportunity to tailor their strategies accordingly only if they can grasp and understand the basic difference between gen z shopping habits vs millennials' spending habits.
Generation Y (Millennials): The Compulsive Buyers
The millennials shopping behavior is unique. Millennials are notorious for making impulsive purchases when they go shopping. Roughly 74% of them acknowledge making impulsive purchases occasionally or frequently. It's interesting to note that with a staggering 48% of them making impulsive purchases on their phones, they are just as likely to splurge on them as they are in actual stores. They don't, however, tend to make rash purchases when using computers.
Gen Z (Zoomers): The Thoughtful Buyers
On the other hand, approximately 46% of Generation Z add gig work to their full-time employment as a result they approach shopping with greater consideration. Compared to 41% of Millennials, nearly half of them would rather wait a few days before making a purchase. Gen z shopping behavior typically depends on extensive research on products before making a purchase.
With projections indicating that Gen Z will account for 30% of the workforce by 2030, it is important to pay attention to gen z spending habits. They typically spend $20 to $50 on smaller online purchases, so they feel comfortable doing so. They will, however, pay up to $100 in-store, especially if they can test and inspect the product in person.
Shopping Behavior: Millennials vs Gen Z
Major Gen Z Spending Habits
1. Beautifying Their Areas
Generation Z is on the move, with many preparing to rent new residences. As a result, purchases of necessities for the home at stores like HomeGoods and Home Depot have increased.
Even though only a small portion is redecorating, Gen Z's interest in interior design is growing, suggesting that they want to make improvements to their homes. When it comes to gen z shopping behavior for their personal spaces, they frequently place a high value on expanding their wardrobes with new items from stores they love, such as Madewell, Abercrombie & Fitch, and Urban Outfitters. According to a survey, almost 82% of buyers have spent money on fashion in the past few years.
Tip: To capitalize on Gen Z's spending habits, improve your home decor offerings. Think about providing them with stylish, reasonably priced options that suit their tastes.
2. A Twist on Loyalty
As 60 percent of Zoomers believe it’s important for brands to value their opinions, many US Gen Zers prefer to participate in loyalty or reward programs, claiming to be brand loyal. Even though this percentage is lower than in previous generations, Gen Z users of loyalty points are using them more frequently. Not only do these loyalty programs apply to regular purchases, but they also play a role in travel and vacation planning, as reward points frequently have an impact on the decisions made.
Tip: Make use of loyalty programs to encourage Gen Z participation by providing incentives other than discounts. To encourage participation and foster brand loyalty, think about including benefits linked to experiences and travel.
3. Not-so-Impulsive Buying
Though they do occasionally make impulsive purchases, gen z shopping behavior is actually more frugal than one might think. For instance, almost half of the respondents in the US stated that, given the option, they would shop primarily online as it would help them more to bargain hunt and are prepared to save money for desired things.
Gen Z consumers are growing more thoughtful in their selections, weighing quality and price, whether they are waiting for a deal or looking for a discount.
Tip: By highlighting quality and affordability, you can establish your brand as a destination for gen z consumers who are oriented towards value. Draw their attention with special offers, savings, and discounts because 47% of Gen Z respondents say they would rather wait a few days before making a purchase, compared to 41% of millennial respondents who share this preference.
4. Adopting Technology and AI in Content
The Gen Z generation is accustomed to using technology, including artificial intelligence (AI) tools, for a variety of shopping needs, such as price comparison and deal alerts.
Gen Z shopping behavior may depend more on AI-driven tools to improve their shopping experiences as technology advances. Just over half of Gen Z are open to trying AR and VR shopping, and 55% of them want AI assistants for their shopping needs. Therefore, retailers can gain the loyalty of Generation Z by prioritizing innovative technology solutions and user-friendly online experiences.
Tip: Content needs to be visually appealing, engaging, and shareable right away to grab Generation Z's attention. Retailers need to adopt omnichannel strategies, making sure that content is optimized for voice search, social media, VR & AR platforms, and consistent across all platforms.
5. Impact of Influencers
Influencer marketing has a big influence on gen z spending habits. Social media is where 97% of Gen Z shoppers get ideas for their purchases, which emphasizes the value of influencer relationships. Gen Z extensively depends on social media influencers to inform their purchasing decisions because they value recommendations from friends and favorite influencers over traditional advertising. Companies that successfully use influencer relationships can win over Gen Z's interest and allegiance.
Tip: 74% Gen Z is the driving force behind social commerce, favoring sites like YouTube (47%), Instagram, and TikTok for shopping. For easy online shopping, these websites provide AR try-on capabilities and customized recommendations.
6. Gen Z Still Prefer Brick-and-Mortar
Even though Gen Z chooses online over offline, many members still enjoy shopping in physical stores, when they are interested in trying things on or seeing them up close. While older generations frequently shop online at places like Amazon, only 37% of Gen Z do the same.
Tip: Around 81% of Gen Zers say they prefer to shop in stores, and 73% say they enjoy discovering new things there. Thus, it's beneficial for retailers to offer omnichannel experiences that include physical and online stores.
7. The Need for User-Friendly Design and Quickness
When it comes to online shopping, gen z spending habits prioritize expediency and ease of use. They anticipate seamless navigation and speedy website and mobile app loads.
Since 64% of consumers visit a local business's website before making a purchase or going in person, it is important to provide them with a smooth online experience. Gen Z is easily turned off by slow-loading websites and subpar user experiences, and they quickly stop using platforms that don't live up to their expectations.
To draw in and keep Gen Z clients, it is imperative to provide quick and easy-to-use online experiences.
Tip: Quick and easy-to-use internet experiences are essential to match gen z shopping behavior. A sizable 87% want a customized shopping experience and so to live up to their expectations and hold their attention, make sure your website loads quickly and navigates easily.
Major Millennials' Spending Habits
1. Experience over Possessions
78% of millennials would rather spend money on events or experiences than on material goods. They place a higher value on experiences than on possessions. Their upbringing and financial hardships such as the Great Recession have influenced their preference and changed the way they view ownership milestones.
Compared to Gen Z consumers, millennials spend 7.62% less of their post-tax income on general entertainment and 35.7% less on buying a car. Millennial-targeted brands prioritize providing carefully planned events, immersive spaces, and distinctive digital experiences.
Tip: Millennials' shopping behavior includes enjoyable activities that they will enjoy. Offer them exclusive online content and events that resonate with them. Ensure that it's simple to share on social media to encourage people to tell their friends about it.
2. Adopting an Online Store
73% of millennials anticipate continuing or increasing their online spending in 2023, demonstrating how at ease they are with the virtual marketplace. Millennials spending habits with online stores totally depend on reviews and recommendations to guide their purchases and have no trouble navigating e-commerce platforms.
Tip: Make sure millennials can easily navigate your website. Before making a purchase, they prefer to shop online and read reviews. 8 out of 10 millennials never buy an item without first reading a review. Thus, make sure your website loads quickly and has a tonne of useful reviews to aid in their purchase decision.
3. Prefer Rental Options
Although millennials do not always prefer to rent, economic factors have increased their familiarity with rental options. Instead of purchasing a home, 24.7% of millennials stated they intend to "always rent." Millennials find renting appealing because it offers flexibility, reduced maintenance costs, and sustainability considerations. This appeal extends to renting toys as well as homes, cars, and clothing.
Tip: Give millennials the option to rent the necessities, as they are likely to spend about 45% of their total income on rent. When it comes to millennials' shopping behavior related to houses, they appreciate its flexibility and environmental benefits. Consider renting out clothing, electronics, and other interesting items they might like.
4. Becoming a Service Subscriber
From streaming services to subscription boxes, millennials are big fans of subscription services. These services match the convenience and value of millennials' spending habits by providing personalized experiences and predictable costs.
Tip: 62% of millennials say they prefer tailored deals and offers. Provide subscription options that millennials will enjoy. Make it simple and reliable for them to consistently receive what they desire. To get them to return, make it feel special and exclusive to them.
5. Encouragement of Sustainable Brands
Ever since the pandemic came into this world, nearly 50% of millennials believed it was essential to support small and local businesses, and 47% of them changed their shopping habits as a result.
When making decisions about what to buy, millennials spending habits involve giving social responsibility and sustainability a top priority. If given the choice, 75% of millennials would purchase ecologically friendly goods. They actively seek out products made ethically and environmentally and support small companies that align with their values. This dedication to sustainability and supporting the local market is evident in several product categories, including apparel.
Tip: Since millennials' spending habits are all about sustainability, the brands should prioritize sustainability by using recyclable materials and packaging free of plastic to win over Generation Z. Openness regarding environmentally friendly operations fosters brand loyalty.
What Influences Gen Z Shopping Behavior?
Gen Z chooses goods and services based on brand authenticity and quality. For them, the most crucial thing is also recommendations from friends.
Because they frequently balance part-time jobs with full-time employment and have embraced hustle culture, Gen Z is estimated to have $360 billion in disposable income. Surveying Gen Z, ages 15 to 22, on behalf of American Express Canada, was done by Nielsen. According to the findings, 63% of respondents cite superior products as one of the main motivators for spending more money on a brand, and 45% claim that they spend more money on a brand when friends or acquaintances shop there.
Affordability, honesty, and sustainability are important factors to Gen Z consumers in addition to quality and recommendations. They look for brands that share their values, as evidenced by a Survey Monkey study in which 73% of participants of all ages stressed the significance of shared values with brands.
It's interesting to note that, in contrast to previous generations, Gen Z values brands that share similar values.
What Influences Millennial Shopping Behavior?
Millennials shopping behavior are influenced by a few major variables. 53% of Millennials follow the brands they like on social media. They look for brands that emotionally connect with them and give priority to purchases that match their personality. As said earlier, they value experiences more than material belongings and are frequently prepared to pay more for uncommon experiences.
Moreover, according to 95% of millennials, friends are the most reliable person to recommend products to. Millennials spending habits value peer recommendations and are very social, often sharing their purchases on social media. Additionally, millennials prioritize immediate needs over brand loyalty and are open to trying out new products and brands.
Conclusion
To sum up, there have been a lot of changes in consumer behavior, especially with the growth of e-commerce and the impact of social media on purchasing habits. To effectively engage with their target audience, brands need to understand the differences between millennials and Generation Z as well as the common characteristics that both age groups share.
