While many of us have felt the effects of the cost-of-living crisis, few have been hit quite as hard as Gen Z.
From lattes to laptops, prices are steadily rising and everyone is feeling the squeeze. While Gen Z may be shielded, to some extent, from soaring utility bills and mortgage rates, they too are feeling the pinch, spurring them to hunt for deals on ‘must-have’ items.
The shift in sentiment has been demonstrated through a new report from UNiDAYS, which surveys a panel of 20m+ verified students. The report’s findings show rising prices have left one in four (25%) students feeling financially insecure with 40% of students relying on parental support and loans as their main income source.
This squeeze on budgets and loss of financial independence is reflected in changing purchase habits, with students spending 40% more on groceries and cutting back on non-essential goods, such as fashion, beauty, and tech.
With Gen Z representing 40% of the total consumer base, this is a significant shift. Now, more than ever, brands must understand how they can support 18 to 25-year-olds during this testing period.
Everything at the right price
It may sound obvious but offering goods at the right price is crucial.
This is especially true for Gen Z. As the first digital-native generation, they are price-savvy and know how to search online to find the best offers from brands.
We can see evidence of this as far back as 2021 when 95% of respondents polled by UNiDAYS’ Fashion Report said they always keep an eye out for a bargain, and 92% said they regularly use discount codes.
Purchase intent has since fallen. Today, 29% of Gen Z say they plan to actively wait for offers before making their purchases.
This means brands must factor discounts into their marketing and business strategies when heading into key retail periods such as the run-up to Freshers Week and Black Friday.
Striking the right balance between timing and price can be tricky, but the rewards can be huge for brands – 82% of Gen Z consumers said they are loyal to brands that offer regular discounts.
Living their values
Discounts alone are not enough to make Gen Z feel supported by brands.
To truly engage with hyper-informed, hyper-connected Gen Z consumers, brands must take meaningful action in support of issues that Gen Z are most engaged with.
This is particularly important during a time of financial hardships where Gen-Z, still at an early stage in their career, can feel unable to deliver the changes they want to see in the world. During these times, Gen Z wants to see brands bring action to their voices by tackling the issues that matter most to them.
The World Economic Forum has found that Gen Z cares about sustainability more than any other generation.
In line with this, UNiDAYS’ research shows that sustainable fashion is important to 79% of Gen Z, and two-thirds (68%) want clothes manufactured to the highest ethical standards. By taking on board these values and making the changes Gen Z demand, brands can empower a generation of consumers.
Warning: words are not enough. Empty gestures and half-hearted attempts at ‘greenwashing’ will be seen through and called out by Gen Z who seek authenticity from brands and will not tolerate unethical behaviour.
Communicate where they are comfortable
To support Gen Z and win their trust, brands must meet them where they are.
Gen Z’s first instinct when shopping is to look online with 97% of the demographic saying they now use social media as their top source of shopping inspiration. Further research has found more than half of Gen Z shoppers believe they will only shop online within the next decade.
So, how should brands communicate meaningfully with Gen Z consumers within the vast world of the internet?
According to a Gen Z study by LTK, 92% of Gen Z shoppers rely on influencers to inform purchase decisions. While consumer engagement with ads may fall during the cost-of-living squeeze, they won’t be unfollowing their favourite influencers.
By partnering with the right influencers, brands can communicate with Gen Z as part of their daily life. Influencers can connect with their followers on a personal level, offering a trusted source able to communicate a brand’s values and value to Gen Z.
With Gen Z using influencers to identify where to spend, the right partnership between brand and influencer can also build the relationship between brands and Gen Z.
Studies show people aged 16 to 24 on average spend over three hours a day on social media, with nearly an hour spent on TikTok alone. Brands cannot waste this prime opportunity to connect with this unique audience.
Understanding Gen Z is not easy, but its influence cannot be underestimated. They are the present and future core consumers for all brands, while their purchasing habits are also influencing the behaviour of Millennials and Generation X.
They have identified key issues and demand brands support their fight for a better world. To empower this generation through the cost of living crisis, brands must meet this challenge to improve their sustainability credentials and communicate this to Gen Z within their daily lives.
And of course, for this cost-savvy generation, they must do it at the best possible price!