Gen Z, those born between 1997 and 2012, will soon be the wealthiest generation in history, according to a recent report.
NielsenIQ’s “Spend Z” report predicts that Gen Z’s purchasing power will grow the fastest, reaching an estimated $12 trillion by 2030 and surpassing the spending of Baby Boomers by 2029.
“The most striking and important thing we’ve noticed as we’ve conducted our research is that Gen Z is ahead of other generations,” Marta Bowles, North America chief communications and marketing officer for NielsenIQ, told Yahoo Finance (video above).
For example, the average 25-year-old earns $40,000 a year, higher than all other generations at that age. With rising incomes, Gen Z’s spending habits are growing.
Gen Z is “the most valuable generation for brands to attract,” Jason Dorsey, a Gen Z expert and president of the generational research and strategy firm Center for Generation Kinetics, told Yahoo Finance. “They’re the generation with the highest lifetime value.”
According to NielsenIQ findings, Gen Z’s per capita spending is projected to grow at a compound annual growth rate of 4.02% over the next decade, “exactly twice as fast as previous generations.”
“25-year-olds are spending exponentially more money than Gen Xers were spending,” Bowles says. “And it’s only going to grow over time.”
People shop at Forever 21 in New York City on the day before Christmas. (Stephanie Keith/Getty Images) (Getty Images)
The fact that Gen Z is the “first digitally native generation” is a big part of this, at least according to Bowles.
Young consumers are using social media to research and learn about brands before making a physical purchase in a store. Health and beauty are the top categories that Gen Z purchases on social media, with 81% of TikTok sales predicted to come from these two verticals in 2024.
“I think social media has really changed the beauty industry in general,” Susan Anderson, managing director at Canaccord Genuity, previously told Yahoo Finance.
According to the report, Gen Z consumers cite online reviews as the most important factor when making a purchase, whether those reviews are posted directly on a product’s website or by influencers or peers on social media platforms.
“They’re used to operating in an omnichannel environment,” Bowles said. “They expect brands to be omnipresent all the time.”
“This is probably the most important time ever” for brands to understand Gen Z, Dorsey said.
But despite being the most digitally-adopted generation, Gen Z is still just as likely to shop in stores — and that’s because they want a “hybrid strategy,” according to Dorsey.
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“Consumers want digital experiences in physical locations,” he said, explaining that there is still a “strong desire to go into a store” to make purchases, such as for cosmetics and clothing.
“If you don’t have both, you’re missing out on a huge opportunity,” Dorsey added.
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