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Economic concerns dominate spending
In 2023, the U.S. economy grew by 2.5% and inflation fell to 3.4%. Despite reports of an improving economy, only 30% of Gen Z consumers are optimistic compared to the previous year. The caution is even more pronounced in Europe, where the economy is experiencing almost zero growth. UK Gen Z is 25% more pessimistic than those in America.
“This explains why TikTok is full of videos about “loud budgeting”, where people talk openly about their money plans and efforts to spend less. This trend is leading to nearly a third of Generation Z trying to save money, buying cheaper things and less unnecessary stuff.”
36% of Gen Z respondents say they are spending less. They are particularly affected by categories such as takeaway food, gaming, electronics and online news. Among Gen Z college students, the sentiment is even worse, with 45% pessimistic about the future of the economy and 77% struggling to adjust their budgets to accommodate these concerns.
How to engage Gen Z?
Instagram, TikTok and Snapchat play a key role in introducing new brands. 68% of respondents said that social media is their main source of brand discovery. Recommendations from friends and family also have a significant impact.
Exclusive offers have proven to be a significant factor in capturing the attention of Gen Z. Up to 91% of college students research discounts before buying. In addition, exclusive offers have been shown to be more effective than other tactics. These include Buy Now Pay Later (BNPL) or extended return periods, for example.
Exclusive discounts not only drive purchase behavior, but also brand loyalty. A significant proportion of respondents said they would switch to another brand for an exclusive offer or sign up for a loyalty program in exchange for a discount.
Free gifts and free shipping were identified as the most attractive exclusive offers, followed by discounts on purchases. Surprisingly, email emerged as the preferred communication channel for sending offers, closely followed by text messages.
Takeaway/delivery orders ranked first among the product categories that Gen Z would purchase at a discount. This was followed by clothing, cosmetics/personal care, games and electronics. The least popular choice was online news, indicating Gen Z’s preference for free sources of information.
