Research Reveals Majority of Gen Z is Pessimistic About the Economy – 71% Plan to Tighten Budgets and Be Selective on Purchases
Survey of Gen Z shows exclusive offers are the leading approach to try a new brand and build customer loyalty in the current economic environment.
SheerID, the global leader in identity verification for commerce, announced the findings of a survey of Gen Z consumers. Fielded by Centiment on behalf of SheerID, the survey sought to gauge Gen Z’s feelings on the economy, better understand their purchasing preferences and discover how brands can meet the current needs of this influential cohort. The survey also explored the role that exclusive offers and rewards play in driving shopping behavior. Respondents included a total of 1,761 people aged 18 to 26 (“Gen Z”) from the United States and the United Kingdom, half of whom are currently enrolled university students. The survey was fielded between March 1 and March 14, 2024.
“We recommend brands invest in multi-touch point campaigns that combine digital and face-to-face interactions to effectively stand out in a noisy marketplace”
Worries about the economy impact Gen Z spending
Despite recent reports about improving economic conditions, just 30% of Gen Z consumers are optimistic about where the economy is headed relative to a year ago. As a result, Gen Z is shopping with increased frugality. Gen Z college students have an even dimmer view of the economy with just 22% stating they’re optimistic about the future of the economy while 71% plan to actively stretch their budgets and seek discounts.
When asked how the current economy has changed their spending habits, groceries and mobile phone/wireless were the only two categories where Gen Z is spending more than they have in the past. Take-out/food delivery, gaming, electronics, and online news experienced the greatest pullback in spending, with 36% or more of Gen Z saying they are spending less in these categories.
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What makes a brand stand out from its competitors
The survey also asked Gen Z how a retail brand can get their attention in the current economy. Strikingly, 91% of Gen Z college students reported they research exclusive brand discounts before making a purchase, indicating that brands that invest in this approach will generate revenue growth. In addition, 86% of college students and 69% of Gen Z overall indicated an exclusive offer would increase the likelihood of a purchase. Exclusive offers outperformed other tactics to drive purchasing such as: buy-now-pay-later financing, longer return times, and better customer service.
How Gen Z learns about new brands
The number one way in which Gen Z is choosing their preferred brands is through social media with 68% of Gen Z and 77% of Gen Z college students learning about a new brand through platforms such as Instagram, TikTok and Snapchat. Gen Z also relies heavily on the recommendations from people in their respective communities – a.k.a. word-of -mouth – with nearly half of Gen Z college students hearing about new brands through a recommendation from a friend or family member.
How exclusivity drives purchase behavior and loyalty among Gen Z
29% of Gen Z and 40% of Gen Z college students said they would switch their loyalty from one brand to another, if they were given an exclusive discount. And, 68% of Gen Z and 73% of Gen Z college students would be more likely to join a loyalty program in exchange for receiving a discount. 56% of Gen Z and 73% of Gen Z college students also stated that they feel more emotionally connected to brands that give them an exclusive offer.
The types of offers that generate interest from Gen Z
More than 40% of those surveyed said they like both an “occasional 20% discount” and “10% off every purchase.” However, Gen Z was most attracted to freebies. When asked what kind of exclusive offer would be appealing, 52% said a free gift and 60% stated free shipping drive their decisions to buy.
Email is not dead when it comes to learning about Gen Z offers
Perhaps surprisingly, email (48%) was the number one choice among respondents when asked how they would like to hear from brands about Gen Z offers. Text/SMS (46%) was the second most popular form of communication, followed by social media (43%), online ads (24%) and the brand’s website (18%).
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What product categories Gen Z are most likely to purchase with a Gen Z discount
When asked what types of products they would most likely purchase if the brand offered them a Gen Z discount, take-out/food delivery was the most popular option (47%). Apparel (42%), beauty/personal care (40%), gaming (39%) and electronics (39%) rounded out the top five. Online news was the least popular choice (10%), suggesting that Gen Z is gravitating towards news sources that don’t require a subscription.
Preferred forms of verification for Gen Z offers
To ensure that consumers qualify for an exclusive Gen Z or Gen Z student offer, brands will typically verify the age or student-status of shoppers. When asked what their preferred forms of verification are, 25% of Gen Z said that having to create a separate account on a Gen Z deals website would have a negative impact while 42% said having to share a document to prove their eligibility would also have a similar negative effect.
Conversely, 59% of Gen Z and two-thirds of Gen Z students said being instantly verified as being members of their particular group as well as not having their data shared with other brands would positively impact their decision to redeem an offer.
“While economists say that the economy is getting better, Gen Z is not convinced,” stated Jake Weatherly, CEO of SheerID. “Our research indicates that, in fact, young people are careful and purposeful with their spending. One way for brands to support the next generation of consumers is through exclusive offers, which show a company’s dedication to recognize and help people. Brands that differentiate themselves in a busy marketplace by supporting their customers lay the foundation for long, durable, and fruitful customer-brand relationships.”
“We recommend brands invest in multi-touch point campaigns that combine digital and face-to-face interactions to effectively stand out in a noisy marketplace,” said Gavin Aldrich, CEO of Campus Group. “Brands that take an integrated approach to demonstrate and authentically communicate their external values hold the key to attracting Gen Z customers.”
