Much like Millennials, Generation Z have a completely new set of values, beliefs, needs and desires for society to understand. For businesses and retailers looking to prosper in the coming years, it’s important to learn what it takes to win the hearts of these young people. Although in their late teens and twenties now, this group will soon represent a large proportion of the workforce, and therefore spending power, in the UK.
Members of Generation Z - loosely, people born between 1995 and 2010 - were born into the digital world. The ability to navigate between digital and physical lives isn’t something this generation has had to learn; it’s all they’ve ever known. Therefore, when it comes to engaging with Generation Z, it’s all about digital. But digital in a way that enhances real-life and where the lines between the two are blurred.
This presents a lot of opportunities for businesses, particularly in the retail, banking and payments spaces. New digital banks such as Monzo and Starling Bank are making a play directly for this audience, hoping to entice them with the best tech and experiences, and to retain their loyalty as they grow older. However, it is important to remember that whilst experience and technology are indeed important for Generation Z, so too is a company’s ethical morals, be it the way it conducts itself or through the respect it shows customers, employees or data.
The successful companies will be those that value their customers, respecting their trust, giving them choice and flexibility, with the best customer service and experience possible.
It is expected that as Generation Z grows older, we’ll see the highest proportion of self-employed workers in recent history. According to one study by Harvard Business Review, around 70% of teens in the US are already self-employed, making money through creative means such as teaching people how to play musical instruments, or through social channels such as YouTube. The current system can make it difficult for self-employed workers to jump through official hoops, particularly in terms of borrowing money for important life events, whether that’s taking out a business loan or applying for a mortgage.
Marry this with recent research from Laybuy which found that just half of British young adults (50%) know where to find their credit score, whilst only 9% can explain how it is calculated, the future is challenging . To overcome this, the new, digital-first financial companies have an opportunity to shake up the system, to keep the economy moving AND win the hearts and minds of Gen Z.
In addition to this, according to research from Yolt, the proportion of an under 30’s weekly salary spent on essential goods has risen by 4.3% since 2006, making up over 83% of their total expenditure. They now spend a higher proportion of their expenditure than any other age group on essentials, such as rent, food, electricity and gas bills, National Insurance contributions and tax. This is compared to 65-74 year olds where essentials make up 54% of all spending.
What this means is that this group of consumers are shying away from traditional credit, have less disposable income, and will find it harder to get on the housing ladder and reach traditional financial milestones. This, in addition to their desire for seamless experiences between digital and offline worlds, shows that there is an opportunity for retailers, financial institutions and businesses in general, to provide customers with greater choice, including choice that meets the needs of this demographic.
In the next five years, the majority of Generation Z will be in the work place and will be making up an increasing proportion of the money spent worldwide. The businesses that listen to these consumers now, and create an offering that not only entices them, but meets their needs and treats them with respect, will be the ones to prosper for decades to come.