The Future of Retail: How Gen Z is Driving Spending Trends
An example of when ChatGPT meets the Unbanx data set
The pandemic has disrupted the global economy, but it has also accelerated many existing trends, particularly in the retail industry. While many retailers struggled to adapt to the challenges of the pandemic, Gen Z and Millennials have emerged as a powerful force in the economy, driving spending trends and shaping the future of retail.
According to a recent study by Unbanx, a leading provider of financial services and data analytics, Gen Z and Millennials account for 25% of the UK's total retail spend, and this is predicted to grow to 39% by 2030 as more Gen Z individuals enter the workforce. This younger generation's growing influence on the economy is driven by their unique preferences and values, which are different from those of previous generations.
One of the most notable trends in Gen Z spending is the shift towards allocating more of their budgets towards home and recreation spending. While fashion still dominates their spending, home and recreation spending is the fastest-growing category among young people, growing above 300% year-on-year. This trend is driven by Gen Z's desire to build their personal brands and lifestyles, which includes investing in their homes and recreational activities. As more Gen Z individuals enter the workforce and gain increased spending power, this trend is likely to continue, reshaping the retail industry.
Additionally, Gen Z and Millennials are championing small and medium-sized businesses, with almost two-thirds of spending through BNPL (Buy Now Pay Later) on these types of businesses. This trend is driven by their desire to support local businesses and their focus on sustainability and social responsibility. Retailers that can offer personalized shopping experiences and customized products and services will be best positioned to capture their attention and loyalty.
BNPL is also on the rise among Gen Z and Millennials, with a 360% increase in BNPL spend since January 2020. This payment option appeals to younger generations who prefer flexible payment options and want to avoid credit card debt. Retailers that offer BNPL services will have a competitive advantage in attracting and retaining Gen Z customers.
While the pandemic has disrupted many aspects of daily life, it has also accelerated the adoption of new technologies and shopping channels, including social commerce and virtual reality shopping experiences. Gen Z is likely to be early adopters of these technologies, which offer immersive and engaging shopping experiences. Retailers that can offer innovative and personalized shopping experiences will be able to differentiate themselves from their competitors and appeal to Gen Z's desire for unique and engaging experiences.
As retailers navigate the challenges of the pandemic and the evolving preferences of younger generations, it is crucial that they adapt to these trends and invest in the technologies and strategies that appeal to Gen Z and Millennials. Retailers that can offer personalized and immersive shopping experiences, support small and medium-sized businesses, and provide flexible payment options will be best positioned to capture the attention and loyalty of these younger generations. Additionally, retailers that can align with Gen Z's values of sustainability, social responsibility, and transparency will be well-positioned to succeed in the years ahead.
In conclusion, Gen Z and Millennials are driving spending trends and shaping the future of retail. As more Gen Z individuals enter the workforce and gain increased spending power, retailers will need to adapt to their unique preferences and values, including their focus on home and recreation spending, their support of small and medium-sized businesses, and their desire for personalized and immersive shopping experiences. Retailers that can align with these trends and invest in the technologies and strategies that appeal to Gen Z and Millennials will be well-positioned to succeed in the years ahead.