Getting Ready for Gen Z: Marketers Work to Crack the Code

Getting Ready for Gen Z:  Marketers Work to Crack the Code

The 31 million 18- to 24-year-olds in the vanguard of Gen Z and the 21 million 13- to 17-year-olds growing up behind them have begun to make a profound impact on the American consumer economy.  Gen Z young adults generate an aggregate income of $463 billion, while older teens (15- to 17-year-olds) have an aggregate income of $17 billion and have parents who spend $25 billion on their clothing and categories such as entertainment and personal care items.

An avalanche of survey research has attempted to understand how members of Gen Z view the world and to analyze what drives their behavior as consumers.  One overriding conclusion to be drawn from these research efforts is that today’s teens and young adults display a wide range of complicated and contradictory characteristics that create an unparalleled challenge for marketers.  As noted by one marketing analyst, Gen Z is proving to be an “especially tough nut to crack” because it is “behaving differently than teens historically have” (, October 10, 2017).

One apparent contradiction in the behavior of Gen Z consumers is that, despite being glued to their screens and living full lives on social media, these Gen Z digital natives continue to seek out consumer experiences in the brick-and-mortar world.  For example, a 2017 study conducted by IBM Institute for Business Value in association with the National Retail Federation (NRF) found that 67% of 13- to 21-year-olds prefer to make purchases most of the time shopping in a store.  Only 22% prefer to make purchases using a web browser, while 13% prefer using an app and 5% prefer calling by phone.  Only 17% of 13- to 21-year-olds use PCs, smartphones, or tablets to shop and browse.

Although Gen Z may be primed and ready to shop in stores, retailers need to understand what they are looking for when they walk through their doors.  Neil Saunders, CEO of retail research agency Conlumino (now part of GlobalData Retail) has noted, “For teens, (shopping) isn’t a static experience.  It’s not just about going to the store, picking something up, buying it, and coming out again”(, February 9, 2017).  Moreover, as pointed out by shopping behaviorist Ken Hughes, unlike their older Millennial counterparts, who became aware of omnichannel shopping part way through their lives, Gen Z has grown up completely inside a world of physical-digital (or “phygital”) collision.  As a result, according to Hughes, “Having store systems that are unconnected to the online experience just can’t happen anymore.” (Retail Touch Points, May 3, 2018).

Research highlighted in a June 2018 Packaged Facts report entitled Looking Ahead to Gen Z: Demographic Patterns and Spending Trends demonstrates that Gen Z young adults also integrate brick-and-mortar channels into their lives as consumers of financial services.  An October 2017 report from Accenture found that 69% of 18- to 21-year-olds use a mobile banking app daily or weekly, compared to just 17% of Boomers.  Yet, the report also found that 23% of 18- to 21-year-olds access banking services through a branch at least weekly, compared with only 16% of Baby Boomers. 

Other research has identified a segment of older Gen Z teens that exhibits highly traditional behavior when using financial services.  A November 2017 survey of 16- to- 18-year-olds by Lombard, Illinois-based Raddon categorized 34% of teens in this age group as “Conventionals.”  These Gen Z consumers “prefer to conduct their banking business face-to-face at traditional providers such as banks and credit unions.  They perceive value in banks, and they are aware that differences exist among institutions.”

-- by Dr. Robert Brown and Ruth Washton, market research analysts