Generation Z is a force to be reckoned with. Born between 1997 and 2012, Gen Z now accounts for 25% of the global population and is expected to be the world’s highest-spending cohort in the next decade.
To win their wallets, business first needs to earn their trust. But the findings from two years of research on Gen Z conducted by the Oliver Wyman Forum and The News Movement and launched at the World Economic Forum in Davos last week suggest that merely doing what has worked in the past won’t cut it. This generation isn’t like others; Gen Zers likely won’t “become their parents” over time.
Gen Zers experienced the pandemic, the opioid epidemic, and other crises during their formative years — leaving them with a greater commitment than older generations to personal wellness, work/life balance, and a more inclusive society. They want to buy from (and work for) companies that share their inclusive values and engage on social issues.
That will require many businesses to create new products and adopt new strategies.
Gen Zers aren’t easily labeled or stereotyped. They are proudly nonconformist — questioning, rejecting, or recalibrating conventional thinking on everything from work to gender. They encourage people to be themselves and want to make others feel welcomed and respected. And they are far more likely than older generations to believe climate change is an existential threat.
Gen Zers want brands that celebrate their differences and support their fight against rigid gender norms, beauty discrimination, and climate change. More than 90% said they are willing to pay extra for brands that support the causes they care about, compared with 79% of older generations. And one in five Gen Zers said they would switch brands if they discover that a company’s values don’t mirror their own — much greater than older generations.
So how can companies win these customers?
Gen Zers are the first generation to grow up online and are accustomed to an “infinite shelf” of choices and a nonstop stream of suggestions. They disproportionately seek brands that are affordable, convenient, and personalized. Many are willing to provide personal data to business in exchange for algorithmic recommendations and personalization.
But they’re also far less brand-loyal than other generations. Less than a third of Gen Zers said they would revert to their “go-to” brand for new products or services, while about twice said that they would consider other options — even if they already have a favorite.
Social media is the best way to reach this generation. Three-fifths say they’re more likely to trust the quality of a company’s products and services if they use social media. Almost half say the content that convinces them to make purchases is short videos like those found on Snapchat and Instagram Reels.
Over half said they use TikTok. That’s a problem for the two-thirds of Fortune 100 companies that aren’t on the platform. “TikTok is curated to me,” said one 19-year-old student. “I feel like they know what I’m looking for all the time…I couldn’t even count all the things TikTok has influenced me to buy.”
Gen Zers also want private, niche spaces where they can connect with like-minded others and brands they care about. That means business can’t ask Gen Zers to buy from them; they need to invite them to join a conversation, giving them a voice and a place to belong.
But while this generation uses social media to make about a quarter of its purchases, retailers can’t just abandon bricks and mortar. Gen Zers see products online and hear about them from influencers, friends, and family, but many also like to see and touch items before buying. The most successful businesses among this cohort will present a blend of digital and physical.
Keep it real
Gen Zers have lived their lives online and know perfection isn’t possible. They embrace differences and want relatable, unfiltered content and to engage with brands and influencers that are real — acne and all. Communications that show the imperfection and unpredictability of everyday life appeal to this crowd.
Perhaps most important, business can’t fake it with this generation. Ads that are uplifting but lack substantive action (“good washing”) don’t work; Gen Zers can sniff out marketing gimmicks and won’t hesitate to bury a company that makes false claims or issues statements without taking real action on social issues.
Companies need to be clear about their mission and values — and live up to them. Those that do are more likely to win this group in the years ahead.
Financial counsellor and Director of the Monetary and Capital Markets Department, International Monetary Fund
“What I'm proposing is a two-pronged approach: Regulate what is in existence but also fuel innovation that is aligned with policy objectives.”