This post is sponsored by Lexington Law.
Gen Z (born between 1996 and 2010) are the new generation entering the workforce. While many are still in elementary school, this group will make up 2.6 billion globally in 2020 and has the combined buying power of $44 billion! So, if you ask me this generation is worth paying attention to.
They entered the world with technology and do not remember a time without immediate access to information or materials. It is the norm for them to be able to get an Uber, have food delivered from practically anywhere, or be able to watch a movie or show on demand. Unlike previous generations, they’re not used to slow internet connections, website outages, or not having their questions answered by either a chat bot or a live person on the other end. The days of dial up internet are before their time!
While this can be extremely difficult for retailers and brands to get their attention, it can also prove to be troublesome on credit scores as the ease of getting what you want can leave little room for making smart buying decisions. According to USA Today, “the percentage of Gen Zers carrying balances on their credit cards increased 41% to $7.75 million from 2018 to 2019, while the number of millennials increased 5% to $38.3 million.”
In order to tackle both sides, let’s go over a few things that are important to know about what Gen Z’s look for in brands and shopping experiences. And then we will also cover what they can do to be an even more conscious consumer and understand how these purchases can impact their credit score.
Gen Z Consumers
What Gen Z Looks for in a Shopping Experience
Gen Z is similar to previous generations in wanting quality service and efficiency. What tends to differ is the expectation for same level of service when they are shopping online, through an app, or in a physical location. They see each of these experiences as an extension of the same company and expect the same results. According to a recent study by the IBM institute and the National Retail Federation and another study by Adyen this is especially important for:
- Being able to find items quickly
- Ability to decide how and where to shop
- Access to the best deals
- Speedy shopping and checkout
- Ability to return online purchases in the store
A post on Lexington Law’s blog sums it up nicely, “quality and value are of the utmost importance to this generation. They’re quick to switch brands if they believe they’re getting better overall value from a different company.”
How Gen Z Researches Potential Purchases
Because Gen Z was brought up in the world of technology, they’ve had access to information at their fingertips. And this goes for how to find an item and what it costs. Obviously, this is going to vary depending on how old the consumer is within this generation since many of them are still in elementary school and unable to make purchases on their own. But don’t think for one second, that even the younger ones don’t know who sells that item, how much it costs, and how they (or their parents) can buy it. According to the same study by Adyen, the most popular ways Gen Z researches new brands and products is:
- Checking out the store’s website
- Word-of-mouth (friends/family)
- Searching megastore apps
While many have been swayed by influencers or Instagram posts, the study revealed that they are more interested in doing their own research and talking with their friends and family than getting recommendations from the sales associate. Another interesting find is that while they are not really interested in the employee’s recommendations, they prefer to work with them to checkout of the store.
What Gen Z Wants from Brands
With the ability to leave feedback at the drop of a hat, it’s not only important for brands to be transparent and authentic- it’s what Gen Z demands. McKinsey shares that “younger consumers don’t distinguish between the ethics of a brand, the company that owns it, and its network of partners and suppliers. A company’s actions must match its ideals, and those ideals must permeate the entire stakeholder system.” This goes for all aspects and presence of the organization.
McKinsey also notes that this relates to knowing where and how the product was made and where it was made from. Getting as much information as they can on the product’s origin is important. Since Gen Z is twice as likely to provide positive feedback than complaints, it’s vital to provide good service, information, and exceed expectations to not only help keep one customer but acquire many more.
Along with transparency, they also expect eco-friendly, high quality, and socially responsible products.
The Future of Shopping for Gen Z
With so much competition, it’s just as important to create an experience that keeps Gen Z coming back. Many companies have started to explore and use:
- Augmented Reality: ability to see what items (furniture, clothes, accessories) look like in their location before purchasing them. IKEA Place is an example of an app that allows you to virtually place furniture in your home (to scale) to see what it would look like.
- Showrooms: a physical place to experience (look, touch, feel, interact) items before the consumer purchases them online. Modcloth is a former pure e-commerce company that has created the showroom experience for its customers to see their products in person then purchase online.
- Virtual Reality: ability to have an experience while being in another physical location. Toms has used virtual reality to bring consumers along when they donate their shoes through their “one for one” model.
Gen Z: Here’s How You Can Be an Even Smarter Consumer
While you might not have a credit card or are just starting to think about opening one up, it’s never too early to understand what it takes to be financially responsible. Making purchases you can’t afford can lead to difficulty getting an apartment, setting up utilities, and even landing a job. Here are three things you can do to be an even smarter consumer and how to get support in understanding and navigating your credit score.
Take the Time to Compare Prices
Being savvy with technology has so many benefits including the ability to compare prices. Taking the few moments to open an app to find a coupon code or ensure you’re getting the best deal can make a big difference in both the short and long term. Some price comparison apps to add to the mix are:
- Google Shopping
Understand the Psychology Behind “Status”
We can easily buy something because we want to be perceived of a certain status. This is made even more prevalent as we can see friends, family and influencers with the click of a button appearing at the level of status we desire. But this can be all an illusion and lead us to make poor financial choices. There is a great post on Lexington Law’s blog on how to achieve status the “right” way. Some of the things addressed are how to:
- Reframe the way you think about status
- Develop a smart attitude about wealth
Understand Where Your Credit Stands and Get Support
It’s easy to make purchases when you don’t understand the repercussions of your actions. If you have not pulled your credit report, this is something that you should do ASAP. You will want to see where you stand as well as find out your credit score. If you haven’t been paying your bills and are now finding yourself in debt, you might be surprised to find out your score. Here are some resources from Lexington Law’s blog on pulling your credit report for free.
Once you’ve pulled your credit report, you are going to want support to understand what it means and find action steps to pull up your credit score. The professionals at Lexington Law work with you to rebuild and repair your credit. Their individualized approach will not only educate you, but help you take control of your financial future.