Gen Z has been shaped by the financial pressures of the Great Recession and Covid-19, the prevalence of social media and a passion around social justice issues. How can you best reach these shoppers?
Do you have a Plan A for selling to Generation Z? These young consumers may not have the deep pockets of older generations (at least not yet), but they will soon be a key mattress buying demographic — and they are shaping shopping trends for the generations that came before them.
“Gen Z (is) now creating trends that ripple up and affect the behaviors and preferences of older generations of consumers around the world, from technology to entertainment and banking. … We expect (that) will accelerate rapidly over the next three years. Gen Z will determine winners and losers when it comes to brands, marketplaces and future growth. The key to success is taking the right steps now to grow with Gen Z,” according to “The State of Gen Z 2020,” a report from The Center for Generational Kinetics, an Austin, Texas-based research and consulting firm.
Who is Generation Z? They were born after 1996, putting the eldest of the demographic in their mid-20s. Some demographers set the other chronological band of the generation at 2011, 2012 or 2015 but there’s no consensus on that yet. There is more agreement regarding what to call them. Generation Z is the most common moniker and what BedTimes uses, with Gen Z or Gen Zers for short. You might also hear this generation referred to as the iGeneration, centennials, post millennials or zoomers (a play on Gen Z and baby boomers).
Other key identifiers of Generation Z:
- By the end of 2022, Gen Z will make up 20% of the U.S. population and have spending power of $360 billion, according to “What Clicks With Gen Z,” a 2022 white paper from Creatopy, a San Francisco-based ad design platform.
- It is the most diverse generation in U.S. history and is the last that will be predominately white, according to a 2021 generational overview from The Annie E. Casey Foundation in Baltimore. Just over half (52%) of Gen Z is white, 25% is Hispanic, 14% is Black, and 4% is Asian.
Like all generations, Gen Z is being shaped by events, societal changes and emerging technologies. Let’s look at how those are influencing how Gen Zers manage their finances, evaluate brands, and research and shop for products. (For more on successfully integrating Generation Z into your workforce, see page 39.)
With the majority of Gen Zers still in school or in the early stages of their careers, they are much like other generations when they were at this same stage of life: not exactly flush with cash. But many Gen Zers watched their parents suffer during the Great Recession and the long, slow recovery that followed. More recently, they’ve endured financial shocks from the Covid-19 pandemic. Both events are shaping their views about money.
Since the pandemic started, nearly three in 10 Gen Zers either lost a job themselves or someone in their family did, according a 2021 study of Gen Z from Ernst & Young LLP, part of the EY global consulting and accounting firm.
A 2022 survey of Gen Z and millennials from global consultancy Deloitte shows other money worries. The cost of living tops Generation Z’s list of concerns (29%), followed by climate change (24%) and unemployment (20%). Nearly half of Gen Zers (46%) say they live paycheck to paycheck and regularly fear they won’t be able to cover their bills. Only a little over a quarter of Generation Z expects the economic situation to improve in the coming 12 months. (The quantitative Deloitte survey was conducted November 2021-January 2022 with follow-up qualitative questioning in April.)
Considering their stage in life, recent world crises, high inflation and recession threats, the fact that Gen Zers feel financially unstable makes sense. But this group is also concerned about broader economic issues, namely wealth inequality. Nearly three-quarters say the gap between rich and poor is widening, according to the Deloitte survey.
Given all this, it is no wonder that Generation Z is, as The Annie E. Casey Foundation says, pragmatic when it comes to finances: “They value the stability that comes with conservative spending, stable jobs and smart investments.”
As pragmatists, Gen Zers weigh purchases carefully and evaluate a number of options before buying. As part of that process, they read reviews, testimonials and recommendations. But, unlike some older generations, they aren’t typically swayed by traditional celebrity endorsements. Instead, they trust “real-life users,” according to the foundation. Those “real-life users” likely include influencers, many of whom are Gen Zers or young millennials themselves. According to Creatopy, 70% of Gen Zers follow at least one influencer on social media and 44% say they’ve made a purchase based on an influencer’s recommendation — a higher percentage than for any other generation.
A 2021 survey of both Generation Z and millennials from London-based Relative Insights asked the two groups how they would spend £1,000 pounds ($1,206 U.S.). Common Gen Z answers: “I don’t know,” “Save it” and “Spend it on presents for my family.” Millennials, in contrast, were more likely to say they’d spend an unexpected windfall on luxury goods or a vacation.
“This shows how they place little value on high price tags and material goods. Instead of spending £1,000 on a big-ticket item, they would rather use that money for practical purposes,” the Relative Insights survey says.
Based on such findings, bedding brands that want to reach Gen Zers might benefit from emphasizing the durability and other practical, life-enhancing features of mattresses — and to entice them with value pricing. The Center for Generational Kinetics study shows a third of Gen Zers wait to buy a product until it is on sale.
You’ll also want to build your brand awareness to catch Generation Z at the right time in the shopping journey. They are far less likely to impulse buy (19%) than to make a purchase when they’ve decided they need something (49%), according to that same survey.
Just be careful of structuring sales, deals and promotions in a way that could come off as disingenuous. This is a generation that values authenticity. (More on that later.)
Born with a device in their hand
Gen Zers haven’t known life without handheld digital devices and constant access to the internet. While they may not have been given a smartphone as an infant, the Creatopy white paper says that, on average, Gen Zers got their first one at age 12.
“Whereas millennials were considered ‘digital pioneers,’ who bore witness to the explosion of technology and social media, Gen Z was born into a world of peak technological innovation — where information was immediately accessible and social media increasingly ubiquitous,” according to The Annie E. Casey Foundation report.
If anything, the early days of the pandemic cemented their relationship with technology as they — and other generations, too — relied on video chats and social media for communication, and apps for shopping and delivery services.
This generation spends a lot — and we mean a lot — of time on social media. According to Creatopy, 42% of Gen Zers average 1-3 hours on social platforms a day and 30% spend 3-5 hours scrolling social media a day. Just over 16% use social media more than five hours a day. Their favorite platforms, surveys agree, are Instagram, TikTok and YouTube. In some surveys, Facebook and Twitter are in the single digits in terms of the percentage of time Gen Zers spend on them.
Given their comfort with tech, Gen Zers are avid online shoppers. Creatopy found that 70% of Generation Z had shopped online “always” or “usually” in the past month. Social media is where they turn most often to research, browse and compare products. In fact, the Creatopy survey shows, 85% learn about new products on social media.
“So, it’s important for brands to have specific content for all the different channels they use, such as TikTok, Instagram or YouTube. Gen Z may discover the product you’re selling on TikTok and then go to YouTube to look for reviews or unboxing videos,” according to Creatopy.
Generation Z also uses social media differently than other generations. As Erifili Gounari, founder and chief executive officer of The Z Link, tells Creatopy, “TikTok is also reaching a type of search engine status among Gen Z lately, which means that they use the app to look things up as they would on Google (i.e., fashion/beauty tips, product recommendations, explanations of current events).”
Interestingly, a 2020 study from global management consulting firm McKinsey & Co. shows that Gen Zers are more likely than millennials to shop in physical stores. This might be, in part, because of their age: Shopping is often a social activity for younger consumers. But even those visits to brick-and-mortar stores are informed by time spent online. “In a sense, members of Generation Z are always shopping, because they are always connected,” according to McKinsey. “They buy on any device and in any format or channel.”
Given that, companies “should always think of ways to bridge the gap between online and offline to offer a unified experience,” according to The Center for Generational Kinetics.
What does Generation Z’s comfort with tech and online shopping mean for bedding manufacturers? First, Gen Z will likely be the group to drive the transition to in-app purchases on Instagram and other social media platforms. If you don’t have plans for offering in-app buying, now is the time to get them in place.
This also is the generation most comfortable with augmented reality and virtual reality. Tools that allow Gen Zers to shop for or experience your products via AR and VR will be winners. Think apps to help them envision how upgrading to a queen-size mattress from a full-size mattress will work in their bedroom. Or consider avatars they can use to see how they, their sleeping partner and their two dogs will fit on a queen mattress in their favorite sleeping positions. Maybe what they really need is a king.
Shopping for values
What types of products and brands appeal to Generation Z?
“In much the same way that Gen Zers use social media as a means to curate their own personal brand, they also look at their purchasing decisions as an expression of their values and identity,” the Annie E. Casey Foundation says. “As an example, they are drawn to sustainable products and brands — and are often willing to pay more for them. They value personalized products, and they are drawn to brands who share their point of view on political issues.”
Gen Zers fall across the political spectrum but tend to be more left-leaning and liberal than older generations. According to the foundation, “even among Republicans, Gen Zers take a more progressive stand on social issues.”
In addition to their focus on environmental issues and sustainable practices, Gen Zers tend to support social justice issues, such as LGBTQ rights and racial equality. And they pay attention to how companies address those issues, according to a 2021 survey of Gen Z from Qualtrics, a provider of customer experience management software based in Provo, Utah.
“Gen Z buyers (31%) were nearly twice as likely as baby boomers (16%) to say the brands they purchase from are doing enough to address societal and environmental issues,” according to Qualtrics. “Only 39% of Gen Z consumers were unsure whether the brands they purchased from were doing their part, compared to 57% of baby boomers.”
Relative Insights found that 85% of Gen Zers think brands “should be held accountable over social responsibility, sustainability issues and climate change.” In a follow-up question, the research firm asked, “Are there any brands that go against your core values and why wouldn’t you buy them?” Gen Zers’ answers tended to focus on environmental issues and included “Lack of transparency in the supply chain,” “Materials are not eco-friendly” and “Packing isn’t recyclable.”
This is a generation that will likely appreciate the bedding industry’s growing focus on creating sustainable products, forming circular economies and reducing its environmental footprint. By touting those efforts and continuing to build on them, you’ll create loyalty among Generation Z.
Your company may be less inclined to take a public stand on some social issues, but there’s likely a cause you already support that resonates with Generation Z. “When asked how they react to a brand or company that supports each cause, Gen Z feels significantly more respect for companies that support a wide variety of social causes compared to millennials,” according to The Center for Generational Kinetics study. That study shows Gen Z most respects companies that support ending poverty and homelessness (51%), (fostering) racial equality (51%), stopping human trafficking (50%) and ending hunger (50%).
The key when it comes to environmental and social issues is to be authentic. As the Relative Insights report warns: “Because Gen Z possesses the knowledge to spot fake communications, greenwashed marketing and unsubstantiated claims should be avoided at all costs.”
In fact, authenticity is a core value of Gen Zers. This generation “sniffs out inauthenticity with ease,” according to EY. “They won’t overtly demand trust and transparency, but they will silently block a person or brand (literally and figuratively) from their lives and will have distaste for anything that looks, feels or is, to them, ‘fake.’