Companies should start looking into the purchasing habits of Gen Z, a growing consumer cohort that is emerging as a critical and largely untapped market whose spending power is projected to grow to an estimated US$12 trillion by 2030, according to a new study.
Consumer goods market research service NielsenIQ reported that Gen Z is poised to become the largest and wealthiest generation in history so enterprises should look into how to build, foster and maintain loyalty from this generation.
Research showed that Gen Z will likely be the only generation ever to reach two billion people, making this demographic a force to be reckoned with. Gen Zs are those born roughly between the mid-to-late 1990s and the early 2010s.
“This generational cohort currently makes up 25 percent of the global population. Indeed, this generation is even larger than Millennials and will likely be the largest generation ever,” said the study titled “Spend Z: A Global Report.”
Moreover, Gen Z is expected to be the wealthiest generation in history. Today, Gen Zers account for about 17.1 percent of the total global spend of $57.6 trillion. By 2030, that number will grow to 18.7 percent. Total global spending is also projected to increase by 2030 to $67.2 trillion.
“With their spending power projected to grow to an estimated $12 trillion by 2030, Gen Z will have a significant influence on the products manufacturers and retailers sell in the near future, while emerging as a critical and largely untapped lever of growth,” the report said.
Gen Z members are also likely to have the highest spending growth. “Gen Z’s spending is growing fast—to the tune of $2.7 trillion in growth over the next few years.”
Products that appeal to Gen Zs
Looking at product categories, NielsenIQ data predicts that through 2030, the most dynamic demand growth among the consumer class will be in the alcohol and health categories.
Research also showed that when purchasing beauty products, this generation is mostly looking for clean products, that have natural fragrances and are cruelty-free. In the food space, Gen Z wants products free from artificial ingredients, low in sugar, natural and high in protein.
“On social media, health and beauty is the most popular category for Gen Z. This year, 81 percent of TikTok dollar sales are expected to come from health and beauty, solidifying it as a key Gen Z category for both brands and retailers,” said the report.
Additionally, over half of Gen Z has used a fitness or exercise app, and 17 percent have used a fitness band to track health and fitness information. Despite their youth, members of Gen Z rank “good health” as No. 1 among the definitions of the “Good Life” and recognize that natural ingredients are healthier.
At the same time, Gen Z is spending more on electronics than on household appliances. Headphones/headsets and mobile computing are their most purchased categories, with a spend comparable to Millennials and Gen X. / PHILEXPORT NEWS AND FEATURES