Gen Zers are likely going to be one of the biggest spenders this holiday period, giving Millennials equal competition. The Holiday Report by Deloitte suggests that these two demographic groups are estimated to spend an average of $1002 on gifts and experience.
The Australian Retailers Association estimates that retailers are gearing up to welcome $69.7 billion in retail sales during the upcoming six weeks of peak holiday shopping season leading up to Christmas, a 2.7% increase from last year. Shoppers are also expected to spend a record $6.7 billion during the BFCM (Black Friday Cyber Monday) weekend alone.
As 18 – 34-year-olds are the key demographics for regular online shopping in Australia, it’s important for retailers no to neglect this cohort while creating their marketing programs. Here are some key points to consider while creating campaigns targeted towards Gen Z.
Fashion items are the most desired gifts
The gift preferences of Gen Z are poised to significantly influence the holiday market. These young customers prefer gifting fashion items such as clothing, shoes, and jewelery. An average 48.5% of Gen Z and Millennials prefer buying these items, closely followed by electronics with an average 32.5% making these purchases. Health and beauty products, along with video games are equally popular with each attracting an average 30.5% of shoppers picking up these items. Experiential gifting like travel and tickets for games and concerts have taken a back seat due to consumers tightening their wallets this year.
It’s more than scrolling on social media
It’s not always TikTok and Snapchat for Gen Zers when it comes to using social media. This group is open to doing their research on products before making their final purchase. They value celebrity and influencer endorsements in their purchasing journey, with 40% claiming it as an important factor when shopping for holidays. Therefore it’s important for brands to create engaging and authentic content that resonates with their target audience.
As digital marketplaces become increasingly popular, social media platforms are used as a place for purchases with 46% of consumers directly buying products from it.
Shopping on ultra-cheap websites like Temu and Shein
Chinese websites like Temu and Shein are giving Aussie retail brands a run for their money due to offering a diverse range of products at cheaper price points, especially at a time when many retailers are struggling with reduced consumer spending. When deals and discounts are a big factor influencing shopping, shoppers are turning to these sites to celebrate their holidays on a budget, especially gifts and home decor. Shein and Temu are expected to capture a bigger chunk of Christmas spending this year with a combined $2 billion in annual sales, securing a massive 30% jump in monthly customers.
Younger customers have a stronger inclination for BNPL
There is an increase in appetite for Buy Now, Pay Later (BNPL) services during prominent purchasing occasions such as Black Friday, Cyber Monday, and Boxing Day sales in Australia. This payment model has gained popularity as it provides a low-cost, convenient finance option to help manage spending on unplanned expenses. Research commissioned by Mandala shows 72% of younger consumers, including Gen Z and Millenials, use Afterpay as a convenient, low-cost alternative to traditional credit cards, and 61% prefer BNPL as their preferred payment option.
Digital tech preferences
Gen Zers are tech savvy and more proficient in using digitech than any other generation before them. Their familiarity with technology has made them agile at adopting newer and modern shopping methods, sometimes across using multiple devices simultaneously. They seek more than just buy-and-sell transactions. They expect hyper-personalised experiences and engagements at every touchpoint in their purchasing journey, including how brands communicate with them post-purchase. These customers are most interested in practical digital tools like price comparison that can help them save money and time, mobile apps over traditional browsers for convenience, digital and mobile payment solutions, engaging with chatbots and AI (artificial intelligence) among others.
The Sustainability Generation
Sustainability is a major factor influencing Gen Z’s shopping habits as they are incredibly conscious of the environmental impact of their choices, gravitating more towards sustainable choices recycling, thrifting and paperless transactions. Nearly 64% of Gen Z and millennials are likely to buy gifts that are associated with a cause. Thus, retailers and brands need to incorporate sustainability as one of their core business practices.
As more Gen Zers continue to enter the workforce and increase their spending power, CMOs face the challenge of decoding this generation and their purchasing habits to create an opportunity to connect with them to create more targeted campaigns.
Explore more on peak holiday shopping season 2024, and check out our Holiday Shopping Hub.
