Next Gen consumers (defined as Gen Z and Gen Alpha) is an emerging theme for both corporates and investors alike -- which has generated a lot of coverage about what makes these cohorts unique. Our take below on who they are, why they matter and where to invest -- based on our own research. Please get in touch to find out more about how “Next Gen” is reshaping retail, consumer and leisure.
Who are they?
Our working definition of Next Gen consumers (Gen Z and Alpha) reflects the broad consensus (recognising some variance in age bands in the wider market):
- Gen Z: born 1995 - 2009 (so aged 14 - 28 today)
- Gen Alpha: born 2010 - 2024 (so aged 0 - 13 today)
Our research highlights that Next Gen embraces different attitudes than age alone would suggest. These attitudes collectively make them distinctive:
- Progressive mindset: unique formative experiences, shaped by global events from Covid19 to the #MeToo movement
- Educated consumers: higher proportion with university degrees, leveraging hybrid learning models
- Digitally natives: social media launched in their lifetime as part of their DNA, as a way to communicate and connect
- Individual in identity: the importance of personal identity and self-expression, with more fluid definitions of gender and sexuality
- Social warriors: conscientious consumption, considering the impact on environment and community
- Experiential consumption: interactive, immersive and shareable shopping journeys, serving multiple missions (“inspire”, “help” and “connect”)
- Adventure seekers: increased appetite for adventure, spending money on travel and unique experiences
Next Gen: Why do they matter?
So there is lots of hype around these newer consumers -- but why do they matter? The volume of consumers within this cohort should make brands and investors sit up - there are over 3.7 billion Next Gen (Gen Z and Alpha) consumers today, representing c.45% of the global population. They have significant buying power – their earnings are forecast to hit $33 trillion by 2030, more than a quarter of all global income.
These cohorts are also markedly different from the generations before them - Next Gen consumers have fundamentally different mindset and behaviours. They share some common attitudes (progressive mindset, digital natives and social warriors) that influence their consumption. But there are also important intra-generational differences (e.g. the importance of self versus the impact on the planet and community).
Our research shows that Next Gen is changing retail, consumer and leisure - in what and how they buy. They are more demanding about what they buy, placing more value on brand, newness and sustainability. They are more likely to go to a physical store than any previous generation but expect their shopping experiences to be enhanced by technology. And they prioritise experiences such as competitive socialising and adventure travel.
Where to invest?
Brands and retailers targeting Next Gen consumers are attracting growing interest amongst investors, with an increasing number of brands and retailers across product categories that exclusively target these generational cohorts (and the younger Millennials).
There are, however, important nuances to recognise when validating the strength of these brand and retail models. Our team adopts a tailored approach that departs from more traditional commercial diligence and methodologies, including:
- Sizing and forecasting the serviceable addressable market
- Identifying the competitor repertoire of legacy and challenger brands
- Distilling relevant key purchase criteria
- Evaluating the appropriate marketing mix (including the role of social)
- Conducting consumer research with targeted panels
Please get in touch to exchange more thoughts on how Next Gen is reshaping retail, consumer and leisure markets!
Guest Authors: Jacqueline Windsor, Rachel Sayers and Sam Farnfield of PwC. Read more PwC blogs here. More: Read all guest blogs here.