The emerging demographic cohort of Generation Z is set to transform the consumer goods landscape in the coming years, with key themes including personalisation, sustainability and convenience.
That’s according to a new report from GlobalData, which also suggests Gen Z consumers’ status as capable and consistent users of digital technology will have clear implications for the ways in which companies market and sell their products.
Many Gen Z consumers are yet to achieve full financial independence – the cohort covers those born between 2001 and 2019 – but they are set to become more and more influential in the future, GlobalData contends in its Generation Z in Consumer Goods report.
“Older members may have left home and are finding stability and freedom financially and socially,” the report says. “In order to target Gen Z, companies are implementing new strategies and products based on what appeals to this generation.
“As these consumers enter financial freedom, this means that they have growing influence on the consumer goods sector and economic climate, meaning there will be huge growth in areas that are imperative to Gen Z, like personalisation and sustainability.”
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Another defining factor of Gen Z consumers is their widespread use of digital technology, from the use of online shopping and on-demand delivery apps to their presence on social media, which consumer goods brands are increasingly targeting in order to reach them.
The report also outlines the impact of the Covid-19 pandemic on Gen Z, including mass isolation, the use of online learning and online shopping, and changes to diet and exercise. Economic uncertainty has also hindered Gen Z consumers from gaining jobs and experience, with a knock-on effect on their prosperity and disposable income.
Key themes that contribute to the Gen Z value chain include personalisation, convenience, hyper-targeted products and digital solutions. “The inclusion of these quintessentially targets this generation and helps companies ensure that their products are fitting for their target consumers,” the report says.
Personalised products and services are an important way for consumer goods brands to target Gen Z consumers, GlobalData believes. “Particularly, consumers are now expecting more than a standardised product that is the same as thousands of others,” the report argues.
“With the prominence of social media and an increasingly connected online culture, consumers now desire products that are unique [and] that they will be proud to share online.”
Meanwhile, Covid-19 left consumers often unable to physically visit stores, leaving companies with little alternative but to promote their personalised services online, often adding a layer of convenience to this via the use of direct-to-consumer (D2C) purchasing and delivery methods.
As this implies, convenience is viewed as “an extremely vital consumer driver” for Gen Z in the report, which says this is fuelled by these consumers’ typically “on-the-go” lifestyles. Brands have reacted, for instance, by creating packaging that is resealable, refillable and reusable – something that also plays to another key Gen Z topic, that of sustainability.
Gen Z is highly familiar with convenience-led delivery aggregators such as Deliveroo, Uber Eats and Just Eat, and their use has accustomed this cohort of consumers to have what they want delivered to their door, quickly and easily, simply by using mobile phone apps.
Convenience also tips over into how consumers make purchases but the report warns against making generalisations about the dominance of online shopping. “Many Gen Z consumers find it convenient to order products online but others may prefer physically shopping in stores,” it says.
“Therefore, from brands being present in the online space and physical space in stores, they have guaranteed convenience for every type of consumer in Gen Z.”
Another emerging consumer trend magnified by the Covid-19 pandemic is that of hyper-targeting – whereby marketers can reach consumers and deliver personalised adverts that those consumers want to see.
The report explains: “With the utilisation of social media, it has been easier for companies to target multiple generations as they can see what is popular online with a specific cohort of consumers.
“For example, if consumers in Gen Z are ‘following’ environmental initiatives/charities on social media, it is clear to see that they are interested in sustainability. Therefore, companies can infer that they should implement sustainable credentials into their products, like plastic-free packaging, to appeal to these consumers’ needs.”
Underpinning all of these important Gen Z themes is the use of digital solutions, such as rapid to-the-door, fast-food delivery apps that include a timeline/tracker of order reception, processing and delivery. “With this hyper-connectedness in digital lifestyles, Gen Z has become accustomed to fast-paced consumption and gaining what they desire online in a fast time,” GlobalData says.
The report also identifies key trends that are set to influence the Gen Z consumer landscape over the next 12-24 months in two fields: technology trends and macroeconomic trends. These include:
- Online shopping
- Abundance of information
- Social Media
- Targeted marketing
- Economic impact of COVID-19
- The future of work
- Impulse purchases
- Ethical consumerism
- Conscious spending
- Premiumisation and personalisation
- Plant-based consumption
- Focus on mental health
Looking at how successfully companies have targeted Gen Z consumers, GlobalData identifies Heineken, Diageo, The Coca-Cola Co and PepsiCo, among other consumer goods businesses, as leaders in the field.
The report highlights Coca-Cola’s promotion of customisable cans, where consumers can personalise packaging on the brand’s website, using a selection of five images, as well as a personalised message and a name.
Meanwhile, the report says Heineken’s successful launch and rollout of a non-alcoholic version of its eponymous lager brand is especially attractive to Gen Z consumers, who are disproportionately likely to incorporate non-alcoholic beverages into their drinking patterns for health reasons.
Finally, GlobalData relates how PepsiCo has been successful in bundling its drinks and snacks into “meal deals” in the UK market – a tactic which the report says is particularly appealing to Gen Z consumers because of its attributes of convenience and value for money.