It has been a turbulent ride for Millennials (ages 26–41) and Generation Z (ages 10–25). Their lives have been impacted by the rise of the internet and personal computers, 9/11, the 2008 financial crisis, geopolitical instability, accelerating climate change, social movements... and now, they've been rocked once more by the Covid pandemic. Without question, these highly transformative periods have shaped these two generations. It has given them unique ideas, values, and buying preferences. For businesses and marketers, understanding Millennials and Gen Z should be a top priority. After all, as of 2022, Millennials and Gen Z account for 140 million Americans, and over $1.8 trillion in disposable income (watch out, Baby Boomers!).
We’ve identified some of the principal factors influencing Millennial and Gen Z consumption – and the key takeaways for businesses and marketers.
For much of their adult lives, Millennials and Gen Z have faced widespread layoffs (e.g. during the Great Recession and Covid pandemic) and sky-high prices (for education, housing, etc.). As a result, these young generations have struggled to gain a financial foothold. Today, almost half of Millennials and Gen Z live paycheck to paycheck. About one-third state the cost of living as their greatest concern. And, according to the Federal Reserve, Americans aged 23–38 hold only 2.9% of total U.S. household wealth.
Millennials and Gen Z are responding in a multitude of ways. Some have scaled back their spending, opting for cheaper or fewer purchases. Others have eschewed ownership, giving rise to companies like Uber and ZipCar. Over 30% have taken on second—or even third—jobs. Finally, many lean heavily on credit, subscribing to the “buy now, pay later” mindset.
Takeaways for Businesses/Marketers: To appeal to this cohort, strive to offer low prices and flexible payment options.
Millennials and Gen Zs are seriously worried about the environment. Many believe the world is at a tipping point to respond to climate change. And so, they are taking matters into their own hands. Ninety percent of Millennials and Gen Zs are striving to reduce their personal environmental footprint. They are also pressuring their employers to act and investing in environmentally sustainable products – even if they cost more. (Indeed, only 36% of Gen Zs would choose a cheaper but less sustainable product).
Takeaways for Businesses/Marketers: Go green and embrace sustainable practices and products as much as possible. Then, be sure to clearly communicate your environmental values and efforts to the Millennial and Gen Z audience.
Millennials and Gen Z grew up in the internet age. Even the oldest Millennials barely remember the “old days” before smartphones and social media. Naturally, these generations are heavy users of digital technology. They are quick to adopt new technologies and to integrate them into all aspects of their lives. This includes shopping: ecommerce now accounts for much of Millennials’ purchasing. As of 2020, 86% of Millennials were “digital buyers.”
Takeaways for Businesses/Marketers: It’s no longer enough to have a website. To have any chance with Millennial and Gen Z buyers, your website must be equipped for online selling and optimized for mobile devices. Plus, you need an active presence on social media platforms frequented by these cohorts (e.g. Facebook, Instagram, Snapchat, and TikTok).
Aside from being the largest living generations, Millennials and Gen Zs are also the most diverse. For example, only 52% of Gen Zs nationwide are non-Hispanic white (dropping to 40% in the west!) At the same time, these generations are more likely to welcome diversity. Thanks in part to recent social movements like Black Lives Matter and LGBTQ+ campaigns, they see the value of growing diversity in the United States. These views are reflected in their purchasing decisions. Millennials and Gen Z are more likely to support brands that “realistically capture real-world diversity” and share/espouse their inclusive values. For instance, 77% of Millennials report taking action when they see a “diverse” advertisement, significantly higher than the overall population.
Takeaways for Businesses/Marketers: Publicly acknowledge the importance of diversity and the role of businesses. Then walk the talk – be inclusive in your advertising, hiring, and offerings.
For many of the reasons listed above (financial struggles, climate fears, Covid, global instability), Millennials and Gen Z are regularly stressed and anxious. Even at their young age, almost half suffer from burnout. However, more and more, these young generations are recognizing the need to prioritize their health and wellness (a global pandemic will do that!). They are demanding better work-life balance, more flexible and remote work, and greater mental health support. When these demands are not met, many are choosing to leave their jobs, contributing to the Great Resignation.
Takeaways for Businesses/Marketers: Ride the wellness wave! Consider offering products or services that promote wellness either directly (like meditation or exercise gear) or indirectly (e.g. by helping clients save time or energy, like meal kits or dry shampoo).
Despite their similarities, there are also some key differences between Millennials and Gen Zs. Among other examples, Gen Zs are more conservative in their spending, as many observed the devastating impacts of the Great Recession on their parents. They are more inclined to seek “what’s new and buzzy” in digital technology, while many older Millennials have found what works for them. They are the most diverse and progressive generation, having come of age during the Obama administration. Moreover, though hooked on social media, Gen Z is sadly the loneliest and most socially isolated generation.
The younger generations are not a monolith. In order to appropriately target Gen Zs and Millennial, businesses must first understand the critical differences between these generations. To this end, businesses should invest in market research, segmented by age group, with a reputable research company like Op4G.