TeaikTok finds and homemade gifts, trips to the mall and the endless search for “dupes” – Gen Z’s shopping habits are shaking up retail sales ahead of Christmas. And with rising prices and declining brand loyalty, retailers will have to work harder to earn this generation’s dollars this season.
The spending power of Gen Z is expected to reach close to $12 trillion by 2030. But according to a recent report from PwC, those aged 13 to 28 are expected to cut their holiday spending by a whopping 23% this year – a sharper decline than other generations.
“We have a consumer who is experiencing budget constraints in many areas, such as credit card debt,” said Kelly Pedersen, retail leader at PwC. “For these reasons, they are extremely value-oriented. It’s a real fundamental shift in the way we think about consumers in the industry.”
According to the New York Federal Reserve’s Quarterly Household Debt and Credit Report, Gen Z has the highest serious credit card delinquency rate of any generation, currently at more than 10%. Pedersen explained that these economic stressors, such as debt, inflation and student loans, have led members of Gen Z to become far more selective in their spending as they value not only price but also the social and emotional value behind purchases.
“It’s not just about selling product,” said Neil Saunders, retail analyst at GlobalData Retail. “It’s about selling emotions, which sounds really soft and woolly, but it’s really important to Gen Z.”
Saunders warns that hard selling has the opposite effect. A constant “sell, sell, sell” approach can feel “stupid” and “inauthentic”, pushing younger consumers towards brands that are more likely to sell, or even “cheat” – replicating a product, often cheaper – which may seem more grounded, personal and valuable.
“If Gen Z feels a lack of value in the company, you lose their trust very quickly.” Pedersen said. “Losing trust just means losing sales.”
Brand loyalty is also on shaky ground, Pedersen said. Even though 59% of Gen Z continue to buy from true and tried brands, many are increasingly open to lesser-known companies and more affordable options.
“I feel like being brand-loyal is very close-minded,” said Jonathan Singh, a 19-year-old sophomore university student from Long Island, New York. “I won’t get the best deal and I won’t be loyal to a brand that charges me $100 when I could possibly get a better quality product for cheaper.”
Despite criticizing brand loyalty, Singh admits that he is often drawn to department stores like Kohl’s — especially when rewards points are on the table. According to Saunders, membership programs can help satisfy Gen Z’s hunger for community. Membership programs may offer benefits such as special sales and releases and, in some cases, invitations to events.
“It’s really a more thoughtful approach to how retailers connect with the customer and make them feel part of something,” Saunders said. “When Gen Z is very (budget) constrained, that connection makes a difference if you can get them to spend with you instead of another brand.”
While Gen Z may not be the easiest buyers for retailers, they are boosting a mall industry that was once decimated by nearly 58%, according to global market research company Ipsos. Reminiscent of previous generations like Gen
“I think of going to the mall as a hobby,” said Holly Pike, 21, a crochet business owner. “Even if I don’t buy anything, it’s fun to hang out with friends and window-shop or check out any events like pop-ups.”
Malls are taking advantage of Gen Z’s search for experiences. The American Dream Mall in New Jersey often brings in musicians like the Jonas Brothers and more recently K-pop stars like Hwasa and Taemin. Its sister establishment, Mall of America, also hosted a fan-meeting with popular K-pop girl group Catseye to celebrate the opening of a new store.
“Shopping should become more of an event,, said Adam Petrick, chief marketing officer of American Dream Mall. “It should be an experience. It shouldn’t just be ‘I’m driving to the Gap to buy a pair of socks.’ “It should be even more exciting than that, and it should be something that people are able to do together.”
Recognizing Gen Z’s sensitivity to price, Patrick explains how the mall “curates a collection of retailers that our consumers respond to”, ranging from luxury labels like Gucci to more affordable options like Zara and Primark. He said retailers have worked closely with mall management to launch more programs designed to lure Gen Z shoppers and boost discount sales.
“Gen Z are going to stores but they’re not necessarily buying anything,” Pedersen said. “It’s now about brand connectivity and experiences that build those loyalties, monetizing Gen Z’s purchases. Shopping has now gone beyond transactions.”
Before Singh even thinks about clicking “Add to Cart” or tapping his card, he jumps into a rabbit hole of research comparing brands with similar products, analyzing the quality of ingredients, reading multiple reviews, looking for coupons, and even opening social media platforms. He doesn’t stop here.
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“After this, I will go personally to find (the product),” he said. “I want to have a good understanding of what it’s like in real life before I buy it. Even after research, I don’t trust the initial impression of it just from being online.”
That pragmatic “deal hunt” has given rise to a copycat culture, where Gen Zers look for cheap lookalikes rather than brand-name originals. According to the report, about 82% are planning to buy counterfeit goods, which are not counterfeit goods, but products that may be counterfeit. Looks like an expensive item at a more affordable price.
“Cheating has become a cultural part of self-celebration,” Pedersen said. “It’s a great treasure hunt for them, like ‘look what I found,’ but they’re less excited about buying replicas for gifts.”
Singh’s friend took pride in acquiring a pair of Chinese AirPod duplicates that were not even a quarter of the original price. However, both Singh and his friend denied ever giving a fake gift.
Even though Gen Z cares deeply about the sustainability and social concerns behind a product, Pedersen explained: “They’re not willing to pay more for it.”
“As much as I tell other people to shop with brands that are sustainable and from small businesses, I don’t have the means to do that myself,” Pike said. “If sustainable brands could make their products more affordable, I would definitely consider shopping there more often.”
Some people are also planning to gift household items like crocheted knickknacks and experiences for affordability.
“A gift doesn’t just mean money, it also includes the love and care you give,” said Nicholas Asiedu, 21, an office assistant. “Sometimes I like to gift a lasting memory, like I often take my girlfriend on a museum trip. Memories are more valuable than a gift.”
“I think my friends are more appreciative of a gift that takes time,” Pike said. “When I crochet something for them, it’s much more personalized to them and their interests. It’s also more affordable for me, so that’s a plus.”
Saunders says Gen Zers who gift homemade goods or experiences are still a distinct subgroup. He expects the majority of the generation to spend intentionally during the holiday season, balancing cost, value and emotional feelings.
“This is the future generation,” he said. “Retailers need to focus on them here and now. If you don’t understand Gen Z and you’re not getting their loyalty or attention, you’re just storing up problems for the next 10 to 20 years.”
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