Gen-Zs: Thin Wallets, Expensive Tastes, and a Social Conscience

Keshan Warakaulle

Earlier generations find the next generations baffling. Those belonging to the Generation Z (Gen Zs), are no different. Due to a tight job-market, they have limited disposable income, but still have expensive tastes. They also desire seamless and customised purchasing experiences, and value social consciousness.

Gen Zs look for authenticity in their digital and real experiences with people and brands Brands are attempting to grasp what these walking paradoxes desire and how they shop when these young people begin spending seriously. The next phase of consumerism will be defined by the answers.

GenZs, also known as Zoomers, is the demographic cohort succeeding Millennials and preceding Generation Alpha. Researchers and popular media use the mid-to-late 1990s as starting birth years and the early 2010s as ending birth years for Gen Zs. Most members of Gen Zs are children of Gen Xs or younger Baby Boomers. The older members may be the parents of the younger members of Generation Alpha.

Their total numbers are impressive. In the USA 110 million Gen Z and Millennials make up one-third of the population in America, and spent $2.7 trillion annually in 2021, or about 30% of all spending. Although American Gen-Zs (those born between 1997 and 2012) currently have the lowest spending power per capita, by 2026 they may make up the majority of the nation’s consumers.

A good place to start in examining the psychology of the youthful Gen Z and Millennials is the economy that has shaped them. On the older end of the spectrum, the recession that followed the global financial crisis of 2007–09 and the coming of age of today’s 30-somethings. Their younger contemporaries had a little more luck because they started their careers at a period of rising pay due to tightened labour markets. However, the Covid-19 pandemic upended many of their lives.

The two major shocks that these young people have gone through have made them more pessimistic than their parents who are Gen Xs and younger Baby Boomers These Gen Z parents had a more prosperous economic period between 1990 and the middle of the 2000s. According to a 2022 survey by the consulting firm McKinsey, 25% of Gen-Zs were unsure whether they would be able to afford to retire, with less than half thinking that they would never be home owners.[1]

Future uncertainty can encourage impulsive use of their present’s scarce resources. More than previous generations, the young were negatively impacted by COVID, and they are now appreciating the recovery. According to McKinsey, American millennials will spend 17% more in the year ending in March 2022 than they did in the year prior. Although they have temporarily recovered from the pandemic’s darkest days, their long-term prospects are less favourable. At the same age, American millennials and Gen-Zs have less wealth than GenXs or Boomers.

The availability of simple payment plans such as ‘buy now, pay later’ (BNPL) apps may also encourage extravagant spending. Whilst baby boomers, those born between reject such frivolity, most Gen Zs have little self-control when it comes to shopping—until the bill shows up.[2]

The ‘attention economy – in which purchasing items has been made significantly easier without making a trip to the store, – has shaped young people’s shopping patterns and, in many respects, their lives. With the spread of social media, there are numerous fresh approaches of grabbing customers’ attention. Most millennial shoppers have never experienced life without smartphones. More than two-thirds of Americans between the ages of 18 and 34 use their gadgets for at least four hours each day. Being raised in the Airbnb, Amazon, and Uber era comes with an increased expectation of convenience. Young folks desire a completely seamless and trouble-free purchasing experience.

Long delivery periods appear to be less tolerated in the lightning-fast online age. According to Forrester, they are more likely than the general population to use their phones to pay for purchases and are turned off if the variety of payment options is restricted.

These ‘always-on purchasers’, as McKinsey has dubbed them, frequently forego weekly shopping in favour of more expedient repairs for everything from furniture to clothing. They prefer shared access to products over outright ownership and enjoy subscription services. Online rental websites and streaming services have benefited from this. Investors may no longer be in love with Netflix, but the video streaming service is still one of the most well-liked in in the western world and in more affluent Asian countries for those in the Gen Z age group.

Additionally, the internet has altered how young people discover brands. Social media has replaced traditional forms of advertising like billboards, TV, and print. The young look for inspiration on Instagram, which is a part of Meta’s empire, and TikTok, a Chinese-owned video-sharing app, particularly for products where appearance matters, such clothing for sports, beauty, and fashion. The user-generated videos on TikTok may quickly catapult even small firms to viral prominence. These applications are rapidly introducing capabilities that let customers shop without ever leaving the application. Also, by combining the opportunity to shop with live-streamed entertainment, some are emulating the ‘social commerce’ trend popular in China.

But for now, young Western shoppers prefer to make purchases without being influence by social media and frequently search websites like Amazon for deals on the brands they’ve discovered. A study by the investment bank Cowen found that young people’s expenditure on subscriptions to Prime, Amazon’s home delivery and entertainment service, comes in fourth behind phone bills, food, and travel.[3]

Physical stores are tolerated to some extent as long as the experience is intimate and, ideally, combines the virtual and real worlds. For instance, Nike effectively attracts young customers by letting them create their own sneakers on its website, pick them up in-person after taking a dancing class in-store, and then encourage them to mention the company in a review on TikTok or Instagram.

The modern shopping experience has also enabled young people to create more educated opinions about the businesses they patronise. Information saturation brought on by the attention economy has not dimmed children’s sensitivities. Instead, it seems to have heightened their sensitivity, particularly to any company that makes a false claim. Gen-Zs usually fact-check statements made in advertisements. Forrester has started referring to young consumers as “truth barometers” after citing survey data that indicates some teenagers have quit using particular brands as a result of their dubious business practises.

Brands that fall short of the extensive list of requirements had better be on the lookout. Children are willing to attempt new things if they do not receive what they want or how they want it. Gen-z and millennial Europeans were found to have changed their shopping habits, locations, and brands nine out of ten times in the previous three months.

There is little doubt that the young shop is changing. Their purchases are also evolving. Wellness and luxury, which were once considered discretionary by previous generations, have now become necessities. Self-care is extremely popular. The youth are choosing upscale brands at an ever-younger age in search of apparel that would make them stand out. The average Gen-z consumer makes their first luxury buy when they are 15 years old, according to the consulting firm Bain, whereas their counterparts in their 30s made their first purchase when they were 19 years old. Some people invest in expensive goods because they think they will keep their value even in hard times. Fortunately, items may now be easily traded on websites for used goods sales like Vinted and Vestiaire Collective.

Young consumers generally claim to be more value-driven than older generations. According to Forrester research, this mindset is even more prevalent among young adults in their 20s and teens than it is among their slightly older peers. Some of these ideals are identity-based (race, gender, etc.). Others are related to issues that are important to young people, like climate change. According to research by the accounting firm KPMG, the Gen-z group is the one that is most concerned about climate change and natural disasters across 16 different countries. A bank’s survey by Credit Suisse found that young people in emerging nations are even more anxious.

Unfortunately, some very un-green purchasing practises are also being fuelled by young people’s desire for rapid pleasure. For example, If meals are delivered in small quantities by a courier on a petrol-powered motorbike, the environmental advantages of eating plants rather than animals can be soon undone. Despite being lambasted for waste, Shein, a Chinese clothing company that is the fastest in fast fashion, leads surveys as a Gen-z favourite in the West. Its fashionable clothing is affordable enough to buy once and then discard, often ending up in landfills.

Clearly Gen Zs are as paradoxical as earlier generations because they are simply human.


Keshan Warakaulle is Social Media Manager at ICMA(ANZ)



[1] André Dua, Kweilin Ellingrud, Michael Lazar, Ryan Luby, and Sarah Pemberton (2022), “How does Gen Z see its place in the working world? With trepidation”, McKinsey Insights, October 19, 2022.

[2] Forrester Analytics Consumer Technographics’ Benchmark Survey,2021

[3] John Kernan, et. al. (2021), 4th Annual Millennial and Gen Z Consumer Survey, TD Cowen, Oct 13.

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