Gen Z are focused on social reputation and rely more heavily on virtual communities over face to face for recommendations

Impact Executives and IORMA Roundtable held on 13th October 2016
Gen Z  are focused on social reputation and rely more heavily on virtual communities over face to face for recommendations

By 2020, 40% of customer spend will be from Generation Y, with their unique spending habits. Millennials tend to rent rather than own and care more about sharing, not simply hiring and buying. They have different spending habits, focussed on experiences and values.

There will also be a shift from Generation Y to Generation Z. This Generation have another different style with the emphasis on socialisation and education and another shift in values and the way they spend. In this Omni Forum we ask what are the implications of generation Z as consumers?

Key themes


Generation Z
Following Generation X and Y (born after c.1965 and c.1977 respectively), Generation Z, roughly, are those born since 1995. (Bassiouni, D. and Hackley, C.).

Given their age, there is very little data surrounding behaviours. Early data suggests they are focussed around justice, authenticity and commune. “84% of 8-11 year olds have bought online without an adult present”. By the age of 3-4, children begin to develop brand recognition and by the ages of 7-8, they already display a brand preference. This generation is used to making purchase decisions in a much shorter time frame.

Value of face to face over virtual
Gen Z consumes media over a number of platforms and they are not particularly loyal to any, as long as their social group is still active on it.  As people become more critical of traditional advertising, native advertising becomes more effective as it is softer and comes from a trusted source.

Data suggests Gen Z are much more likely to use online reviews/ virtual channels than physical word of mouth, whereas Gen X tend to prefer face to face contact within their network for advice on purchases.

Role of influencers on Gen Y and Z
Young people are being brought up in a digital world. They have different expectations compared to Generation X and Y. Customers now are being bombarded with huge amounts of data from an early age – they require and have a need to be helped with buying decisions. What we are now seeing is that ‘influencers’ are replacing original PR/journalists. Teaming up with online ‘influencers’ that can have a huge Instagram/YouTube/Twitter/Snapchat following allows brands to reach a large, very targeted user base.

Payments are getting increasingly embedded in our day to day lives. Uber manages payment well, it is very frictionless process. Gen Z will want increasingly seamless experiences. Currently on Instagram there is not a slick transition from seeing a product on a retailer’s page and purchasing- it is not as seamless as an application like Uber.

Messaging platforms and other social media apps are becoming retailers in their own right. WeChat is a Chinese messaging platform with over 700 million monthly active users. It can book taxis, pay bills, order food and manage your bank account as well as deliver adverts. Looking into the future, artificial intelligence may be able to analyse conversations and deliver extremely specific adverts to products that are being discussed.

As WeChat are already there, does this mean Google or Facebook will be the next big banks?

As more user data is stored by companies, this information may become a liability as security risks increase and regulations tighten. Programmatic advertising will become particularly prevalent for generation Z. Will the government act to add regulation around this area or will they struggle to keep up and allow the sector to set the precedence?

As there will be an explosion in the use of influencers vs. journalists in the coming years, will ASA implement further laws defining what an advertiser is? Since late 2014, UK based vloggers are breaking the law if they fail to tell their fans they are being paid to promote a product.

Community and Risks
Gen Z are focussed on social reputation and a communal environment. Children’s Games such as Club Penguin are completely based around online communities and there are many more applications like it. This reflects the communal online experience this generation have been raised with.

Regulation is an important part of how retailers will interact with Generation Z as they become more and more relevant consumers. It is also important to identify potential risks online for this generation and whether the government will take an active stance in monitoring these risks.

In summary, conversation around Gen Z suggest they are focused on social reputation and rely more heavily on virtual communities over face to face recommendations.  This reiterates the importance of connecting people and, of course, regulation will have a big role to play here.

A key next step for businesses is to understand and keep ahead of the constant innovation in digital journeys and how do Boards make sure they are keeping up to date with both the opportunity and risks.

So for our next debate:
How do businesses innovate in their business and educate the board to manage the risk / reward model of digital innovation?

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