While both Gen Z and millennials have lived through economic recessions in the 21st century, the two generations are less alike financially than you may expect.
A 2019 working paper found that millennials, those born from 1981 to 1996, were severely impacted by the Great Recession. The average millennial lost about 13% of their earnings, according to Kevin Rinz, Census Bureau economist. Additionally, due to this recession, Gen Z (born from 1997 to 2012) lost 9% of its earnings. Even still, these generations have vastly different financial priorities — from how much they’re willing to spend to what they look for in brands.
Millennials Value Sustainability More Than Gen Z
With more time to build wealth and acclimate to rocky economic climates, it’s no surprise millennials are willing to spend a little more for more sustainable products. According to a 2020 Institute for Business Value study, 79% of millennials cite sustainability as important to them.
In the past decade, more and more companies have focused on sustainability. Skincare companies might label products as “clean” or composed of environmentally sustainable ingredients. Clothing companies might advertise that they pay their warehouse employees a living wage and ship their products in eco-friendly packaging. Millennials value this as consumers, but Gen Z is not far behind; 75% of Gen Zers see sustainability as important when making a purchase.
Millennials Will Pay More for a Great Customer Experience
Alongside millennials’ prioritization of sustainability, this generation is also willing to pay more for a great customer experience. In fact, a whopping 75% of millennials are willing to spend more for exceptional customer service, according to The Fulfillmment Lab. This compares to just 69% of Gen Z who feel the same.
Gen Z Will Switch To Lower Price Alternatives
Gen Z is a very spending-conscious generation. When shopping, 73% of millennials are not willing to exchange an item for a lower-priced alternative; however, only 62% of Gen Z are not willing to exchange, according to The Fulfillment Lab.
This could be a product of Gen Z’s relative lack of wealth (more of which comes with age), but also their savviness at online shopping and price comparison, being the first generation of digital natives.
Gen Z Is Looking For Authenticity
Due to growing up in the digital age, Gen Z is very familiar with people and brands being called out for scamming customers and not staying true to their word. If there is one thing Gen Z is prioritizing when spending, it’s putting their money toward transparent and honest brands.
This generation looks for brands that have a large, constant and reliable online presence, and likes seeing ‘behind the scenes’ of companies. A 2021 Consumer Research Report by Data Axle found that 63% of Gen Zers want to feel connected to the brand they are supporting over social media, and 42% of Gen Z find a brand’s reputation important when it comes to whether or not they will support that brand.
Gen Z displays the highest engagement with brands on social media and is the generation that values brand reputation the most.
How Are Gen Z and Millennials Spending Similarly?
With the pandemic still fresh in both generations’ minds, Gen Z and millennials do more online shopping than ever before.
A 2020 survey by Kibo for Business Wire found that 30% of Gen Z and 36% of millennials plan to shop in physical stores less than before. The survey also revealed that 55% of millennials choose to shop online because of the convenience of the shopping experience. Additionally, 51% of Gen Z stated that price comparison was their main reason for shopping online.
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