What Do Gen Z’s Buying Habits Mean For The Future Of Retail and E-Commerce?

Gen Z represents a huge revenue opportunity for online retailers and e-commerce brands - but this unique generation also represents a significant challenge for these same companies.

Although Gen Z makes up around one-third of the global population, many businesses are struggling to connect with them through traditional channels. This generation carry strong views on sustainability, finance, politics, and personal health.

And while there are some core similarities between Gen Z and millennials, there are also some major differences that need to be acknowledged. If companies want to unlock the full revenue potential of Gen Z, they need to adapt their strategies accordingly.

So what specifically makes Gen Z so unique in its behaviours and beliefs? And how can retail brands adapt their approaches to access the spending power of these consumers?

Let’s take a closer look at Gen Z’s buying habits and assess how they might shape the future of retail and e-commerce.

Technology

Gen Z has grown up with instant access to the internet, which has had a massive impact on its shopping habits. Many Gen Z consumers automatically turn to social media websites like Pinterest and TikTok for shopping inspiration, rather than relying exclusively on in-store experiences.

But social media isn’t just about inspiration for Gen Z customers.

In fact, these channels present retailers with a very real sales opportunity - 92% of people claim that they’ve purchased products directly through Instagram, and these platforms are constantly releasing new e-commerce tools and features.

As a result, a large number of traditional brick-and-mortar stores have now been forced to strengthen their online presence to stay relevant, marketing through social media channels to reach Gen Z customers.

However, unlimited access to the internet hasn’t just changed the way that Gen Z discovers new brands. It has also dramatically increased the transparency of customer reviews.

Gen Z is full of savvy shoppers that can access thousands of online reviews through platforms like Google and Trustpilot. These consumers depend on testimonials and reviews to affirm their buying decisions and rely less on traditional word-of-mouth recommendations.

What does this mean for retailers and e-commerce businesses?

When it comes to Gen Z and technology, companies need to embrace the online world if they want to stay competitive.

Using sites like Instagram, TikTok and Google is second nature to Gen Z shoppers, so businesses need to respond accordingly.

If brands want to attract Gen Z customers, they need to be visible and active in these online environments. That means using multiple social media platforms to showcase their products, build their brand identity, and generate valuable sales.

Sustainability

Sustainability is hugely important for many Gen Z consumers, and this has a major influence on their shopping behaviours.

Gen Z often makes a deliberate effort to shop with local businesses to support the community. This generation understands the importance of small businesses and the impact that their spending has on the wider economy.

Gen Z consumers are also big advocates of sustainable shopping and are often willing to pay more for higher-quality products that are ethically manufactured. These shoppers are selective in their choice of brands, regularly avoiding corporations with a negative reputation and spending their money with B Corps or other sustainable brands.

This focus on sustainability has also led to an explosion in the popularity of pre-owned marketplaces. Platforms like Depop, Shpock and Vinted attract a large number of Gen Z users who are keen to avoid fast fashion and purchase pre-loved items.

But the pre-owned phenomenon isn’t just limited to apparel. Many customers are now also buying pre-owned furniture, and reports predict that this trend will “help the furniture resale industry to increase by 70% by 2025”.

What does this mean for retailers and e-commerce businesses?

If retailers want to connect with Gen Z, they’ll need to become more active in the sustainability space.

For one thing, it’s a good idea for businesses to show off their sustainability credentials, and if necessary, improve their business practices. Gen Z can instantly recognise brands that are slacking in this department, so it’s important for companies to make a genuine effort.

Companies can focus on sustainability in their external communications, but they can also pursue certifications such as B Corp to prove their commitment.

Although the B-Corp certification is difficult to achieve, it immediately highlights businesses that are prioritising sustainability and environmental protection, as well as inclusivity and progressiveness. At Harmonic, we’re delighted to have recently secured our own B Corp status and joined a growing number of businesses that uphold similar values.

Retailers can also capitalise on the popularity of pre-owned products by setting up ‘buy-back’ initiatives and exchange schemes that are likely to resonate with Gen Z.

Wellness

Wellness is one area where Gen Z has clearly started to distance itself from previous generations.

Gen Z is less interested in going out and exploring as frequently as millennials, for example. Instead, Gen Z is more invested in home spaces and the products that fill it. This generation is keen to know as much as possible about its furnishings and fabrics and is highly invested in vegan leathers and sustainable alternatives.

Gen Z also tends to spend more on health and wellness than other generations. In fact, health and wellness is the second highest spend category for Gen Z shoppers, after fashion and clothing.

These consumers are happy to spend their money on health products, from organic foods to vitamin supplements. Gen Z also has instant access to a huge amount of fitness and nutrition content online, which helps individuals to understand more about physical well-being.

What does this mean for retailers and e-commerce businesses?

Businesses should acknowledge the key differences between Gen Z and previous generations if they want to keep these shoppers engaged.

For example, while millennials were historically more interested in socialising, Gen Z has shown itself to care more about personal health and fitness. Gen Z is a very unique group with distinct behaviours, and companies need to recognise this to succeed.

Gen Z is also keen to purchase products that are shown to be vegan or eco-friendly. Businesses should make an effort to highlight the origin or source of their products, and if they can offer sustainable alternatives to traditional items, even better.

Gen Z is a valuable audience for any business to win over. But in order to attract these customers, brands need to tailor their strategy around specific Gen Z behaviours.

Firstly, embracing the world of online shopping is pretty much compulsory for modern businesses. Gen Z is using social media platforms to research, discover, and purchase from multiple brands - if companies want to succeed, they’ll need to establish a strong online presence.

Secondly, companies should focus on proving their sustainability credentials. However, empty promises and surface-level PR stunts will quickly be sniffed out by Gen Z, so businesses need to ensure that they’re making a genuine effort to improve.

Finally, product transparency and authenticity are key. Gen Z wants to understand more about where its products are coming from, and how they’re being made, so companies will need to be open about their materials, ingredients, and manufacturing processes.