From Home Furnishing Business
Statistically Speaking: Get Ready for Generation Z – the iGeneration
During the next five years, over 20 million consumers tagged as Generation Z will pour into young-adult status with the leading edge surpassing the age of 21 this year. Studies suggest they are self-confident and more traditional and pragmatic than older Millennials, and will demand total integration in their shopping experiences.
It has sometimes been said that America gets the generation it needs when it needs it the most. During the next five years, over 20 million consumers tagged as Generation Z will pour into young-adult status with the leading edge surpassing the age of 21 this year, graduating from college and entering the workforce. Studies suggest they are self-confident and more traditional and pragmatic than older Millennials, and will demand total integration in their shopping experiences. They are tired of hearing about all of society’s problems. They get it and believe they are the generation to fix it.
The total wave of approximately 66 million Gen Zers will continue for 16 years. Much has already been studied and surveyed about these consumers who have never known a world without the internet or smartphones. Here’s what we know so far.
How big is Generation Z?
Researchers have been non-committal in defining the actual end of the Millennials and the beginning of Generation Z (also being called the iGeneration or iGen), but recently the generational research giant Pew Research Center has defined this cohort as being born between 1997 and 2012, a period of 16 years, matching the year span of Millennials and Gen Xers. Based on current estimates from the U.S. Census Bureau, Generation Z is currently about eight percent smaller than Millennials and roughly two percent larger than the older Gen Xers, who are predominantly their parents (Figure 1). The impact of future immigration will swell their ranks further.
As shown in Table A, Generation Z is the most ethnically diverse of all the generations preceding it. Forty-eight percent of 6 to 21-year-olds in 2018 (Generation Z) are non-white, significantly more compared to 39 percent of Millennials in 2002, 30 percent of Gen Xers in 1986 and 18 percent of Early Boomers in 1968. As immigration continues to impact Gen Z, they are projected to become even more ethnically diverse falling below 50 percent white in the future. Because of this diverseness, early indications show they are they less judgmental and more accepting of cultural differences.
College Enrollment and Early Employment
On their way to being the most college educated, Generation Z has the highest percent of 18 to 20-year-olds enrolled in college among those no longer in high school – at 59 percent in 2017 (Table B). Millennials in 2002 were the first generation to reach over half (53 percent) of young adults in college – up from 44 percent of Gen Xers in 1986.
Generation Z will enter the workforce with the least job experience of any cohort (Table C). Only 19 percent of Gen Z teens 15 to 17-year-olds in 2018 were employed full or part time during the previous year compared to 30 percent of Millennials the same ages in 2002 and 41 percent in Gen Xers in 1986. Numbers are also lower for Generation Z 18 to 21-year-olds with only 58 percent holding a job in 2018, compared to 72 percent and 78 percent of Millennials and Gen Xers, respectively.
Although many Gen Zers have not been in the workplace, numerous studies indicate they have an advantage over older Millennials. According to Dan Schawel, founder of Millennial Branding, “They (Gen Z) appear to be more realistic instead of optimistic, are likely to be more career-minded, and can quickly adapt to new technology to work more effectively.” He adds, “they come to the workplace better prepared, less entitled and more equipped to succeed.”
Coinciding with college education, many in Generation Z are born to more affluent families with parents having relatively higher education than previous generations. Expressed in constant 2017 dollars, Generation Z ages 6 to 21 in 2018 lived in households with an average income of $63,700 – 2.1 percent higher than Millennials in 2002 (Figure 2). In 1986, Gen Xers lived in households with an average income of $52,800 – 20.6 percent below today’s Generation Z.
Media and Shopping Preferences
Because the internet/smartphones and brick and mortar shopping have always been a part of the fabric of Generation Z, it has never been an either/or experience, but rather the two meld together. Smartphones serve as support for the brick and mortar shopping experience, not a competition to it.
Gen Z are “more traditional shoppers than Millennials,” said Katherine Cullen, director of retail and consumer insights for NRF. “They are killing the idea that online and offline are separate.” It will be interesting to see as these young Gen Zers age into personal credit cards if their shopping habits move more online.
According to Brandon Pierce at SPS Commerce, the previous generation of Millennials “is accused of killing this or that industry (also television sitcoms, traditional sit-down dinner dates, golf and of course, retail shopping at malls and stores). In reality, they’re only disrupting the way things have been. They still buy the products they want, consume media like movies and shows, buy groceries and eat food from restaurants. They just prefer to go about it differently. It’s a matter of needing to change old, traditional ways of marketing and selling to keep up with a younger generation’s preferred way of living. Basically Generation Z is going to be an intensified version of the Millennial tidal wave of change.”
Studies and surveys are being published almost monthly, detailing how young Gen Zers currently shop. As shown in Table D, currently 98 percent of Gen Zers prefer to shop in brick and mortar stores, while almost half (46 percent) research items on smartphones before making in-store purchases. 60 percent prefer the mall to shopping – likely due to socialization and inability for younger teens to drive to multiple retail locations. 70 percent influence family decisions regarding items such as furniture, household goods, and food and beverage.
In a survey by the IBM Institute for Business Value, “Uniquely Gen Z,” Gen Zers were questioned on items most purchased themselves and purchases by their parents they heavily influenced (Table E). The top purchased items by Gen Zers are clothes and shoes, books and music, apps and toys and games – over 50% of respondents choosing these items. While a low amount actually bought furniture themselves (15 percent), 76 percent responded that they have influenced parents on furniture purchases.
With the influx of Millennials, many brick and mortar stores strengthened online capabilities. Now arrives Generation Z demanding a fully integrated shopping experience forcing internet-only companies to turn toward brick and mortar options.