Experts are saying that the new normal will change consumption behaviour in the long term. As business owners, these changes can affect us. In this video, I explore how covid-19 has changed the consumption behaviour of Millennials and Generation Z.
Consumption patterns differ from one generation to another. What one generation finds valuable might not necessarily be seen as valuable by the another. That‘s because generations are raised in different circumstances.
Let‘s take a look at Millennials. Members of this generation were born from 1981 to 1996—they are people who are in the mid-20s to late 30s. They were raised at the beginning of the Internet Age, and technology was a prominent feature in their formative years. However, Generation Z, those born from 1997 to 2010, are the true digital natives, born and raised when digital technology was widely used.
Unfortunately, their formative years also coincided with crucial economic events in history: the 2008 Global Financial Crisis and the 2020 Global Covid-19 Pandemic. Both events have impacted them economically and have narrowed their economic choices, compared to the older generations, the Baby Boomers and Generation X, who have experience growing up in a relatively better economic climate.
How have these events affected their circumstances and choices?
Data shows that there is rising youth unemployment, which has particularly affected Millennials and Gen Z. In turn, this affects income and, as a result, the younger generations’ ability to build wealth. When this happens, this also pushes back the generation‘s economic milestones.
What does that mean? It means that the younger generation will marry and start a family later than their parents and grandparents. They will begin the process of home ownership, wealth accumulation, and retirement planning at a stage later than their parents or grandparents have.
These economic worries have made the Millennial generation and Generation Z one of the most stressed and anxious generations to date. From this context, we can begin to understand the choices that these generations make and how it will impact their consumption behaviour.
What do experts say are the key Millennial traits?
Growing up with technology means that Millennials are tech–savvy. Growing up during an economic crisis that saw their parents deal with lay-offs, unemployment, and massive debt, Millennials have embraced experiences over material possessions. They also value interaction, wanting to be heard, and are willing to collaborate. They are confident and will speak their minds. They demand authenticity from their everyone.
What do experts say are the key Generation Z traits?
Generation Z are the true digital natives and use technology in all aspects of their lives. They embrace individualism and are pragmatic and mindful of financial issues. They are open-minded, tolerant of differences, and are said to be the most open to diversity. They are also socially responsible and are committed to make the world a better place.
Knowing the characteristics of these 2 generations and how economic events have impacted their pre-pandemic behaviour will help you anticipate how consumption patterns will change in the years to come.
- They will spend on mostly necessities.
They will continue to be frugal, perhaps even more so. Millennials and Generation Z were born and raised during uncertain economic times. The pandemic and its economic impact affirm the need to be pragmatic and frugal.
As many cities and countries worldwide continue lockdowns, we’ll see the younger generation focus their spending on necessities and buy less of or find cheaper alternatives for transportation, leisure, recreation, and other big-ticket items.
- They will embrace virtual living.
Millennials and Generation Z are the experts in melding work and home life compared to older generations—and they will continue to set the pace in how to turn the home into a hub where people work, play, exercise, study, relax, shop, and everything else in between. This means that they will focus their spending on anything that will allow them to make their home comfortable.
- They will focus on finding a connection.
As cohorts of these generations find themselves staying home, they will crave for true and authentic interaction. They will focus on what matters: their health, their families, and society in general. Millennials and Generation Z find the connection between their personal health and keeping our planet healthy and gravitate towards brands that share those values.
What does this mean for small businesses?
By better understanding how these two generations perceive the world and their values, you will be able to better tailor your products and services to them to help them solve their challenges. If you wish to explore how you can do that, reach out to me and let‘s have a chat.