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06/11/2021

A Keen Understanding of Gen Z Is Critical for Businesses Seeking Growth

This generation values discovery, authenticity and connection.
Generation Z

CHICAGO — Generation Z is a new, powerful generation of shoppers that currently accounts for 20 percent of all U.S. consumers and $143 billion of direct buying power.

To help marketers prepare to win with this cohort, IRI teamed with The Female Quotient, an organization advancing equality in the workplace through cross-industry collaboration, to publish "Understand Me, Don't Define Me," a new white paper with insights and recommendations.

"Gen Z presents tremendous opportunities for brands and retailers, but these digitally native, fiercely independent consumers approach shopping with very different expectations than prior generations," said Lynne Gillis, principal, survey and segmentation practice, IRI. "Gen Z expects brands to be authentic and understand them as unique individuals to earn their dollars. It's a challenge to build loyalty among a generation whose digital prowess enables them to constantly discover and experiment, and who value the freedom to continually reinvent themselves. To win, brands must understand Gen Z's fluid needs and motivations, develop authentic, purpose-driven brand messages and prioritize connecting with shoppers on the digital platforms — like TikTok, Snap and YouTube — that most influence them."

The white paper includes specific insights from an in-depth study of the performance of eight New Product Pacesetter brands among Gen Z versus other generations, based on IRI purchase data and supported by a robust quantitative survey.

"Across the brand we examined, those that connect with Gen Z drive, on average, 14 times greater dollar growth opportunity than that seen for other generations, underscoring how critical a keen understanding of Gen Z is for businesses seeking growth," added Jennifer Pelino, executive vice president, IRI Media Center of Excellence. "Our study leveraged IRI's unparalleled, omnichannel purchase data assets alongside research from our partners at The Female Quotient and Influential, because mixing qualitative and quantitative data is key to gleaning actionable insights about a population that does not want to be defined."

Key highlights for marketers include:

Think Discovery, Not Loyalty Discovery has an outsized role in shaping Gen Z's brand and shopping experiences as they begin their lifetime journey of shopping. Marketers who are sensitive to the enjoyment that stems from the process of discovery are more likely to capture their attention, as more than half of Gen Zers say they love to try different brands, compared to just 35 percent who say they are brand loyal and when they find something they like, they stick with it.

Connections and Influences Connecting through social media and sharing product discoveries is a powerful part of this generation's path to purchase. Fifty-nine percent of Gen Z shoppers say organic recommendations from family and friends are more likely to influence an actual purchase than any other way that they may learn about a product or brand.

Gender in Marketing Representations of gender have a minimal impact in driving choice for Gen Z shoppers, as just 13 percent of female-presenting Gen Z respondents aged 17-23 said that, everything else being equal, they would buy a gender-neutral product over a gender-specific product. Qualitatively, Gen Z respondents consistently said that a focus on gender neutrality or fluidity, unless authentically a part of the brand's essence, would not resonate with them in a way that drove purchasing.

"Our research shows overwhelmingly that Gen Z is looking for brands that take the time to get to know them, and embrace the continuous evolution in their preferences," said Janis Gilman, head of research at The Female Quotient. "In continuing our research — both qualitative and quantitative, in partnership with IRI — we can enable brands to anticipate, respond to, and innovate on the needs of this powerful new generation, while serving our mission of promoting equality and authentic change that Gen Z so deeply embraces."

The full white paper is available for download here.