Fast Company: Gen Z spends less money but shops at more stores. New research explains why

Younger shoppers are putting more of their everyday spending toward restaurants, fitness, and entertainment while showing less loyalty to traditional brands, a new report finds.

They’re far more likely to take taxis or rideshares and drop some money gambling or in prediction markets, but they also use coupons and rely heavily on public transportation. Welcome to the somewhat confounding spending habits of Gen Z shoppers.

As with any generation, stereotyping millions of people based on when they were born can prove to be tricky—but Gen Z is challenging some conventional assumptions about consumer loyalty and retail engagement, according to a new report released Thursday by advertising, marketing, and data technology companies Attain and Dentsu. While the report found that Gen Z shoppers spend 25% less than other generations—which may not be so surprising, given their life stage—this generation is spreading their more limited funds across 6% more merchants.

Making sense of how (and where) Gen Z spends their money is very important as this generation becomes a more dominant engine of the consumer economy. The study, which combined purchase activity with a survey, found that Gen Z is 25% more likely to value brand names than the price of an item, but they’re 18% less likely to buy from the same brands repeatedly.

Even with more limited funds to spend, Gen Z’s greater appetite for spending money on discretionary purchases and their openness to switching brands means that traditional marketing methods may need to be rethought.

“Gen Z is showing us why the traditional view of the consumer is no longer enough,” Jeff Zifrony, senior vice president of strategy at Chicago-based Attain, said in a statement. “When you can see what people actually buy across retailers and categories, you can begin to understand the full picture of consumer demand, not just the portion visible within any single platform.”

How Gen Z is Spending

As might be expected of a generation in their late-teens and 20s, Gen Z is all about having a good time and living in the present.

Americans of this generation are much more likely to spend on discretionary purchases, and 66% of their day-to-day spending goes toward goods and services like eating out, entertainment, travel, clothing, electronics, beauty, and rideshares. That’s compared with 58% of everyday spending on these categories for shoppers of all generations.

Spending on public transit, taxis and rideshares, gyms and fitness centers, casinos and betting or prediction markets, video games, and restaurants commands a disproportionately large share of their money, the study found. By contrast, groceries in particular take up a much smaller share of Gen Zers’ wallets, even though they’re as likely as anyone to buy groceries.

For a generation that’s only ever known many of the conveniences of modern life, Gen Zers are more likely to prioritize saving time or one-stop shopping rather than getting a deal on a regularly priced item or saving on everyday low prices. And yet, Gen Z shoppers are 7% more likely than the general population to use coupons.

Making sense of some of the spending habits of Gen Z could help brands to rethink how they’ll compete for their dollars in the future, according to Aisha Khan, head of retail and commerce at Dentsu North America.

“Gen Z’s fragmented spending behavior requires brands to connect audience understanding, media planning and buying, commerce, and measurement rather than treating them as separate disciplines,” Khan said in a statement.

By: Anna-Louise Jackson