According to the recent Spend Z report from NielsenIQ, the purchasing power of Gen Z is expected to reach $12T by 2030, outpacing Boomer spending. By that same year, more than 64% of all new births will be to Gen Z mothers, making them a dominant force in the important consumer segment of Families with young kids.

For brands and retailers, the 12 trillion-dollar question therefore is: how do we connect with this new must-win audience? The answer lies in recognizing that many of the truths about marketing and sales do not apply to Gen Z in the same way as they did to Gen Y and Gen X.

1. ‘Change the channel’ on channels

Unlike their predecessors, Gen Z does not stay within defined linear media or sales channels. In fact, they rarely think in terms of channels at all. To them, channels are an industry construct. Gen Z shoppers don’t distinguish between stores and screens or apps and ads. These are all just various touchpoints, physical and digital, in what they perceive as a fluid, connected commerce experience.

For Gen Z, more than any other generation before, retail is media and media is retail. The sooner organizations let go of pre-conceived notions about channels, and even the concept of channels altogether, the faster they can start capitalizing on the potential of Gen Z.  

2. ‘Win the pre-shop’ ≥ ‘Winning the shelf‘

So where – in this non-linear connected commerce world – should brands be focused on to win these new high-value consumers?

For Gen X, and indeed many Gen Y consumers, the customer journey still kicks into high gear in the store itself—when you see the physical product, on a display or as part of a promotion— and it triggers a response based on latent brand messaging.

For Gen Z, that bite point is often much earlier in their journey—in the pre-shop phase—before they get near a physical or digital shelf. Perhaps more aptly, shoppers are not so much biting as nibbling in a great many places: search platforms (including their gen AI-prompt bolt-ons such as Copilot or Gemini), social media networks, retail apps, intermediary apps like Instacart, etc., as well as traditional media.

In the highly competitive consumer goods industry, the new scarce resource is not shelf space but mind space—and with every digital touchpoint being a potential point of pre-order, success is more and more about triggering, and capturing, a purchase decision at the point of desire/need.

This is evidenced in the fact that nearly half of Gen Z consumers (46%) have purchased a product via social media platforms. And about the same amount (45%) have bought products from an influencer or celebrity brand in the past year, according to our latest consumer research from the Capgemini Research Institute.

You can also see this in who is winning among CPG brands and retailers. In this new era of connected commerce, winning the pre-shop is how leaders are made. For instance, Aldi in the U.S. has an incredible $2B in sales going through the Instacart app alone.

3. Same needs, new expectations

Gen Z are not a new species, although you would be forgiven for thinking so given some of the sensationalism that surrounds their imminent emergence as a dominant force in the workplace and consumer landscape. 

They have the same needs for shelter, food, security, harmony, socialization, and self-actualization as all previous generations. What is different – and this is shaped by the fact that they are the first generation to be brought up entirely within the digital age – is their expectations about how they satisfy these needs.

Practically every aspect of their purchase decision journey is shaped by their warm embrace of data and digital touchpoints to add utility to their lives. They are more willing than Gen Y and Gen X to trade their data for a value exchange of more personalized content, offers, and fulfillment options. They are more likely to build their consideration set online, and to advocate on product performance or retailer delivery performance than any of the previous generations.

Perhaps the ultimate expression of this is the speed with which Gen Z have adopted Gen AI tools for shopping. According to our most recent consumer trends tracker, 56% of Gen Z shoppers and 61% of millennials believe that generative AI tools improve their user experience, as compared to 52% of Gen X and 43% of Boomers.

This improved customer experience takes two forms:

1. Automating routine replenishment of essentials
2. Adding value to the shopper experience to ensure better outcomes

4. Value ahead of values: Closing the think-do gap

Our research revealed that the majority of consumers maintain a consistent demand for sustainable products, especially Gen Z. It also confirmed what they value most is time and freedom—and what they want from a shopping experience is convenience, affordability and social awareness.

This throws up some intriguing contradictions. The evidence points to the ability of Gen Z to absolutely hold all these values to be true but not of equal consideration in their purchasing behavior. In particular, as much as Gen Z say they value sustainability, it is clear from behavioral data, that convenience and price come first in their purchasing decisions.

This sustainability “think-do gap”—the difference between sentiment and action—poses a big problem to brand owners and retailers alike who are trying to do the right thing as sustainability often comes at the expense of convenience, as well as adding an on-cost to price.  

The obvious solution, if not the easiest solution for brands and retailers, is to remove the trade-off and, with it, the dilemma away from the consumer. Instead of forcing the shopper to make a choice between convenience and the planet, bake sustainability into a fairly-costed solution that preserves convenience in form, function and fulfilment for the consumer.

One of the brands to successfully adopt more sustainable practices while avoiding trade-offs in terms of price or convenience is IKEA. They have enhanced their sustainability credentials in parallel (rather than in compromise) through increased use of renewable materials, a shift to 100% renewable electricity in factories, and eliminating print copies of their catalog. With these changes, IKEA is enabling all consumers, but especially reassuring Gen Z consumers, that with IKEA they can make sustainable choices they are proud of.

Forging a new connection with Gen Z and beyond

Gen Z is the vanguard of a new digital-first era—a new Connected Commerce era. Already Generation Alpha are entering their teens and queueing up to take their place in 2035.  Generation Beta (sic!) are unlikely to be the throwback their name suggests. 

The time for brands and retailers to let go of old “certainties” and lean into this change is now, because the lead time to equip yourself with the data and technology platforms required to succeed is at most 2-3 years – and that’s on top of whatever investments your organization has made to date.