What makes Generation Z so different

What a difference a few years makes. When we first started delving into the buying habits of Gen Z and Millennials, we found Gen Z to be pragmatic, focused on saving money, and wanting brands to constantly innovate. Millennials, on the other hand, were idealistic, willing to pay more for experiences, and committed to their favorite brands. 

But shutting down the world for two years has given us, and them, a new perspective. Their differences are no longer as clear cut, although they still diverge in some shopping habits. For brands and retailers, understanding the nuances and personality quirks of each generation is part of the fun — and part of the challenge.

First, let’s cover some basics.

What is the Millennial age range?

We’re defining Millennials as those born between 1981–1997. This means that in 2022, Millennials are 25 to 41 years old.

What is the Generation Z age range?

Members of Gen Z are those born between 1997 and 2015. In 2022, Gen Z is 7 to 25 years old. It’s important to keep in mind that more than half of this generation is still in grade or high school and living at home, while many are away at college. It will be interesting to see how their preferences and shopping habits evolve when the entire group is earning and spending its own money.

While 27% of Millennials are buying more private-label products to save money, only 13% of Gen Z does so.

Millennials vs. Gen Z: How are these generations different?

Millennials and Generation Z are different in how they shop, interact with brands, and view money.

Gen Z is spending less than Millennials, and they save in different ways 

Inflation has impacted the shopping behaviors of both Millennials and Gen Z. Our recent research found that 30% of Gen Z and 27% of Millennials were buying much less due to inflation.

But while 27% of Millennials are buying more private-label products to save money,  only 13% of Gen Z does so. Millennials also are turning to discount retailers (26%) more often than Gen Z (22%). This makes sense because more Millennials have families than do Gen Z’ers. Millennials are choosing these options as a way to cut down on their grocery bills, which are rising steadily due to inflation. 

Given that most Gen Z’ers haven’t formed households yet, we see them saving money on non-discretionary items. Due to inflation, 22% of them are buying more secondhand products rather than buying new products, as compared to 19% of Millennials. And to pay for their purchases, 18% of Gen Z are using buy-now-pay later while only 15% of Millennials are turning to this payment option with greater frequency.

Both shop online – but Millennials like in-store purchases for instant gratification

Millennials are avid online shoppers. They watched the world go from AOL dial-up to always-on connectivity, and they take advantage of this convenience at every turn. However, they still shop in stores more often than Gen Z.

48% of Millennials visit stores to get merchandise immediately compared to 39% of Gen Z.

Why? Millennials like in-store shopping for its immediacy. According to Salesforce’s Connected Shopper report, 48% of Millennials said that one of their primary reasons to visit a store is to get merchandise immediately rather than wait for delivery, as compared to 39% of Gen Z. 

The need for quick trips to a store is underscored by their use of buy-online-pickup-in-store, as 66% of Millennials have used it compared to 52% of Gen Z. A retailer catering to Millennials needs to have easy in-store fulfillment options as well as seamless checkout and a thoughtful store layout that makes products easy to find. For Millennials, picking up a much-needed item at Target while on the way to pick up the kids at school may often be the fastest and cheapest option.

76% of Gen Z prefer convenience over brand compared to 70% of Millennials.

For Gen Z, convenience is all about fast delivery

But when it comes to home delivery of groceries, Gen Z wants their stuff now. They grew up alongside the on-demand economy. Uber, Lyft, Instacart, UberEats, and DoorDash were founded around 2010, and Gen Z favorite GoPuff, which promises delivery in less than 30 minutes, arrived in 2013.

It’s not surprising, then, that 76% of Gen Z prefer convenience over brand compared to 70% of Millennials. According to Salesforce research, 27% of Gen Z prefer to have their groceries delivered within an hour, and 23% want their alcohol within that same timeframe. This drops to 12% and 11%, respectively, for Millennials. 

Gen Z enjoys social shopping, while Millennials are more traditional

Gen Z was practically born with tablets in hand, and they’re comfortable shopping through non-traditional digital channels. Gen Z enjoys social shopping, with 64% using Instagram, Facebook, and other platforms to browse and make purchases, and 41% shopping through social influencers. Millennials are less enthusiastic about these channels, with 58% social shopping and just 32% shopping through influencers. 

Gen Z prefers fee-based loyalty programs, Millennials earn points

Loyalty programs aren’t a big draw for Gen Z, with only 45% enrolled. This could offer future opportunities to brands and retailers, as long as the programs they develop are easy to understand and use. Simpler terms and conditions were favored by 48% of Gen Z, and 57% said they could be persuaded to join loyalty programs if rewards were automatically applied. Additionally, 55% would prefer rewards be applied to multiple brands rather than having separate loyalty programs for each brand. And 62% said they were more likely to join a loyalty program if the rewards were personalized.

61% of Millennials belong to loyalty programs, while just 45% of Gen Z have enrolled.

Millennials show more interest in loyalty programs, however, with 61% claiming membership in at least one. Like their Gen Z counterparts, they are more likely to join if rewards are personalized (60%) and automatically applied (61%). 

Preferences for program types are more distinct, though. For Gen Z, 65% prefer programs where they earn points for purchases, while 46% like to earn cash back. But 78% of Millennials love to earn points. They like cash back as well, with 53% saying they’d join for that reward. Interestingly, 27% of budget-conscious Gen Z were willing to join a fee-based program, where they pay for a higher level of perks, while only 21% of Millennials were willing to do so. 

Are Gen Z shoppers less loyal?

Millennials have favorite brands and they’re not afraid to show it. Around 70% trust companies to meet their changing needs and expectations. That could be because 69% of them feel an emotional connection to the brands they buy.

Just 54% of Gen Z expect brands to always personalize offers, compared to 63% of Millennials.

A whopping 79% expect brands to understand their expectations and 68% expect companies to anticipate their needs. They believe brand loyalty is a two-way street, with 63% expecting brands to always personalize their offers. 

Just 63% of Gen Z feel emotionally connected to the brands they buy. Only 70% expect brands to understand their unique needs and expectations and just 54% expect offers to always be personalized. 

Selling across the generations

Despite all the “Millennials vs. Gen Z” discussion, brands still need to build greater trust with both generations. How? By using data to understand what matters most to them, then personalizing offerings that meet their wants and needs.

Both Millennials and Gen Z want honest and transparent communication (97% and 96% respectively) and consistency in all their interactions with a company (95% and 93%). They also have privacy concerns, with 97% of Millennials and 92% of Gen Z wanting assurances that their customer information is used responsibly. 

Finally, and most importantly, both want to be viewed as individuals, not numbers, according to 95% of Millennials and 91% of Gen Z’ers. To build a lifetime of loyalty, brands need to make every interaction custom and unique, offering both generations products, services, promotions and rewards that speak to their evolving shopping habits and innate individualism.