By Chris Beer, Data Journalist at GWI
Gen Z and millennials have a significant impact on global consumer sales. These groups possess strong purchasing power. Our own research shows that more than two in five (41%) of Gen Z and millennials are now making impulse purchases at least once every 2-3 weeks, which presents a significant opportunity for retail brands. So how can brands best engage with these consumers? The key is to understand changing consumer spending habits and what’s driving their purchases.
Understanding the shift in purchase patterns
There is a lot impacting consumers right now. The continued cost of living crisis is certainly front of mind for many, but despite this, our research shows that impulse spending isn’t going away.
Particularly in the UK, consumers are considered the most spontaneous globally when it comes to impulse purchases. For instance, in the first half of 2023, there was an 18% rise in personal items purchased ‘on a whim’ in the UK across all groups against those who initially planned to do so (33%), compared to only 3% globally.
The gap between planned and impulsive purchases presents an opportunity for retailers and brands. For campaigns to be most effective, it’s important for marketers to understand which audiences are most predisposed to make spontaneous purchases.
We can see Gen Z and millennials are driving this behaviour, with the former being 51% more likely than the average consumer to make impulse purchases online at least every two to three weeks. Further still, millennials are 27% more likely than the average impulse buyer to make ‘spur of the moment’ purchase decisions.
For brands to reach these impulsive consumers, they need to uncover what’s motivating their purchase decisions.
So, why do consumers impulse buy?
Our insights show half (51%) of Gen Z and millennials are making impulse purchases to treat or reward themselves. While this behaviour may not seem the most financially prudent in the current economic climate, when you factor in the psychological reasoning it makes more sense. The pursuit of happiness is underpinning spending decisions among these younger generations, with many opting to make purchases to boost their mood.
With the cost-of-living crisis in full swing, we can see that emotional spending is on the rise. Consumers are making purchases to feel better about the situation and ease their own concerns.
Less than half of Gen Z and millennials currently own a home, and 15% of UK millennials still live with their parents. But one benefit for those living at home is saving on high rental costs. This in turn means they have more disposable income, despite the current economic conditions.
Social media’s influence on young consumers
The way we search for products and brands is changing. Rather than looking for specific products online, discovery is happening more naturally, and social media is a huge driver. Social media has become increasingly important for brand discovery. In fact, 94% of consumers engage with social platforms at least monthly.
Purchases made using social media are becoming more desirable amongst both Gen Z and millennial consumers in the UK. Some of Gen Z and millennials’ main reasons for impulse buying include using the “buy” button on social ads, and they are also 83% more likely than the average impulse buyer to make spontaneous purchases based on recommendations from celebrities or influencers.
This is also reflected in emerging social media trends. On TikTok, recent trends like ‘girl math’ and ‘dopamine decor’ are rising in popularity amongst Gen Z and millennials; whereby creators share relatable content explaining their spending choices to make them feel happier.
Brands need to stay ahead of what is culturally relevant to their audience, using these insights to create timely inspirational content and drive more engaging social commerce campaigns.
How brands can stay on top of ever-changing consumer habits
It’s important for brands to understand the motivations behind the purchases to resonate with their target consumers. Whether through harnessing social media trends or altering brand messaging to reflect consumer sentiment, they must engage with potential customers in an authentic approach.
Understanding the buying attitudes and beliefs of consumers can help retailers improve the shopping experience of their customers and, ultimately, enable them to increase sales.