Gen Z is projected to become the largest, wealthiest generation, according to report
The digital age is transforming the cohort.
Gen Z — those born between 1997 and 2012 — will soon become the wealthiest generation ever, according to a recent report.
The "Spend Z" report from NielsenIQ projects that Gen Z will have the fastest growth in spending power, reaching an estimated $12 trillion by 2030 and overtaking baby boomer spending by 2029.
"The most prolific or significant thing that we noticed as we did our research ... was that Gen Z is ahead of other generations for where they were," Marta Bowles, NielsenIQ chief communications officer and head of marketing in North America, told Yahoo Finance (video above).
For example, the average 25-year-old earns an annual salary of $40,000, higher than all other generations when they were the same age. The higher incomes have resulted in bigger spending habits from Gen Zers.
Gen Z is the “most valuable generation for brands to attract,” Jason Dorsey, Gen Z expert and president at the Center for Generational Kinetics, a generational research and strategy firm, told Yahoo Finance. "They have the greatest lifetime value."
According to the NielsenIQ findings, per capita Gen Z spending is estimated to grow at a compound annual growth rate of 4.02% over the next decade, "exactly twice the speed of previous generations."
“A 25-year-old is spending exponentially more than what a Gen Xer was spending," Bowles said. "That only is going to increase over time."
The fact that Gen Z is "the first digitally native generation," at least according to Bowles, is a key part of it.
Younger consumers use social media to research brands and inform themselves before physically purchasing items in stores. The biggest products for Gen Z on social media are in the health and beauty categories, with 81% of TikTok dollar sales in 2024 projected to come from the two industries.
"I think social media has been a big game changer for beauty in general," Canaccord Genuity managing director Susan Anderson previously told Yahoo Finance.
The report found Gen Z consumers name online reviews as their most important factor when shopping, whether that review is posted directly on a product's website or on a social media platform by an influencer or peer.
"They're used to operating in an omnichannel environment," Bowles said. "They expect brands to always be omnipresent."
For brands, "it’s maybe the most important time ever" to understand Gen Z, Dorsey said.
Yet even though Gen Z is the most digital generation, they are still just as likely to shop in stores. According to Dorsey, it's because Gen Z wants a “hybrid strategy."
“They want to have a digital experience in a physical location," he said, explaining that there's still "a real desire to go inside" for shopping, whether for makeup, apparel, etc.
“It’s a massive missed opportunity if you don’t have both," Dorsey added.
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