Move over, Baby Boomers. When it comes to making high-end purchases, the younger generations are taking over. Gen Xers are the number one buyers of Gucci today, and while Millennials are also a dominant demographic, Gen Zers showed the largest buyer growth (33%) year over year in luxury resale in 2021.
These younger generations have a spending power that is significant, pointing to huge opportunities for retailers. Millennials have the most spending power today of any age cohort outside of Gen X, consuming $61,000 on average per person. Gen Zers have also been underestimated, with prior estimates putting their total spending power at $143 billion. But new data has revealed that Gen Z’s disposable income has reached an estimated $360 billion. Retailers are taking note, but there’s still a lot to learn about the ascendant generations, who are paying and shopping in new ways.
Gen Zers are more likely to shop online for things other than necessities. And they shop via online marketplaces more than other generations, according to Oliver Wyman.
Gen Zers and Millennials don’t make buying decisions lightly. They check out brands on social media to decide what to buy, and are more attuned to social issues related to each brand. In fact, the rate at which they peruse social media before purchasing is substantially higher for Gen Z (84%) and Millennials (78%) than the general population.
Alternative payment fans
Nearly a fourth (24%) of Gen Zers pay with Buy Now, Pay Later (BNPL) programs as a smart alternative to avoid revolving debt on a credit card, boosting their purchasing power by splitting up payments over several months with no interest.
For retailers, BNPL offers an opportunity to tap into the ascendant generations. But it also offers the potential to attract shoppers outside these age brackets – in particular, consumers who crave flexibility. Klarna data reveals that 84% of US luxury shoppers find it helpful to pay for high-end items over time, without interest or extra cost.
Tips for merchants
Customer data clearly demonstrates that BNPL can drive consumer loyalty by enhancing customer purchasing power. What’s more, Oliver Wyman research shows this alternative payment method enables merchants to increase customer touch points and offer an experience in-line with the preferences of Millennial and Gen Z audiences who look for the payment method for larger purchases.
Citcon’s global payments platform creates a smoother customer buying experience by connecting online and in-store merchants with Klarna – and 150+ preferred payment methods – through one integration and a single reconciliation.