Generation Z Takes the Lead with Buying Power Driven by Positive, Sustainable and Honest Values
The new generation is here. Generation Z, made up of those born between 1996 and 2015, is hitting the workforce, bringing with them a passion centered around advocacy and positive change. Corporations are taking note, not only because the generation is becoming a vital part of the workforce, but because their collective buying power is more than $140 million, making the group the fastest-growing consumer segment. And Gen Z has a unique set of purchasing values in mind when they make decisions about where to work and who to buy from – they want companies to use their power to push for environmental change, human rights, and diversity and inclusion. Honesty and transparency are top priority. It’s now a fact: Gen Z overwhelmingly makes purchases based on personal, social, and environmental values and principles.
By 2023, Gen Z will be the largest generational segment, making up more than 40 percent of the world’s population. Their willingness to act on their values is pushing companies to scale up their sustainable and human rights initiatives. Sixty-two percent of the generation says they would rather buy sustainable. Further, the majority of Generation Z (54 percent) state that they are willing to spend an incremental 10 percent or more on sustainable products, with 50 percent of Millennials saying the same. This compares to 34 percent of Generation X and 23 percent of Baby Boomers. It appears that with every generation, the desire to buy sustainable has increased, a fact that translates into sales. There was a remarkable 50 percent growth in sales among consumer packaged goods between 2013 and 2018, the bulk of which came from sustainability-marketed products, despite the fact such goods account for just under 17 percent of the market. Additionally, Gen Z wants companies to go much further than just checking a sustainability box. They want to spend their money to strongly support upcycling, resale, and consignment (including models like those adopted by companies such as Poshmark and Tradesy) and peer-to-peer marketplaces. There’s no budging on this: 93 percent of Gen Z believes brands have an obligation to take a stand on environmental issues.
In addition to supporting positive changes to the environment, Gen Z is making its voice known when it comes to human rights and diversity. Workers’ health and safety, as well as working conditions, are important. Diversity, equity, and inclusion is an additional core belief. LGBTQ acceptance, equal pay and actionable diversity initiatives are just some examples of what Gen Z wants companies to incorporate as fair opportunities for all.
But above all else, Gen Z expects the truth and transparency from companies regarding their record and practices in all of these areas. In fact, brand loyalty and trust are key parts of Gen Z’s decision-making before buying a product. This is a worldwide trend indicating that brands that are known for environmental stewardship, social responsibility, and honesty among today’s youngest consumers are growing their market share significantly through this consumer loyalty.
New Gen Z organizations, such as the non-profit Voyagers, are taking the lead to ensure these principles become the norm for companies. Voyagers’ goal is to foster relationships between sustainable businesses and youth voices, creating what they call “forcible youth-led change in the world of business sustainability.” Co-founded by University of Michigan Ross School of Business freshman Isabel LoDuca and Chicago teenager Devishi Jha, Voyagers is already having an impact. Their Ambassadors program is an energetic youth coalition dedicated to a sustainable future, leading with clarity on what Gen Z consumers want.
Since its launch in the fall of 2020, Voyagers’ platform of youth voices has worked together to hold campaigns to rally supporters, share and promote their sustainability journey stories and gain irreplaceable Gen Z consumer insights. Using market research, Voyageurs developed its own set of pillars: a value system that Gen Z would like companies to refer to when making future business decisions. “We’re done with Fake News,” they explained, making honesty the first pillar. An obligation to take a stand on environmental issues is the second, followed by DEI (diversity, equity and inclusion) and human rights.It’s clear there’s a seismic shift in the way consumers do business. Ideologies have changed amongst generations and firms have started to incorporate these more relevant philosophies in their brand representation. With Gen Z at the helm, corporations are trending toward a business model built on authenticity, honesty, respect and sustainability in order to do big – and better – business for all.