Author: Teresa Mettela (Left Leaning)
While millions of Americans are struggling through the economic depression brought on by the global pandemic, Gen Z and millennial consumers are benefiting financially. In fact, the coronavirus pandemic has turned many of our youngest generation into frugal spenders and avid savers. Since the shutdown of schools, restaurants, gyms, and clubs, a number of Gen Z and millennial consumers have started to change their spending habits. According to CNBC, this is not only a financial change, rather it reflects a greater lifestyle change that incorporates more conscious consumer spending and saving habits.
Research shows that there has been an increased savings rate among millennials and Gen Z. Since the start of the pandemic, over 16% of Gen Z and 18% of millennials began saving more for retirement. Many consumers belonging to this generation have also reported paying off credit debt and student loans with money coming from stimulus checks and unexpected savings. Interestingly, data from a Wells Fargo study shows that almost an equal number of Gen Zers and millennials have deferred saving for retirement, with 15% of Gen Z and 8% of millennials pausing contributions.
Hiba Sohail, an undergraduate student at George Washington University, has recognized this shift within her own spending habits. “During quarantine, I think I’ve started buying more from small businesses or from stores that are ethically sourced. At the same time, I’ve cut down a lot of my spending (on restaurants, fast food, etc.) and have started saving money in the process.”
Consumerism in the Digital Age
Seeing as Generation Z and millennial consumers have “grown up” in the digital age, it makes sense that they have adapted well to online shopping. It is easy to see why younger consumers are shifting their habits faster than their older counterparts.
Many marketing companies predict that the shift away from physical shopping will continue. eCommerce has grown more significantly in the past eight weeks than in the decade before that, according to SocialMediaToday. Generation Z and millennial shoppers, who have grown accustomed to digital shopping options, might actually prefer this method of shopping even after physical stores reopen.
In terms of how they spend their dollars, Gen Z and millennials are leading the shift to eCommerce. According to a study done by Boston Consulting Group, “Since the pandemic began, 33% of these consumers have increased their online spending, for a net increase of 6%, versus 23% of consumers in older generations, or a net increase of 1%.” This rapid increase in eCommerce is happening due to a shift of existing products, services, and retailers to online, and a surge in digital-only products, services, and retailers.
These statistics show Gen Z and millennial consumers favor digital shopping, but are more likely to think about where their money is going. Younger generations are seeking sustainable products and brands and are willing to pay more for them. According to Forbes, a majority (59% of Generation Z and 57% of millennials) are buying upcycled products; upcycling is the process of transforming by-products, waste materials, or unwanted products into new products of greater quality, artistic value, or environmental value. Websites such as The RealReal, ThredUp, and Poshmark are also gaining popularity among young consumers.
“A lot of young people are leaning into ethical spending,” says Bromina Rani, an undergraduate student at Stony Brook University. “We’re looking for brands and products that protect the environment, support underrepresented groups, and work well. Most of the time, if you’re buying ethically, you don’t overspend.”
Is this frugality Sustainable?
Due to the pandemic, it is unclear when stores will reopen and people are allowed back into shopping centers. So, as long as online shopping remains efficient and reliable, consumers will continue to depend on this method of shopping. Will digital platforms, however, permanently replace physical shopping once the lockdowns are over? Recent research shows that many of our younger consumers will stick to these newly developed patterns beyond the COVID-19 pandemic.
Restaurants and bars were always the go-to option for Generation Z and millennial consumers, but now that these options no longer exist, the value of low-budget activities has increased significantly – making these options popular and sustainable.
For Dehaan Rahman, a senior at City College of New York, the pandemic has given him opportunities to partake in activities that do not require excessive spending. While he has always enjoyed these activities (ex. hiking, camping, biking), he says “I’ve appreciated how inexpensive and convenient these options are for my friends and I, especially during COVID.”