Carol Wong-Li
Carol Wong-Li is Associate Director, Lifestyles and Leisure for Mintel. Carol researches and writes reports on the Canadian lifestyle and leisure industries.

While the global pandemic has shaken the ground of all consumers, the economic fallout hits the Gen Z generation (defined as 18-25s) at a particularly influential time of their lives and will shape the behaviours now and in the years to come. As companies look to re-emerge from the economic fallout of the pandemic, now is the ideal time to not only reassess the impact the outbreak has had on Gen Z consumers but to revisit some of the buzzworthy behaviours of Gen Z consumers that were written off as ones they’ll ‘grow out’ of – like their tendency to shop with their values.

Impact of the pandemic on Gen Z

Financial foundation is challenged
It is no secret that the preventative measures put in place as a result of the outbreak have had an unprecedented shock on the Canadian labour market, with the impact being particularly severe for Gen Z in terms of job losses and limiting future job prospects. According to Statistics Canada, the unemployment rate for 20-24s reached 30% in May 2020 (which has since declined to a still-high 26% in June 2020). The cohort, particularly older Gen Z consumers (ie those aged 21-25) is now financially squeezed and will need greater assistance from companies to maintain their current standard of living and help pave a realistic road to re-establish their financial foundations.

A toll on mental health
With more than a quarter of Gen Z struggling to maintain their current standard of living, coming to terms with financial uncertainty in light of the current recessionary conditions will take a toll on the mental health of Gen Z consumers. As it will take time to achieve financial stability, Gen Z consumers will need more tools and resources to help them reduce stress and anxiety now and in the months to come. It is expected that many Gen Z consumers will have prolonged reliance on their parents due to the economic setbacks experienced now and ahead. As self-sufficiency is associated with life satisfaction, Gen Z’s greater reliance on their parents to maintain their standard of living highlights a need to help them gain back a sense of control.

Adulthood is set to look different in the future
Gen Z was already highly anxious about their financial situation and future prospects before the COVID-19 pandemic struck. The economic fallout has only exaggerated their concerns as they are now in an increasingly precarious situation than before. The longer-term impact of Gen Z consumers being reliant on their parents prolongs the unique dynamics of appealing to Gen Z consumers in that marketers need to appeal to 18-25s as the end-users of products/services while appealing to their Gen X parents as the actual product/service purchasers.

Re-emergence with Gen Z consumers will need to be on their terms

Mirror the way they communicate
We’ve all heard it before: Gen Z consumers prefer texting/messaging over talking to their friends over the phone. The rumours are true, as two-thirds of 18-25s prefer this compared to two in five older consumers, according to Mintel research on marketing to Gen Z in Canada. What’s notable is that this behaviour is nuanced, with Gen Zs making an important distinction when choosing what channel to communicate with others. Where texting/messaging is best for regular casual conversations, communications that demand more detail or immediate answers are talked out. Consider taking a cue from their habits when choosing channels to connect with the cohort. Instant messaging or mobile platforms will be best for providing them with quick hits of information to address simpler queries (online and in-stores), while live chat functionalities or even traditional phone calls will remain necessary to address more complex issues. Notably, this qualitative difference in channel preference will remain when they shop in-stores, meaning that for the cohort, better integration of in-store shopping with mobile functionalities that help with discovery is necessary.

Providing information via mobile phones will be even more important during the ‘re-emergence’ period given that the virus remains uncontained and retailers must continue to protect the health and safety of consumers. With safety continuing to be a top priority in the coming months, there will be a need to replace traditional tactile stimuli (eg sampling) with more visual stimuli to enhance the in-store shopping experience. For example, the ability to scan QR codes that call up Pinterest posts providing relevant or even fun information about products will resonate.

Put the power in their hands
Before the pandemic, there was a sense Gen Z was learning from Millennials and taking a more cautious approach to managing their money. However, despite their best efforts, things are not going as planned. Worse, many see a road ahead where they will need to rely on their parents for longer. All told, the issue of ‘lost control’ is prominent for adult Gen Z consumers (which includes parents making many purchase decisions for them). Companies may be able to ease some of the mental anxiety related to their current situation by providing offerings that put some ‘power’ back in their hands by giving them choices to customize products that they buy for themselves like clothing and accessories. Being able to personalize shopping experiences will have a similar effect. While providing small choices may seem insignificant, the psychological impact is key in that it will help to create a sense that they still ‘own’ their decisions – empowering Gen Z through the power of choice.

Let them channel their values
Gen Z consumers define their identities by what they do rather than their role in the family. This is a factor of age as many are still students and are not yet the head of their household. Like all other generations, Gen Z is a product of their times as they have grown up in a period where pop culture is rife with political references and social media keeps social/environmental issues front and centre. Further, younger consumers recognize they can voice their opinion via various platforms well before they can vote. This leads Gen Z to be more likely to participate in activities that reflect their personal values. Gen Z consumers are hungry for change and see brands as a partner in the push to do things differently. Their relationship with brands is a personal one – they see logos they use as an outward portrayal of who they are. As such, creating avenues that allow them to participate or contribute to the causes they care about is an important way to connect with them. Actions could include smaller-scale efforts, such as contributing a portion of proceeds to charitable causes or featuring local artists on walls, to more active larger-scale efforts, like creating actual platforms that allow them to speak out. As Gen Z consumers achieve greater financial stability, they will emerge more passionate for change than before, making these avenues even more important in the ‘recovery’ months.

What we think

The pandemic will be a truly unifying experience for adult Gen Zs, particularly 21-25s, given they likely face more severe financial setbacks to establishing their futures. Companies across all categories will need to find ways to best set up the Gen Z cohort for success amid this unstable foundation, now and in the months to come. While practical solutions are a must to give them some immediate relief from monetary stresses, mental wellness also needs to be a priority in light of their loss of control. Adulthood is likely to look very different in the years to come.

For a comprehensive look at Gen Z consumers in Canada, check out “Marketing To Gen Z: Incl Impact Of COVID-19 – Canada” at the Mintel Store.