By Mark Richards.
Millennials are the generation that currently dominates the workplace and economic predictions. But what about the post-millennial generation – Generation Z as it is known? They are going to have an even bigger impact – and some industries will not survive them…
Yes, it is a slightly dystopian title. But before you think that the Z’s are evil invaders from the Doctor Who Christmas special, I should tell you that I am referring to Generation Z.
We have written many times about millennials this year. They are the generation that came of age around the turn of the century and – as almost everyone knows by now – will make up 75% of the global workforce by the middle of the next decade. Cue mindfulness sessions at work and Hygge rooms as companies try and make their millennial employees feel special.
So what is Generation Z?
Simply put, it is the generation that comes along after the millennials. As always with the generations, there are differing views on exact dates: the consensus seems to be that anyone born between the mid-1990s to the mid-2010s qualifies.
There has been a range of different names suggested for this demographic cohort, notably Generation 9/11 with several commentators arguing that anyone born after September 11th 2001 is someone born into a markedly different world. Post-millennials and the iGen have also been suggested as names, but Generation Z seems to be the one now in common usage.
What are the characteristics of Generation Z?
By and large Generation Z appears to be a cautious generation: they have grown up with the recession following the financial crash, and many have seen their parents struggle in the workforce. A 2013 survey in the US found that 47% were concerned about student debt, with 36% worried that they would not be able to afford a college education.
That conservatism extends to social issues as well. Generation Z – at least in the US – are more likely to go to church, less likely to try alcohol or find themselves pregnant and more likely to graduate from high school on time.
What changes will Generation Z bring about?
Generation Z will be a powerful demographic: they are the most racially and culturally diverse generation the Western world has yet seen and in the US they already make up 20% of the population. They also have a big impact on family spending habits, so not surprisingly advertisers and marketers are desperate to understand them – and several industries are getting very worried.
The first thing we can say about Generation Z is that – with the exception of their very early years – they have lived their entire lives online. And this is a generation with a combination of spending power and social media influence. Earlier this year a tweet from Kylie Jenner wiped over $1bn (£780m) off the stock market valuation of Snapchat. (Old person’s disclosure: I had to check who Kylie Jenner was on Wiki…)
So given that level of power, what industries are in Generation Z’s firing line?
Malls in the US and the UK high street
Shopping malls in the US have been closing at a record rate over recent years and bricks and mortar retailers struggle to meet the demand for a personalised, digitally enhanced shopping experience – and one without the traditional, “Can I help you?” According to a 2017 survey, 93% of Generation Z prefer to shop without any help from a sales assistant.
As malls struggle in the US, so the high street continues to flounder in the UK, where it has been an interesting week. We have had further confirmation that wages are rising at their fastest rate for ten years, with average weekly earnings rising by 3.3% in October. In theory, this should put more money in people’s pockets – but they do not appear to be spending it on the high street, with the November footfall labelled the ‘worst since the recession.’
This prompted Mike Ashley, the owner of Sports Direct and House of Fraser – and clearly a man with a vested interest in the success of the high street – to call for heavy taxes on online businesses. In his recent Budget speech Philip Hammond signalled the introduction of a Digital Services Tax from April 2020 – but will any of this do any good in the face of Generation Z and its determination to shop online?
It is difficult to escape the feeling that artificial moves to support the UK high street are the equivalent of taxing the motor car to protect the horse and buggy economy.
Could sport be under threat?
As we have written above, Generation Z is inherently cautious. This also extends to its own physical safety, with participation in American football showing a sharp decline in recent years. Teens have preferred other sports involving less physical contact – but add in the decline in playing sport in the UK (especially among girls) and could we be seeing the generation that will sound the death-knell for traditional spectator sports? Will our best hope for gold at the 2040 Olympics be in online Call of Duty? Or whatever has replaced it by then…
The end of print magazines
Anyone over 40 has grown up with print magazines: now they are closing almost weekly, or moving online. And newspapers will surely go hand-in-hand with print magazines. Generation Z might well signal the end of the printed news industry, receiving all their news and information on mobile devices. After all, why should advertisers pay to advertise in a broadly targeted newspaper or magazine, when algorithms and AI will increasingly allow them to target personalised ads to individual consumers?
And it will finally be goodbye to cash
American teens are four times less likely to use cash than the general public and use cash for only 6% of their transactions. The majority of people under 30 prefer to avoid the use of cash for any transactions – even those under $5 (£4).
You may not have heard of it but Venmo is the current favourite among US teens. It blends social media and payment processing and facilitated more than $40bn (£32bn) of payments in the last 12 months.
…And if Generation Z forsakes cash, you can be sure that the politicians will be right behind them. Digital transactions can be tracked and taxed – in the future, using or accepting cash may automatically trigger suspicion. Which reminds me, I must go to the cashpoint before I am arrested…