Gen Z ‘Doom Spending’ in the ‘Joy Economy’
Photo by Boxed Water Is Better on Unsplash
The Millennial’s ‘avocado toast’ is Gen Z’s ‘caviar bump’. Delicacies like caviar have seen a surge in sales among this age group, inspired by TikTok’s influencer-lifestyle trends. According to the ‘Luxury Refocused’ report, even in a cost-of-living crisis, only 17% of 18-34-year-olds describe luxury as ‘unaffordable’.
Traditional markers of adulthood, such as home ownership and financial stability seem to be unattainable for Gen Z, so this generation is opting instead to indulge in experiences and luxury items. Despite the real possibility of living with their parents forever if they don’t save for the future, 90% of 18-to-34-year-olds would consider splurging on a luxury brand. Without the prospect of ever getting onto the property ladder, Gen Z are doom-spending.
McKinsey report that 44% of global consumers (60% Gen Z and Millennials) say that they plan to splurge, especially on experiences or instant gratification, like tickets for Taylor Swift’s Eras tour.
YPulse dubbed this ‘The Joy Economy’. This dopamine-fuelled trend is not limited to brands and experiences to bring happiness. Among Gen Z and Millennials, groceries are the new splurge trend. Unlike the simplified view of avocado toasts and caviar bumps signifying irresponsible use of money, this is merely a redefinition of spending priorities.
Grocery shopping has seen a growing trend toward fresh, locally sourced, and organic foods. Although Nielsen IQ reports that 86% of US CPG dollar sales are ‘omnichannel shoppers’, groceries have struggled to gain traction in e-commerce.
As McKinsey find, since the growth of CPG during the pandemic, consumer behaviour is shifting in two ways: (1) a higher purchase frequency compared to 2022, but (2) buying fewer items per shopping trip across the grocery, health and beauty, and household categories.
However, Gen Z purchase occasions for groceries, health and beauty increased 10% in 2023, meaning on average 18-34-year-olds went grocery shopping one to two additional times per month.
Small businesses could be a beneficiary. One of the findings from the 2024 Small Business Marketing Report by VistaPrint and Wix shows that consumers want to support them. More than any other age group, Gen Z love supporting local small businesses and 46% shop them once or twice a week, while 42% struggle to even find small businesses in their area.
For digital natives like Gen Z, not all brand discovery needs to happen online. As this research finds, as part of the ‘Joy Economy’, Gen Z look for real-world experience like events and in-store shopping, and having the flexibility to do this both online and offline.
