Gen Z holiday shopping looks different in 2020: Here's what to expect

It’s already beginning to look a lot like Christmas… albeit an unprecedented one. As we approach a holiday season like never before, YOY data from past years isn’t going to cut it. But, brands can reference 2020 back-to-school shopping data to help prepare for this holiday season.

How and where will Gen Z holiday shopping happen?

While 2020 marches on as a contender for the most complicated year ever, there’s still hope for a less unnerving holiday season. But whatever the remainder of 2020 holds, no doubt it will surprise us. Come September, as brands gear up for the next big sales cycle—the holidays—one has to wonder, what unchartered territory will we have to traverse this time? 

Will Zers even be interested in shopping for the holidays? How will the pandemic-driven recession affect their Gen Z holiday shopping? Will it be a time of caution or indulgence? It’s hard to say. 

Impact of COVID-19 on Gen Z spending habits

Forecasting this year’s spend is challenging, given that there’s no reliable YOY comparison for holiday sales during a pandemic. However, in a recent report, emarketer forecasted that the 2020 holiday season will see overall growth rates slow down compared to past years—not surprising, considering the hit the global economy has taken as a result of the pandemic. The report states that expected total retail spending will increase by 3.4% to $1.042 trillion, but the ecommerce growth rate will accelerate slightly, to 13.9%, reaching $156.69 billion total. 

For insights on Gen Z spending habits specifically, brands should look to this year’s summer and back-to-school shopping to uncover how Zers prefer to shop, along with what they’ve been buying. Historically, did their purchases change? Were they going into stores or primarily shopping online? Did they spend less money on more trendy, disposable items, or more money on fewer, longer lasting items? 

You’ll also find that new spending habits have developed during the pandemic (Did your Z consumers stockpile toilet paper and canned food?), leaving a mark and creating a long-term shift in their purchasing behaviors. For example, will they sidestep bigger brands for small business in an effort to help local economies?

Answers to some of these questions lie in a brands’ own data. Yet, regardless of your industry segment, there are some baselines of truth in Gen Z spending habits: 

• Gen Z wields incredible spending power of $143 billion. They will increase their per capita spending by more than 70% in the next five years. 
• Gen Z have always been digital shoppers and are embracing online shopping even more rapidly than others. In a recent report, BCG found that since the pandemic began, 33% of Gen Z and Millennial consumers have increased their online spending, for a net increase of 6%, versus 23% of consumers in older generations. 

RMS asked a few Gen Zers for their thoughts about spending for the holidays. Online shopping, concern for others, and thoughtful, intentional purchases emerged as common themes. Here’s what they had to say.  

How much do you expect to spend on holiday shopping this season?

"Every holiday I spend less and less. I realize the significance of gifts and how store-bought things usually shy in comparison to a gift that is thoughtful and kind. I will probably spend $300 on my family." - Lilli 

"I’m probably only going to spend around $100-200 (most of that being for my girlfriend) because I don’t usually get presents for any of my guy friends." - Sam F.

"I will probably spend less this year on holiday shopping because I’m now living on my own and have actual bills to pay this year. Also since there’s a pandemic, I don’t really want to go out to shop, and will probably end up making most of the gifts I give." - Michaela

"This year I will probably end up spending around $300 on Christmas gifts. That is about average for me." - Amanda

How do you feel the virus and economic troubles will impact holidays this year?

"I think everything will be significantly subdued and people will care less about the bigger holidays."  - Lilli 

"I think that most of the lower socio-economic classes will spend a lot less this holiday. Many people have lost their jobs or don’t have any job security." - Haley 

"I kind of hope the pandemic does affect the holidays this year. I hope people won’t storm stores and maybe think a little more about what they are buying." - Michaela

"I think COVID is definitely going to screw up the supply chain, especially manufacturing. I’ve heard that a lot of products are backlogged or out of stock because manufacturing facilities overseas have been hot spots for COVID and shut down. I also anticipate it will hurt retailers as people will be less willing to spend a lot of money on presents when they can barely pay rent." - Sam F.

"I feel like COVID will definitely put a damper on the holidays because so many people are getting laid off and unemployment benefits and stimulus checks haven’t been enough for those with larger families. The holidays this year won't really feel like the holidays." - Manny

Where do you plan on spending money for the holidays?

"I plan on shopping from sustainable brands, like Outdoor Voices and Girlfriend Collective. I also plan on making things for my loved ones or coming up with a thoughtful experience instead." - Lilli

"I will probably spend money at local stores." - Michaela

"I’ll try to support more small businesses this year when I do shop, because I know Nike and Adidas won’t have any trouble getting out of this economic rut." - Sam F. 

"I plan on shopping at online stores because it’s easy and I can avoid going out in public and dealing with random, sometimes troublesome people." - Manny

How are you feeling generally about shopping these days?

"I think shopping in general right now is very important to stimulate the economy — that is, if it’s possible for you and your family. But I feel guilty purchasing items knowing how much others are struggling financially." - Haley 

"I’ve been doing a lot more online shopping but I also feel the need to spend less money since I haven’t been working during the pandemic." - Sam D. 

"I’m feeling better about not shopping this year honestly. It gives me an excuse to not feel pressured to get (or ask for) all the gifts you can and instead, think more about what kind of gifts would be meaningful or worth enough that I’m willing to go out to a public place to buy them.  or supplies to make them." - Michaela

"I think the past few months, shopping has changed a lot and will not be the same after Covid. I’ve noticed that now almost EVERY retailer has an online shopping service, and the ones that already did have improved their online stores. It’s a lot more convenient to buy things online regardless of a pandemic or not, and I think brick-and-mortar shops are going to have to adapt to a new era of online shopping." - Sam F. 

"I have not been out to shop in a store since the virus began, but I have shopped quite a bit online. I always find myself scrolling on Amazon!" - Amanda

"I’ve been to the mall maybe twice during the entire pandemic. It’s so different and weird. It’s time consuming having to stand outside and wait to get inside - it ruins the entire experience, especially if you need to go inside for things but can’t get in due to the long and slow checkout lines. Ordering online and picking up curbside is such a great addition to help everyone out." - Manny

Gen Z holiday shopping: Action items for brands 

While the above comments are but a small sample size, they provide a telling story of Gen Z’s attitudes toward holiday shopping in 2020. Here are some things brands can keep in mind: 

• Realize that Gen Zs are global citizens. As such, they continue to expect thoughtful, authentic brand engagements that respect not only their individual outlook and identity but also those of their fellow Zers—and honestly, the world at large.
  
  Consider how your brand can express this as you advertise and market to Gen Z for the holidays. Ideas might include a 1:1 purchasing model. Clothing retailer Buck Mason does this with their ‘Masks for America’ initiative. For each non medical-grade mask they sell, they donate one. By increasing availability of face masks for the general public, Buck Mason is helping ensure there are enough medical-grade masks for the essential workers who need them. 

• Make the in-store shopping experience as frictionless and frustration free as possible. As Gen Zer Manny mentioned above, shopping in stores during the pandemic can be stressful. It’s safe to assume that the closer the holidays become, that concern will only persist. Brands should make a point to not make it a reality or Zers won’t return. 
  
  Share the steps you’re taking to create a welcoming in-store experience. Take an omni-channel approach to communicating your mask policy and show how you’re keeping brick-and-mortar stores clean and lines manageable (if you can). 
  
  
• Make all shopping experiences and touchpoints as pleasant as possible. With supply chains still facing challenges, product availability is a valid and real concern. Communicate inventory delays and shortages often and early.
  
  Remind Gen Z shoppers of potential shipping delays and the benefits of shopping early to avoid disappointment. If free shipping is an option, that can be a deciding factor for Zs as well. Be mindful though, not pushy. This is not the year to use fears of ‘Get it before it’s gone,’ as a scare tactic with Gen Z.
  
  Take advantage of loyalty programs to communicate limited product availability as well as a heads-up on incoming stocked inventory, particularly for popular items (while indicating any quantity restrictions). 
  
  
• Appeal to Gen Z’s desire for authenticity. Respond to their interest in creating experiences and giving intentional, quality gifts. Provide options to build a personalized present (Lush nails does this) and offer digital content and ideas for festive, (brand and product-complementary) DIYs and experiences.  
  
  
• If your brand extends beyond online to a brick-and-mortar storefront, make sure your BOPIS, click-and-collect and curbside pick-up efforts are on point. Nothing dampens holiday cheer and brand loyalty quicker than receiving notification your product is ready for pickup only to find it’s not ready or that your customer has to get out of the car to retrieve an item when they weren’t planning on it. 
  

As the world continues to pivot and Gen Z continues to adapt, it’s even more critical to know your customer. Developing an understanding of who Gen Z is, along with an awareness of what they’re going through, can make all the difference this holiday season.