Millennials, born between the early 1980s and mid-1990s, and Generation Z, born between the mid-1990s and 2010, are the demographic group that is rapidly reshaping consumer behaviour the world has witnessed for the past several decades.
These two groups, which can be identified as the most digitally savvy units, represent a substantial portion of the world population. They are capable of changing the business landscape, particularly the consumer markets, substantially due to their sheer size.
In Sri Lanka, collectively, Millennials and Generation Z consumer categories that represent age groups from 18 to 44 consist of approximately 37% of the total population, numbering around eight million people. Perhaps this is the most active and largest consumer segment in the Sri Lankan retail market. Although there can be a few negative effects, these figures can be extremely important to most Sri Lankan business entities engaged in consumer markets.
Particularly, Generation Z, as children, experienced a world swamped with digital technology, social media, connectivity, and the ease of accessing instant information. Consequently, their buying behaviour is distinctly different from those of previous generations, portrayed by a blend of updated information, digital fluency, and enhanced social interrelationships.
On average, most millennials are established in their chosen careers, thus individually possessing better spending power. They are also well set on their personal lives, such as marriage, goals for building houses, and raising children. In contrast, Gen Z is in the early stages of their careers and has less disposable income with fewer events to shop for.
As a common phenomenon, both generations possess high digital literacy, helped by rapid technological advancement during the past few years. Therefore, their buying behaviour is heavily influenced by engaging in social media and other online platforms.
More impulsive
While Millennials, although with a higher purchasing power, are more careful in their buying decisions to maintain common family requirements, In contrast, Gen Z buyers are more impulsive and less concerned with traditional spending patterns. They prefer integrating technology into every aspect of their lives, including how they shop and interact with brands.
Authenticity, or the extent of trust in transparency and consistent communication, is one of the most important aspects of millennial and Gen Z buying behaviour. Both segments prefer organisations that align with their values and beliefs.
With the mass information flow, they can instantly scrutinise the products for lack of authenticity or insincerity. Therefore, the companies that are targeting these two segments must prioritise authenticity and transparency to earn the trust and loyalty of Millennial and Gen Z consumers.
Despite their reputation for impulse buying, Millennials and Gen Z are remarkably value-conscious, armed with better product or organisational evidence due to the easy access to information on the internet. Both groups prioritise value for money and are more likely to seek out bargains and discounts.
Studies reveal that Millennials and Gen Z prefer experience over material things and prioritise spending on things that make them happy. They simply contemplate that spending money on enjoyable experiences brings them lasting pleasure. Also, experiences can be more shareable than material possessions, which seems more important to the young generation. For example, they feel that sharing pictures of a picnic or a cooking recipe is more effective than buying a new television receiver.
Therefore, Millennials and Gen Z are willing to invest in experiences that create lasting memories and connections. Businesses that can tap into this desire for experiential consumption stand to capture the attention and loyalty of this important customer segment.
Social issues
Due to the endless flow of news and information, Millennials and Generation Z seem to be deeply concerned about social and environmental issues, and they expect the brands they support to share their values. They are more likely to patronise brands that demonstrate a commitment to social privileges. Therefore, vendors must be conscious of corporate responsibility, transparency, and legitimacy. They tend to purchase brands that prioritise purpose over profit.
Peer pressure, a hallmark of adolescence, takes on a new dimension in the digital age. It plays a significant role in Millennials and particularly Generation Z’s buying decisions due to their heavy reliance on their social networks. They invariably share opinions in addition to the recommendations and reviews that appear on social media. Studies and surveys show that the major portion of this segment has been significantly influenced by peers on their purchasing choices of fashion, experience, and other utilities.
Hence, social media platforms serve as virtual marketplaces where Gen Z shares product recommendations, reviews, and shopping experiences with their peers. Brands that leverage user-generated content and foster online communities stand to benefit from the collective influence of Millennials and Gen Z’s peer networks.
Businesses use customisation and personalisation of products interchangeably, depending on various factors. While customisation is done by the consumer, personalisation comes under the purview of the seller. Although millennials and Gen Z consumers are considered digital natives, they highly value personalised offers from vendors.
They even switch vendors if they are offered a higher number of personalised offers. This consumer segment desires personalised and customised experiences, products, and services that cater to their individual preferences and tastes. Therefore, personalised marketing messages to Millennials and the Gen Z segment are key to engaging them in the buying cycle.
Physical shopping
Traditional brick-and-mortar retailers can also now strategically adapt and meet the expectations of these tech-savvy groups. As for the shopping preferences of Millennials and Gen Z, while they are heavily influenced by technology, research has uncovered a fascinating fact to conclude that the two segments show an immense interest in physical shopping. Researchers have revealed two unique drivers behind the trend: They seem to enjoy trying out the products in person and like to interact with the floor staff. In this context, to obtain an optimal result out of this new trend, retailers can concentrate on actions such as offering self-service options to minimise waiting times, maintaining accurate and visible stock management, improving the try-on experience, and leveraging smart technologies. These positive moves can not only diminish the complexities of modern shopping but also allow retailers to attract more customers from both generations.
The purchasing habits of Millennials and Generation Z are fast changing, impacted by technological improvements, socioeconomic considerations, and cultural shifts. They provide obstacles as well as opportunities for enterprises. This segment of customers’ present impulsive purchasing behaviour is influenced by a variety of variables, including their exposure to immediate gratification culture, social media impact, fear of missing out (FOMO), peer pressure, and the availability of online shopping and payment methods. Hence, businesses must adapt to these changing trends to win over these important segments.
