Gen-Z Shoppers with Budget Constraints Influence the Future of Retail Shopping

From TikTok discoveries and handmade presents to mall visits and the quest for affordable dupes, Gen Zs shopping habits are transforming the retail landscape this Christmas season. With rising prices and waning brand loyalty, retailers are facing a tougher challenge to capture this generations spending.

Experts estimate that Gen Zs buying power could approach $12 trillion by 2030. However, this year, those aged 13 to 28 are expected to reduce their holiday expenditures by nearly 23%, a sharper drop compared to other age groups, according to PwC.

This consumer segment is feeling budget pressure from areas like credit card debt, said Kelly Pederson, retail leader at PwC. They are extremely value-focused, which represents a significant shift in how we understand consumers in the industry.

Gen Z also leads in severe credit card delinquency rates, with over 10%, according to the New York Federal Reserves household debt and credit report. Pederson notes that economic pressures, including debt, inflation, and student loans, are driving this generation to be more selective, evaluating both the price and the social or emotional significance of a purchase.

Its not just selling products, said Neil Saunders, retail analyst at GlobalData Retail. Its about offering emotions. A hard sell can feel insincere and push them toward alternatives or dupescheaper versions that feel more personal and meaningful.

Pederson added, Gen Zs trust is fragile. If they sense a lack of value, sales are lost immediately. Brand loyalty is also uncertain; while 59% still buy from familiar brands, many are exploring lesser-known or more affordable options. Jonathan Singh, 19, a college student from Long Island, commented, Being brand-loyal feels narrow-minded. I want the best deal, not to pay $100 for a name when I can get a better product for less.

Yet, rewards programs and membership perks continue to attract Gen Z. Saunders explained that these programs provide exclusive sales, events, and a sense of community, which can influence spending decisions when budgets are tight.

Malls are benefiting from Gen Zs social shopping habits. About 58% of this generation visit malls frequently, according to Ipsos. For them, malls offer social interaction, events, and hands-on experiences, reminiscent of previous generations. Holly Paik, 21, said, Even if I dont buy anything, walking around the mall with friends and seeing pop-ups is enjoyable.

Malls like the American Dream in New Jersey host performances from musicians and K-pop stars, while Mall of America organizes fan meets for popular groups. Shopping should feel like an event or an experience, said Adam Petrick, chief marketing officer at American Dream mall. Its more than buying a pair of socks; its something people do together.

Understanding Gen Zs price sensitivity, malls combine luxury brands with more affordable options and collaborate with retailers to offer events and discounts. Pederson emphasized, Gen Z visits stores for brand connection and experiences, not just transactions.

Before buying, Gen Z consumers often conduct extensive research, comparing products, analyzing materials, reading reviews, hunting coupons, and checking social media. Singh explained, I want to understand the product in real life, not just online.

This careful approach fuels the popularity of dupesaffordable alternatives that mimic high-end items. PwC reports that 82% of Gen Z plan to purchase such items. Pederson said, Dupes are a treasure hunt and a form of self-celebration, though less used for gifts.

While sustainability matters to many Gen Z shoppers, they are unwilling to pay significantly more for eco-friendly products. Paik noted, If sustainable brands were more affordable, I would buy from them more often. As a result, some opt for homemade or experiential gifts, prioritizing thoughtfulness over cost. Nicholas Asiedu, 21, explained, Memories from a museum trip can be more valuable than a physical gift.

Saunders highlighted that while gifting experiences or handmade items is currently niche, the majority of Gen Z intends to shop thoughtfully, balancing price, value, and emotional impact. Retailers need to focus on Gen Z now, he said. Failing to capture their loyalty today creates long-term challenges.

Author: Sophia Brooks