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Recent reports suggest that retailers need to embrace trends adopted by some of their most profitable shoppers, and those shoppers are young.
In a series of recent reports from PYMNTS Intelligence and American Express, a clear trend has emerged highlighting the evolving spending habits and preferences of younger consumers, particularly those belonging to Generation Z and millennials. These insights are informative for businesses aiming to tap into the lucrative youth market, adapting to digital transformations and personalized services.
American Express reported a 15% surge in spending by millennials and Gen Z consumers, outpacing other generations and highlighting their growing economic influence. The increase is particularly evident in travel and entertainment, with a notable rise in restaurant spending. This demographic's robust engagement with American Express card services reflects their preference for experiences over material goods, a trend that has implications for businesses targeting these consumers.
The shift towards digital wallets underscores a broader generational divide in payment preferences. While 79% of Generation Z consumers utilize digital wallets, only 26% of baby boomers and seniors do the same. Digital wallet consumers spend 31% more on retail and grocery products compared to non-users, especially in younger and higher-income demographics. The report, “Tracking the Digital Payments Takeover,” reveals that digital wallets are not only preferred for their convenience but are also a significant driver of higher expenditure across various sectors.
The generational divide extends to the underlying payment methods within digital wallets, where debit cards dominate in-person transactions, but PayPal balance leads in online retail. The data suggests a growing inclination among younger consumers towards digital-first payment methods, driven by the convenience and security they offer.
Another report, “Personalized Offers Are Powerful — But Too Often Off-Base,” highlights Generation Z's preference for personalized offers over traditional discounts. Despite their financial constraints, Gen Z consumers exhibit a strong interest in receiving offers tailored to their preferences, including exclusive access to products and personalized bundles. This trend indicates a significant opportunity for merchants to engage with this demographic through customized marketing strategies such as digital retail subscriptions Again, younger consumers are leading the way, with millennials and Gen Z showing a strong preference for the convenience and personalized experiences these services offer. From Amazon Subscribe & Save to Stitch Fix and HelloFresh, these subscriptions are reducing the frequency of in-store shopping, compelling brick-and-mortar retailers to innovate and integrate digital solutions into their offerings.
These reports collectively underscore the need for retailers, including giants like Walmart, to adapt to the changing consumer landscape. The rise of digital wallets, personalized marketing, and subscription services all point to a future where convenience, personalization, and digital engagement are key to capturing the loyalty of younger consumers. For traditional retailers, this means rethinking strategies to incorporate digital technologies and tailored experiences that resonate with the values and preferences of millennials and Gen Z.
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