Are You Ready for the Generation That Will Transform How You Do Business?
Even though the early 2000s may feel like yesterday, those born in 2003 are turning 18 this year. This signals the rise of a new generation that will influence consumer behavior in significant ways. Small businesses must take note and adapt. This article explores how Generation Z (Gen Z) will impact small businesses and how you can stay ahead.
Who Is Gen Z?
Generation Z typically includes individuals born between 1995 and 2010, although exact dates may vary. This group is considered the first true digital natives, having grown up with the internet, social media, and smartphones as part of their daily lives.
Gen Z is not just an extension of Millennials. In Jason Dorsey’s book Zconomy: How Gen Z Will Change the Future of Business – and What to Do About It, he emphasizes that Gen Z has distinct behaviors, values, and priorities. Building relationships with them and creating brand awareness among them requires a fresh approach.
“This generation is diverse, hyper-connected, and influential across industries, brands, and digital platforms,” says Dorsey.
Gen Z Seeks Unique Brand Identities
Gen Z values brands that strike a balance between being popular and unique. They want to associate with brands that are desirable yet allow them to stand out. While this provides opportunities for small businesses to compete with larger brands, maintaining social proof remains essential.
For many Gen Zers, their purchases are an extension of their identities. They are more likely to buy from businesses that align with their personal values. For instance, some fashion brands now offer gender-neutral collections, and skincare companies incorporate braille on packaging to support inclusivity.
Personalization and Customization Matter
Gen Z’s desire for individuality means that personalized or customizable products and services are highly appealing. This could range from apparel designed around zodiac signs to skincare tailored to DNA. Younger consumers are increasingly comfortable sharing data and are willing to pay more for unique, tailored experiences.
A study by IBM found that 55% of Gen Zers prefer products they can customize. For small businesses, this might include options like adding text to items, selecting different colors or patterns, or uploading personal images for a customized design.
Social Media and the Rise of Private Sharing
While both Millennials and Gen Zers are avid social media users, their habits differ. Gen Z spends more time on social platforms and has strong digital literacy. They carefully curate their online personas and expect brands to do the same. Nearly half of Gen Zers cite social media as their primary influence in choosing brands.
However, Gen Z’s use of “dark social” is increasing. Instead of sharing content publicly, they are more likely to share privately via messaging apps or closed groups. Small businesses must adapt by creating campaigns that are easy to share in private spaces, such as branded GIFs for platforms like WhatsApp or engaging content for private online communities.
Video Content Is Essential
Platforms like TikTok and YouTube play a significant role in how Gen Z discovers new brands. About 70% of Gen Zers find new brands monthly on video-based social platforms, and they are heavily influenced by video content when making purchase decisions.
Small businesses should invest in creating high-quality, engaging videos. These videos should align with Gen Z’s preferences and avoid appearing outdated or overly promotional.
Reviews and Ratings Drive Decisions
For Gen Z, online reviews and ratings are critical. They rely on feedback from others before making a purchase. A study by Dorsey revealed that 68% of Gen Zers consult at least three reviews before buying something for the first time. Positive reviews—whether written or in video format—can be a powerful marketing tool.
Small businesses must focus on providing excellent products and services while encouraging satisfied customers to leave reviews. Additionally, tools like Proof or ProveSource can help highlight social proof and increase conversions.
Financial Flexibility Is a Priority
Gen Z grew up during challenging economic times, such as the Global Financial Crisis, and now faces a pandemic-driven economy. As a result, they prioritize financial stability and value flexible payment options.
“Buy now, pay later” services like Afterpay and ZipPay are particularly popular, as they allow customers to spread payments over time. Gen Z also values the ability to shop directly through social media platforms like Instagram and Facebook.
Access Over Ownership
Gen Z is redefining consumption by valuing access over ownership. Whether it’s subscribing to streaming services instead of buying DVDs or using car-sharing platforms instead of owning a car, they prefer options that offer flexibility and reduce commitment.
Small businesses can explore ways to incorporate this mindset, such as offering subscription-based models or rental services.
Balancing Affordability and Ethics
Sustainability and social responsibility are important to Gen Z, but many are unwilling to pay significantly more for eco-friendly products. Small businesses must strike a balance between being affordable, ethical, and high-quality to capture this audience.
Localize Your Strategy
While there are shared traits within Gen Z, preferences can vary based on local markets. For instance, Australian Gen Zers are particularly focused on sustainability compared to other regions. Tailor your approach to match the values and habits of your specific target audience.
Key Takeaways
Generation Z is transforming how businesses operate. To succeed, small businesses must understand this generation’s priorities, including personalization, financial flexibility, ethical practices, and digital savviness. By adapting to these trends and investing in a strong, relevant brand presence, small businesses can build lasting connections with this influential group.
