The economic squeeze that is forcing huge swathes of Generation Z and Millennial consumers out of the housing market is also giving them more disposable income, driving a new era of impulse spending in the pursuit of happiness and creating major opportunities for marketers.
That is according to the findings of the GWI 2023 Commerce Report, derived from 237,677 interviews among 16- to 64-year-olds across 52 markets, including 10,008 in the UK, which reveal these consumers are now buying more mood-boosting treat purchases.
Gen Z and millennials are 51% more likely than the average UK consumer to make impulse purchases online at least every two to three weeks.
Consumers have a lot going on right now, with the continued cost of living crisis being front of mind for many. However, while their current purchase behaviour may not seem rational from a financial standpoint, from a psychological perspective it is actually pretty rational, the study claims.
For instance, amid these ongoing challenges, 42% of UK GenZers state they are living at home with their parents. With 91% of Gen Z and Millennials stating they don’t own a home currently, this is allowing them to save rental costs and have more disposable income to play with, despite the current economic conditions.
In addition, UK Millennials are 27% more likely than the average impulse buyer to make ‘spur of the moment’ purchases to cope with stress. These findings demonstrate the pursuit of happiness is underpinning many purchase decisions among these younger generations.
UK consumers are now among the most spontaneous when it comes to hot ticket impulse purchases compared to those in other global markets. Between Q1 2023 and Q2 2023, there was a 21% increase in electronics purchased against those that initially planned to do so (41%), compared to just 2% globally.
Similarly, there was an 18% rise in personal items purchased on a whim against those who initially planned to do so (33%), compared to only 3% globally. Almost half (47%) of impulse buyers say that taking advantage of sales or deals is their biggest reason to splurge.
With the realisation of the unattainable, social media purchases are becoming more desirable amongst UK GenZers and Millennials. For instance, they are 83% more likely than the average impulse buyer to make spontaneous purchases based on recommendations from celebrities or influencers and are 74% more likely to do so because they use the “buy” buttons on social ads.
TikTok for Business head of research and insights Mahmoud Shammout cites the social media site’s own research which shows 62% of online shoppers make an impulse purchase at least once a month, rising to 70% among TikTok users.
This is reflected in emerging social media trends. On TikTok, recent trends like “girl math” and “dopamine decor” are rising in popularity among GenZers and Millennials. These trends are seeing creators share relatable content explaining their financial habits or spending choices as a psychological way of justifying spending to make them feel happier.
GWI trends manager Matt Smith said: “Our research shows consumers are shifting their purchase patterns, with many now making impulse purchases in the pursuit of happiness.
“The gap between planned and impulsive purchases presents an opportunity for retailers and brands.
“As consumer behaviours evolve, brands need to gain a deeper understanding of the motivations behind these purchases if they are to resonate with them. Whether this is by harnessing social media trends as part of a campaign or by altering brand messaging to reflect consumer sentiment, retailers and brands can engage with consumers more effectively.”
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