Gen Z and millennials make up more than 60 percent of the world’s population, and retailers are desperately vying for their wallet share.
A report released Tuesday by payment solution provider Afterpay revealed that these young consumer groups are driving the fashion industry—and Gen Z shoppers are actually outpacing their millennial counterparts when it comes to monthly purchases of fashion and beauty items.
Afterpay, which allows shoppers to split purchases into four equal payment installments, aggregated data from purchases made by more than 2 million U.S. customers, across more than 5,000 brands and retailers from August through October.
The report’s data showed that nearly half (about 46 percent) of Gen Z consumers spend between $101-$300 per month on shopping compared with 44 percent of millennials. More than one quarter (almost 28 percent) of Gen Z spends even more—between $301-$500 every month—compared with roughly 22 percent of millennials.
Almost half (47 percent) of millennials and more than one-third (41 percent) of Gen Z shoppers make a fashion-related purchase weekly.
To capture a portion of their massive purchasing power, brands and retailers must consider that young shoppers are doing things differently than their older counterparts. Brand discovery happens most often online, with 92 percent of millennials and 97 percent of Gen Z citing social media as their top-trusted source that influences purchasing behavior. Friends and family rank second for both groups, with 80 percent of millennials and 78 percent of Gen Z shoppers looking to those they know for guidance.
Celebrities and influencers are also an undeniable consideration for young shoppers, with 51 percent of millennials and 64 percent of Gen Z consumers saying that these public personas prompted their purchasing decisions.
And while they may be spending a ton on fashion and beauty, most millennials (63 percent) don’t have credit cards, according to Afterpay analysts. Instead, they’re making purchases on their debit cards, leading analysts to believe that both generational cohorts are more fiscally responsible than older shoppers.
While they’re not willing to go into debt for fashion, Afterpay’s repeat users are disproportionately located in large, expensive cities like San Francisco, New York and Los Angeles, the company said. This suggests that consumers with a higher cost of living are more likely to look for buy now, pay later options to help offset the burden of their purchases.
Most young consumers also tend to shop on the go using their mobile devices. More than half of Gen Z consumers (55 percent) and nearly half of millennials (49 percent) use their phones to shop, while a little over one-third (37 percent) of millennials and about a quarter (27 percent) of Gen Z shop on desktop computers and laptops. Only 14 percent of millennial respondents and 18 percent of Gen Z survey-takers said that they shop in stores, despite data from previous studies showing young consumers’ affinity for brick and mortar.
Using data from its 6,500 brand and retail partners, Afterpay assessed the fall’s most-purchased brands and popular colors.
Adidas beat out Nike for the No. 1 spot in the hearts of young shoppers, though the Oregon-based athletic brand came in at a close second. Recently sold beauty brand Kylie Cosmetics, the ultra-lucrative brainchild of influencer Kylie Jenner, took the No. 3 spot. Calvin Klein came in No. 4, beating out Levi’s, Yeezy and Madewell, which came in at No. 5, No. 6, and No. 7, respectively, on the list.
When it comes to styling, streetwear’s “casual cool” won’t be going away anytime soon, analysts argued. Items like track jackets, graphic tees, biker shorts and sweatshirts from brands like Levi’s, K-Swiss, Adidas, Nike and Calvin Klein proved to be the season’s most popular items—a trend that analysts predicted would continue into the spring season.