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Will Gen Z Pay Extra for Goods That are Locally Sourced and Sustainable?

Gen Z‘s desire for health and wellness—and a willingness to pay for it—is changing the retail landscape.

A report from A.T. Kearney on “How Gen Z’s Concern With Emotional Health Fuels Retail Growth and Failure” surveyed 1,500 U.S. and Canadian consumers across four generations to explore how the cohort’s self-reported heightened anxiety from news and social media is influencing how they shop.

“I think one of the things the survey shows us is that, despite being the first generation of digital natives, Gen Z is looking at brick-and-mortar retailing as a way to ‘disconnect’ from the stress of social media while at the same time getting emotionally closer to the online influencers and celebrities they follow,” said Nora Kleinewillinghoefer, a principal in the retail and consumers goods practice group and co-author of the report.

More so than their older millennial or Gen X counterparts, Gen Z is more concerned with mental and physical health. And that concern can have a material impact on their shopping behaviors.

Among the report’s key findings, 46 percent of Gen Z respondents said they were “very much” concerned about their personal health and mental well-being. What’s more, they were also more likely than other demographic groups to let negative shopping experiences stop them from making purchases, whether online or in-store. That’s because Gen Z is far more intolerant of poor service than the generations before them.

Still, these shoppers want to buy in brick-and-mortar stores to discover products and feel them out prior to purchase. Once in a store, 83 percent said support tools like maps and kiosks were extremely or moderately important to their overall experience, which points to the need for streamlined shopping in stores that at least attempts to mimic the ease of online buying.

As for why they buy, 44 percent of Gen Z respondents agreed with the statement that “Shopping helps me feel more confident and secure about myself.” Twenty-six percent said they felt pressured to keep up with the trends, saying shopping boosts confidence even when they can’t afford it–and as many as 30 percent said they often buy things they can’t afford. And that’s another reason 86 percent of them are looking for exclusives, promotions, free samples and giveaways when they shop.

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Despite the influencer’s waning or changing influence, 26 percent of Gen Z shoppers like buying products endorsed by these tastemakers because it creates a feeling of closeness to them.

When it comes to what these consumers will spend on, half of Gen Z respondents said they want products that are locally sourced or made, with 57 percent noting they want goods that are environmentally sustainable. However, the same disconnect between wants and actions remains: just 38 percent said they were willing to pay more for locally-sourced products. That puts the onus back on brands to get the value equation right. The end result might mean either lower-cost goods, or smaller margins for consumer goods manufacturers or retailers, A.T. Kearney found.

Greg Portell, who heads up A.T. Kearney’s consumer practice, said the findings create a roadmap for consumer firms to react to Gen Z consumers.

“The findings underscore two important points: one, Gen Z is continuing to evolve, forcing marketers to view this as a snapshot in time requiring quick response; and, two, the difference between the U.S. and Canadian respondents (and the spread of responses in general) reminds us that we can’t afford to generalize too far about this cohort of consumers known for their individuality.”