Asia Pacific's GenZ is a unique and diverse generation of its own

19 July 2020 Consultancy.com.au

While often perceived as a younger extension of the digitalised Millennial generation, GenZ actually displays a number of unique consumer patterns across the Asia-Pacific (APAC). This is according to new analysis from McKinsey & Company, which lays out five patterns that characterise GenZ. 

Age brackets for GenZ vary, although McKinsey classifies it as individuals born between 1996 and 2012. The global management consultancy surveyed more than 16,000 consumers across Australia, China, Indonesia, Japan, South Korea and Thailand, comparing responses from “Gen Zers,” Millennials (1980-1995) and GenXers (1965-1979).

The findings threw up some interesting trends from a marketing and branding perspective. No doubt, Gen Zers are similar to Millennials in a number of ways, but they also present distinct characteristics.

“Generation Z has its own unique characteristics. Unlike previous generations, they have never known a world without the internet and have grown up with social media. And, now Gen Zers are entering into adulthood during a global pandemic,” said Thomas Rüdiger Smith, co-author of the report and APAC lead for the Consumer Packaged Goods and Retail practices of McKinsey & Company.

Five unique GenZ traits

The APAC consumer market, driven by the young population in the region, is expected to be a key driver of economic growth in years to come. Brands need to be aware of the nuanced preferences amongst the youth to ensure that they remain relevant. McKinsey identified five traits that are most apparent among Gen Zers.Gen Zers spend more time on their phones than other generationsFor starters, Gen Zers are very much wired into social media. According to McKinsey, Gen Zers in APAC spend an hour more on their phone every day than Millennials, and two hours more than Gen Xers. In fact, nearly a third of Gen Zers in APAC spend more than six hours a day on social media, compared to just over 20% for Millennials and 10% for Gen Xers.

The average Gen Zer in Indonesia spends a staggering 8.5 hours a day on their phone. Among an spectrum of activities, this time is spent cultivating an online personality and carefully curating their presence on social media. Interestingly, while spending more time than other generations online, Gen Zers are also more conscious than older generations that staring at a device can negatively affect relationships.

Nevertheless, McKinsey notes that all this time spent online has a strong bearing on consumer behaviour. Social media accounts for more than half of the influences that go into selecting a brand for Gen Zers. This ties into the firm’s second finding – Gen Zers like to do their homework before a purchase.

On average, Gen Zers are much more likely than older generations to scan the web for discounts before buying. Two thirds of Australian Gen Zers hunt for deals before buying, as do half of the Gen Zers in China. To some extent, this boils down to the low percentage of the generation that is in full-time employment, although they still wouldn’t compromise on quality, according to the report.

Gen Zers use video of brand and product purchase decisions

While looking to spend as little as possible, Gen Zers demand personalisation in their products, and have an eye for exclusivity. Nearly two-thirds of Australian Gen Zers, for instance, have a preference for brands that collaborate with other trendy brands. “More for less” is McKinsey’s summation of preferences in the generation.

The third finding is that Gen Zers in APAC like their brands, but in a more nuanced way than previous generations. They want their brand of choice to be well known, but still want it to “set them apart” from the crowd. The firm points out how brands in APAC will have to engage in a balancing act in the future, “achieving popularity through scale so that they are widely recognized while also maintaining a sense of relevance and distinctness that connects with younger consumers.”

The fourth factor that sets GenZ apart – perhaps to a greater extent than others – is that Gen Zers consume more video content on platforms such as YouTube and TikTok than other generations, which has an impact on their selection of brands. In fact, Gen Zers in each market surveyed put video in their top three influences, more so than other generations.

Driving this point home, the firm reports that 70% of all Gen Zers in APAC learn about at least one new brand every month from online video platforms. This figure is lower than 60% for Millennials and less than half for Gen Xers.

Willingness to pay for environmentally conscious brands

McKinsey’s fifth and last finding relates to environmental consciousness, where Gen Zers in most APAC markets are similar to Millennials. Most are environmentally conscious, which means that they are trying to make their consumption habits more sustainable, and have a preference for organic, ethical and sustainably produced brands.

Up to 80% of Gen Zers even call for more environmental accountability for brands. However, only in Australia did Gen Zers indicate that they were more willing to spend money on environmentally friendly products. According to McKinsey, this can be explained by the fact that environmental consciousness tends to be a social status symbol for Gen Zers.

Six types of GenZ consumer

That being said, the authors are careful to point out that APAC Gen Zers are not a homogenised entity. In fact, the firm identifies six distinct categories of GenZ consumers. For instance, there are the ‘brand-conscious followers,’ who love brands and track trends, and shop occasionally. From a business perspective, they are important as they tend to be early adopters.

Types of GenZ consumers

Then there are the ‘premium shopaholics’, who are constantly up to date and shop impulsively and regularly. Then there are the ‘ethical confidents,’ who place environmental factors at the centre of their purchases, while ‘value researchers’ are sticklers for a trusted brand that can assure quality. ‘Disengaged conformists’ are neither interested in brands nor online research, and need to be approached by brands. Lastly ‘quality-conscious independents’ do not allow anything but considerations of quality dictate their purchases. They are not swayed by brand reputation or trends, although many view environmental consciousness as an indicator of quality.

So GenZ is a unique and diverse generation, comprised of what McKinsey describes as “tough customers.” McKinsey is not alone in recognising this. Research from strategy consultancy OC&C last year also highlighted the uniqueness of GenZ, at least in APAC, which presents a challenge for brands in the region.

“For companies looking to win over Generation Z, brands need to be agile and stable, regionally aware and locally focused, environmentally sound and acutely price conscious, social-media savvy and respectful of privacy, and authentic and able to tell a compelling story,” said Rüdiger.


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