May, 2020 Piper Donaghu

Younger consumers and COVID-19

As you may have seen in our blog post a couple of weeks ago, we recently conducted a nationally representative survey of American consumers during COVID-19. In our report out on this first wave of findings, we highlighted how Americans felt as a whole, which yielded some very interesting insights. We were also interested to know if there were any generational differences in attitudes, perceptions, and feelings around COVID-19. This blog summarizes a few key insights into how young people are feeling about the COVID-19 situation as a whole, and how they expect brands to respond.

Note – for the purpose of this blog, when we refer to “younger consumers” we are referencing respondents aged 18-29 (older Gen Z and younger Millennials), and when we refer to “older consumers” we are referencing consumers aged 30+.

Brands are interested in meeting the unique needs of younger generations because of their extensive purchasing power. A McKinsey study from 2019 reported that Millennials (24-39) and Gen Z (8-23) had a combined $350m spending power, and predicted that by 2020, Gen Z alone would account for 40% of all US spending. Remember – Gen Z ranges from age 8 to 23. Imagine how much greater their spending power will be when a larger portion of this population has their own income! 

While Gen Z and Millennials have big differences in perspectives, experiences, and anxieties, this blog focuses on what they have in common. Gen Z and Millennials are more progressive than their parents and grandparents; they believe that society will benefit from increasing racial and ethnic diversity, and they engage in activism to promote these values. Both generations are also more entrepreneurial than their parents and are highly driven to advance throughout their career. Having opportunity for advancement is Gen Z’s top career priority, and a lacking opportunity for advancement is the #1 reason why Millennials leave their job. Finally, both Millennials and Gen Z have higher expectations for digital touchpoints with brands than their parents do. This comes as no surprise – Millennials and Gen Z are often referred to as “digital natives” and have essentially never lived in a world where brands didn’t have a digital presence (Source: Tell Ignite).

Now, for our findings…

1: Younger consumers feel more powerless than older consumers

In our first wave of findings, we were heartened to learn that for the most part, American consumers feel empowered to influence the situation for those around them. And, while a majority of young consumers do feel this way, they are less likely to feel that they have the power to influence the situation around them than older consumers. In fact, younger consumers are 17% more likely to feel powerless than older consumers. The next insight points to one reason why this may be…

2: Younger consumers are more pessimistic about the economic impacts of COVID-19 than older consumers

Compared with consumers 30 years old and over, younger consumers are 11% more likely to be pessimistic about economic ramifications of COVID-19. This finding is mirrored in Benenson Strategy Group’s national omnibus study, which found that 18-34 year-olds are more pessimistic about the economy than any other age group. This could be because these same young people are more likely to have experienced negative impacts on their income as a result of COVID-19. Our survey showed that 55% of young consumers report their income has been affected, compared to 45% of older consumers.

However, despite their heightened economic pessimism and potential loss of income, younger consumers are less likely to report that they have cut back on spending during COVID-19. Without proof for the reason behind this trend, we could guess that younger people with lower incomes have fewer expenses to cut back on than older people with more income to spend on non-essentials. If you were only spending money on the essentials in the first place, then spending is less likely to decrease.

For younger people who may be finishing their education, moving out of their parents’ house, getting a first job, or just beginning to financially support themselves, the loss of a job or the potential of a recession is understandably anxiety-provoking. We are looking forward to seeing if and how these trends change following our May survey.

While our first two insights covered younger consumers’ perceived ability to improve the situation around them, and their economic attitudes and realities, these next couple of insights demonstrate how young people expect brands to respond during the time of COVID-19.

3: Amidst a scary and unpredictable time, younger consumers want to feel comforted and in control

In running this survey, we weren’t just curious to learn how Americans felt about the COVID-19 situation. We also wanted to know how these changing times have influenced what they want or expect from the brands they buy from. Our expectations for brands extend far beyond wanting quality products that meet our unique needs. We often look to the brands we love to inspire us, reassure us, or provide us with the information we need.

So, we asked consumers how they wanted brands to make them feel during the time of COVID-19. All Americans – young and old – reported wanting brands to make them feel safe and informed. But there were some differences in how older and younger consumers wanted brands to make them feel that are worth highlighting…

Younger consumers are 37% more likely than older consumers to want to feel comforted, and 34% more likely to want to feel in control. Given that younger consumers are more likely to feel powerless and worried about the economic future, their desire for brands to make them feel comforted and in control makes a lot of sense. This begs the question: how might a brand make them feel in control?

Our final insight reveals generational differences in what consumers expect brands to be doing during this time...

4: Younger consumers believe brands should wield the power of money, both in terms of health and in terms of the economy

When asked what they believe is most important for brands to be doing during the COVID-19 outbreak, the top choice for all consumers was for companies to support employees who were furloughed or laid off. 55% of all respondents chose this as one of their top 3 most important actions for brands to take.

However, younger consumers were 50% more likely than older consumers to believe it is important for brands to donate money to the cause. Even in normal times, younger generations have higher expectations for brands to contribute to the greater social good. Of all generations, Gen Z (followed closely by Millennials) is most likely to report choosing a product because the brand contributes to a cause they believe in (Source: Tell Ignite).

Younger consumers were also 45% more likely than older consumers to believe that it is important for brands to lower prices. Given their concern with the economy, and the fact that they are not reporting cutting back on spending, it makes sense that younger consumers would want brands to offer cheaper products and services during this time.

All in all, these data points suggest that younger consumers are more inclined to believe that money (brands donating money to the cause, helping consumers save money by lowering prices) will help alleviate some of the challenges related to COVID-19.

The findings we just shared paint an initial picture of how younger consumers are feeling amidst COVID-19, but we will have a much deeper understanding of some of these trends after we run our second wave of our survey. We plan to share findings from this second wave in mid-May. If you’d like to join a virtual discussion on these findings in mid-May, sign up here. And if you haven’t already, feel free to request a full report of our April findings here.

Be well.

 

Piper.icon

Piper Donaghu | Strategist

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