Opinion | The ‘zillennials’ are the new disruptors in town4 min read . Updated: 13 Jun 2019, 12:54 AM IST
As consumers, Gen Z doesn’t want value for money, but brands that deliver value to all of society
Structural changes are afoot in businesses as diverse as automobiles, clothing and airlines. While companies in these sectors attribute any slowdown to a temporary lull in demand, there is increasing evidence to suggest otherwise.
In passenger vehicles, sales growth in India is at a 20-year low leading to production cuts by top automakers such as Maruti Suzuki. Globally, too, the twin threats posed by electric vehicles and the rising gig economy are raising serious questions for legacy carmakers, forcing them to look for previously unthinkable marriages. Among airlines, the picture is more complex. Profits are scarce and with each closure customer choices are narrowing, leading to spiralling prices of air tickets. Even as airlines scramble to meet demand, a small but growing anti-flying movement, which reckons planes are a significant factor in climate change, could be an emerging threat to the industry.
Among the various factors driving these changes is the growing presence of the ‘zillennials’, the generation of young people born after the millennials and now in their late teens or early 20s. According to Bloomberg, Generation Z—people aged roughly 7 to 22—already account for a quarter of the global population. There are clear indications that this socially-conscious, always-connected cohort will have bigger implications for companies than the millennials who preceded them.
Earlier this year, consulting firm OC&C Strategy Consultants released a report titled A Generation Without Borders, based on a survey of 15,500 respondents in nine countries, dealing with the buying habits and factors influencing the purchasing decisions of this generation, which is already responsible for 7% of spending. One of the significant findings of the study is that a quarter of zillennials surveyed say that they consciously buy products that can be used repeatedly and more than a third try to buy and keep what they truly need. In addition, they choose sustainably sourced products.
This shows up best in the emergence of the slow fashion movement and the challenges it presents to the $2 trillion fashion industry, which according to the World Economic Forum is responsible for 10% of the global carbon footprint. One of the advisories for consumers, Shop Less and Buy Well—when you buy, buy second-hand, ethical, organic and only items you love and that will last—is straight out of the playbook of Gen Z. When young people slow down on buying clothes, the party for the fashion industry is truly disrupted. As consumers, this is a generation that isn’t focused on value for money, the 1970s concept that was often used as an umbrella description of the Indian customer’s buying behaviour. Rather, Gen Z-ers are looking for brands that deliver value to society as a whole. That’s what’s fuelled the growth of companies such as Everlane, Lush, Beyond Meat and TOMS, all for-profit companies but with ethically strong backbones.
Needless to say, this digitally native generation is averse to big brands and their marketing messages, choosing instead to rely on recommendations from other users for their purchase decisions. Indeed, the smartphone, which is umbilically attached to the Gen Z-er, is the railways of today, transporting ideas, opinions and values across geographies, leading to a wide dispersal of influences. The ethical fashion movement may have begun in Sweden but almost immediately its impact is felt in cities across India. Because of this, Gen Z-ers are also mini-influencers at home and often within their extended families, which means their combined purchasing power is hugely magnified.
While emerging technologies such as Augmented Reality and Virtual Reality have fundamentally altered the way all of us interact with the digital world, the newest generation has integrated these as a part of its life.
In doing so, it constitutes a real threat to legacy firms across the spectrum of industries. In the past, a company such as Maruti Suzuki has been enormously successful by segmenting the market smartly and then catering to each of those price and feature segments. However, as automakers come up against this new cohort they will need to offer far greater personalization opportunities. It has implications for makers of large SUVs as well. Their parents might have believed driving off-road vehicles through the narrow lanes of Delhi and Mumbai was cool but these big, ugly, fuel guzzlers are not going to be on the wish list of their children, who have a completely different attitude towards vehicle ownership and transportation. The biggest beneficiaries of this change have been ride-sharing companies such as Uber and Ola, great favourites of this generation. The question though is, with the Uber model now looking increasingly suspect, whether is it even a long-term option.
Not everything zillennials say or do makes sense, nor is it expected to, given their age and lack of experience. However, while reshaping our society mostly for the better, they represent an entirely new way of approaching products and markets. In her 2017 book Understanding IGen: Why Today’s Super-Connected Kids Are Growing Up Less Rebellious, More Tolerant, Less Happy—And Completely Unprepared For Adulthood author Jean M. Twenge writes “iGen is at the forefront of the enormous changes under way in the United States today, driven by the internet, individualism, income inequality, and other forces of cultural change. Understanding iGen means understanding the future—for all of us."
Sundeep Khanna is executive editor at Mint and oversees the newsroom’s corporate coverage