The Gen Z paradox: Spending less, expecting more

Gen Z has become a riddle that many retailers can’t quite crack.

Their arrival in the consumer marketplace coincided with the explosion of smartphones and social media – and with economic headwinds like inflation, rising interest rates, a tough job market and the resumption of student loan payments.

The result is a generation defined by contradictions. Gen Z is digitally native, yet drawn back to physical stores.

Fiercely brand-aware, yet ready to abandon brands for private labels. Cautious with money, yet quick to spend when the purchase carries emotional weight.

According to PwC’s analysis of nearly a million consumer transactions, Gen Z cut overall spending by 13% between January and April 2025 – particularly in categories like apparel, accessories and electronics.

And in PwC’s 2025 Holiday Outlook survey, they reported plans to slash holiday spending by 23% this year, after expecting to boost spend by 37% in 2024. Even so, Gen Z still plans to spend an average of US$1 357 this season.

Understanding this shift is important, considering that Gen Z’s spending power is expected to grow to US$12 trillion by 2030, according to NielsenIQ and GfK in collaboration with World Data Lab projects.

What Gen Z is buying?

It turns out Gen Z isn’t just price-conscious. They’re value-conscious, with an emphasis on emotional and social value, not just discounts.

PwC’s five-year view of Gen Z indicates that more than 79% wait for products to go on sale, and only 21% regularly pay full price.

Deal hunting is rising – searching for discount codes is up 14%, browsing up 17% – but this is less about frugality than intentionality.

Increasingly, as Gen Z also turns to artificial intelligence (AI) tools for help finding deals, whether it’s asking for the “best value-for-money mascara” or more tailored recommendations, their path to purchase could become more algorithmically curated.

To stay ahead, retailers need to start thinking about optimising discoverability within AI-driven environments now.

With all this in mind, the answer to the Gen Z riddle appears to be about offering affordable affluence.

This is like the lipstick effect, something that appeared in the aftermath of 9/11 and again in 2008, updated for the social media era.

Micro luxuries like a pricey matcha, a resale sneaker drop or cosmetics that double as skincare can telegraph cultural relevance without breaking the bank. But to stay in the “must-buy” category, these items need more than aesthetic appeal.

They need to feel smart – endorsed by creators, justified by value transparency and surfaced through algorithmically tailored feeds.

Timing also matters. A trending item can rise and fall within days – and for retailers, converting interest means meeting Gen Z expectations for social-to-shelf speed. The window for “what’s worth it” is short.

While this generation is saving for big milestones and managing tight budgets, they still want purchases that spark joy, earn social currency and align with their own sense of identity.

Gen Z’s selectivity doesn’t stop at products – it extends to brands themselves.

This generation isn’t inherently brand loyal. They’re brand agnostic until given a reason to commit.

For example, according to PwC’s analysis, more than half of Gen Z (59%) still prefer known brands but nearly half (41%) are willing to buy less expensive, private-label alternatives and 49% want customised products.

For the holidays, according to our Holiday Outlook survey, 82% of Gen Z say they plan to purchase less expensive alternatives (commonly known as “dupes”) and 63% plan to shop for vintage or upcycled products.

These choices aren’t just about saving.

They reflect a generation that rewards relevance over recognition and expects brands to keep up.

When asked where they’d cut back over the next six months, Gen Z pointed to restaurants and takeout (51%), clothes (33%), and alcohol (29%). But fewer said they’d trim “high-value” items this year compared to last.

What emerges is not across-the-board austerity, but selectivity.

They’re willing to trade down – or trade out – on everyday expenses in order to afford meaningful indulgences.

• Read the full article here: https://www.pwc.com/us/en/industries/consumer-markets/library/gen-z-consumer-trends.html

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