millennials and gen z in the uk: next gen index

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Millennials and Gen Z in the UK: Next Gen Index

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Page 1: Millennials and Gen Z in the UK: Next Gen Index

Millennials and Gen Z in the UK:Next Gen Index

Page 2: Millennials and Gen Z in the UK: Next Gen Index

Contents Introducing the Next Gen Index

How Consumers Spend

What Consumers Spend On

Page 3: Millennials and Gen Z in the UK: Next Gen Index

Introducing the Clearpay Next Gen IndexThe Next Gen Index is an economic series on consumer spending. The insights provided recognise the growing power of younger generations in the economy, and how their behaviours and preferences are shaping the future of commerce. The series also shines a light on the role of Buy Now Pay Later (BNPL) in the changing landscape.

The Index consists of two components:

1. How Consumers Spend: Explore overall consumer spending by each generation and the types of payment methods people use (internal and external data analysis).

2. What Consumers Spend On: Deep-dive into the spending trends of Clearpay customers in this dynamic dashboard, which compares trends for each generation across multiple categories (internal data analysis).

The Index is an evolving tool that will develop over time as it is updated regularly with the latest consumer data.

Page 4: Millennials and Gen Z in the UK: Next Gen Index

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Note: Generation age grouping based on definitions by the Pew Research Center

Gen Z 1997 - 2012 Aged 9–24

Millennials 1981–1996 Aged 25–40

GenX and older Before 1981 Aged 41+

Meet the 3 Gens

Page 5: Millennials and Gen Z in the UK: Next Gen Index

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These results have been produced by AlphaBeta Advisors Pty Ltd (ABN 91 603 412 013) ("AlphaBeta") for presentation by Clearpay Finance Limited (company number: 05198026) (“Clearpay"). Every effort has been made to provide the most current, correct and clearly expressed information possible on this site. Nonetheless, inadvertent errors can occur. The information contained on this site is general and is not intended to serve as professional advice. No warranty is given by AlphaBeta, Clearpay or any other contributors to this site in relation to the accuracy or reliability of any information. Users should not act or fail to act on the basis of information contained herein. Users should not rely on the information for any business, commercial or other purpose, and are strongly encouraged to seek professional advice concerning the information provided on this site before making any decision. All contributors to this site disclaim all and any liability to any person or organisation in respect of anything, or in consequence of anything, done or omitted to be done by any person, organisation or other user in reliance, whether in whole or in part, upon any information contained herein.

No part of the text or graphics on this site may be reproduced or transmitted in any form or by any means, electronic or mechanical, including by photocopying, facsimile transmission, recording, re-keying or using any information, storage and retrieval system except with the prior written consent of Clearpay. Notwithstanding the above, any use of results, text, graphics or other information from this website for journalistic, reporting, media or communications purposes or otherwise for use in any publication (whether online or in print) is permitted, provided that the source of such information used is accurately cited by the author. Certain links on the site lead to resources located on servers maintained by third parties. As such, no representations are made by AlphaBeta, Clearpay or any other contributors to this site as to the accuracy, currency or any other aspect of the information contained on such servers or the timely, accurate or complete transmittal of such information.

Disclaimer

Page 6: Millennials and Gen Z in the UK: Next Gen Index

Introducing the Next Gen Index

How Consumers Spend

What Consumers Spend On

Contents

Page 7: Millennials and Gen Z in the UK: Next Gen Index

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Key takeaways on how consumers spendGen Z and Millennials are becoming a powerful force in the economy

Gen Z and Millennials account for 25% of the total retail spend in the United Kingdom.

Their share of spend will grow to 39% by 2030, as more of Gen Z (currently aged 9-24) enter the workforce.

Spending by Millennials is now 1% above pre-COVID levels.

Older generations have been relatively more conservative with their spending. Their level of spending is still 4% below pre-COVID levels

While BNPL spending currently accounts for a small share of total spend, that number is growing fast.

Since January 2020, BNPL spend has grown by 260%, compared to 0% for debit and a decrease of 1% for credit cards.

BNPL spending is trending up across all generations, however older generations are leading the charge.

BNPL spend by older generations is up by 300% since January 2020.

Spending by Millennials has recovered faster

BNPL and Debit are on the rise, while Credit is decreasing

Older generations are leading the growth of BNPL

Source: Forecasts based on the Living Costs and Food Survey 2015-2019, Money Dashboard Insights, analysis by AlphaBeta as part of Accenture

Page 8: Millennials and Gen Z in the UK: Next Gen Index

Total population in the UKMILLIONS

As of 2020, Millennials and younger generations outnumber older generations

8

Source: ONS Population Forecasts (2018)

Millennials, Gen Z& Gen Alpha

Builder, Baby Boomers& Gen X

2010 2015 2020 2025 2030 2035

50

40

0

30

10

20

Page 9: Millennials and Gen Z in the UK: Next Gen Index

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Millennial and Gen Z share of spend will increase to 39% by 2030

9

Millennials and Gen Z peak earning years are still to come

Retail spend by generation

in 2020Percent, 2020

Source: Forecasts based on the Living Costs and Food Survey 2015-2019, analysis by AlphaBeta as part of AccentureNote: Retail expenditure includes clothing and footwear, personal care, household goods and services andmedicines, prescriptions and healthcare products

Gen Z

Millennials

Gen X and older

Retail spend by generation

in 2030Percent, Forecasted 2030

Retail spending over time for Millennials and Gen Z£BN

Gen Z

Millennials

74%

22%

3%

61%

28% 11%

2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

20

0

40

10

30

Page 10: Millennials and Gen Z in the UK: Next Gen Index

Spending by generationMonthly index of consumption, 100 = January 2020

Spending by Millennials and Gen Z has recovered faster than older generations, and is now at or near pre-COVID levels

10

Source: Money Dashboard Insights

(Pre-COVID)

May-20Feb-20

86

60

100

84

Mar-20

98

Oct-20Sep-20Aug-20 Nov-20

106

Jun-20 Dec-20

92

Apr-20

88

90

94

96

Jul-20Jan-20

102

104

-4%

+1%

-2%

Gen Z

Millennials

Gen X and older

Page 11: Millennials and Gen Z in the UK: Next Gen Index

Spending on BNPL has increased rapidly – up 260% for the year, while credit card purchases have stagnated

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Source: Money Dashboard Insights, analysis by AlphaBeta as part of Accenture

Buy Now Pay Later

Debit

Credit

Spending by payment methodMonthly index of consumption, 100 = January 2020

(Pre-COVID)

May-20 Oct-20

280

210

Apr-20 Aug-20Jan-200

70

Mar-20 Jun-20 Jul-20 Nov-20 Dec-20Sep-20

350

420

140

Feb-20

+1%

+260%

0%

Page 12: Millennials and Gen Z in the UK: Next Gen Index

Spending on Clearpay has increased across all generations, especially for Gen Z and older generations – up 272% and 300% for the year

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Source: Money Dashboard Insights, analysis by AlphaBeta as part of AccentureNote: Data year-to-date as of December 2020

Gen Z

Millennials

Gen X and older

Change in value of purchases by payment method and generation%, Year to date

17

-1

272

-2

5

238

-4

300

0DebitCredit BNPL

Page 13: Millennials and Gen Z in the UK: Next Gen Index

Introducing the Next Gen Index

What Consumers Spend on

How Consumers Spend

Contents

Page 14: Millennials and Gen Z in the UK: Next Gen Index

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Key takeaways on what consumers spend onMillennials still dominate BNPLbut older generations are the fastest growing

Millennials were the first adopters of BNPL, and while they still account for the majority of purchases, other generations are catching up.

Older generations account for 31% of spending on Clearpay. This is the fastest growing cohort – spending increased by 425% in 2020.

Though other categories such as Wellness, Beauty and Recreation are growing fast, Fashion still dominate consumer spend.

Fashion accounts for 68% of Gen Z spend and 61%of Millennial spend.

Gen Z and Millennials are increasing their spend on Wellness.

Wellness purchases only make up 2% of Gen Z and 1% of Millennial spending but this product category is growing fast.

Almost two-thirds of all spend on small businesses is from Gen Z and Millennials.

Spending for small businesses has increased by more than 700% for Gen Z and Millennials in 2020..

Fashion still accounts for the majority of spend for Millennialsand Gen Z

Wellness is the fastest growing category for younger generations

Younger Britonsare supportingsmall businesses through BNPL

Source: Clearpay data, analysis by AlphaBeta as part of Accenture

Page 15: Millennials and Gen Z in the UK: Next Gen Index

13%

31%

56%

15

Millennials account for the majority of spending on Clearpay

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However, older generations are fast growing cohort, with spending up 425% for 2020

Source: Clearpay data, analysis by AlphaBeta as part of Accenture

Gen Z

Millennials

Gen X & Older

Share ofconsumer spending

on ClearpayPercent, December 2020

Spending by payment typeIndexed, 100 = January 2020

Gen Z

Millennials

Gen X & Older

0

100

200

300

400

500

600

Jul-20Jan-20 Aug-20 Oct-20Feb-20 Dec-20May-20Mar-20 Apr-20 Jun-20 Sep-20 Nov-20

+425%

Page 16: Millennials and Gen Z in the UK: Next Gen Index

0

100

200

300

400

500

600

700

800

900

1,000

0 20 40 60 80 100

Wellness

Recreation

Beauty

Footwear Fashion

0 20 40 60 80 100

1,200

0

100

200

300

400

500

600

700

Wellness

Beauty

Fashion

Footwear

Recreation

0

100

200

300

400

500

600

700

800

900

1,000

0 20 40 60 80 100

Wellness

Footwear

Beauty

Fashion

Recreation

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Spending trends by generation

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Gen ZGrowth, % YoY

Share of Spend, % Share of Spend, %

Source: Clearpay data, analysis by AlphaBeta as part of Accenture

MillennialsGrowth, % YoY

Gen X and olderGrowth, % YoY

Share of Spend, %

Page 17: Millennials and Gen Z in the UK: Next Gen Index

For Gen Z and Millennials,the majority of consumer spend is on Fashion

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Source: Clearpay data, analysis by AlphaBeta as part of Accenture

Top brand profiles within Fashion for Millennials and Gen Z are…

Online Pure-players

Budget-friendly Women’s Fashion

Sportswear

Gen ZGrowth, % YoY

MillennialsGrowth, % YoY

Share of Spend, %Share of Spend, %

0 20 40 60 80 100

500

0

600

100

200

400

300

700

1,200

Beauty

FashionFootwear

RecreationWellness

0

100

200

300

400

500

600

700

800

900

1,000

0 20 40 60 80 100

Fashion

Wellness

Recreation

Beauty

Footwear

Page 18: Millennials and Gen Z in the UK: Next Gen Index

The fastest growing categoryof spend for Millennials and Gen Zis Wellness

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Source: Clearpay data, analysis by AlphaBeta as part of Accenture

Top purchaseswithin Wellness forMillennials and Gen Z are…

Fitness and gym gear

Protein supplements

Vitamins and dieting supplements

Gen ZGrowth, % YoY

MillennialsGrowth, % YoY

Share of Spend, %Share of Spend, %

0 20 40 60 80 1000

500

400

600

300

100

700

200

1,200

Beauty

FashionFootwear

RecreationWellness

0

100

200

300

400

500

600

700

800

900

1,000

0 20 40 60 80 100

WellnessBeauty

Fashion

FootwearRecreation

Page 19: Millennials and Gen Z in the UK: Next Gen Index

14%

57%

29%

Over two thirds of all spend on small businesses is from Gen Z and Millennials

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Younger Britons have been spending more on small businesses

Source: Clearpay data, analysis by AlphaBeta as part of Accenture

Gen Z

Millennials

Gen X & Older

Share ofconsumer spending

on Clearpay for ‘Supporting Small’

Percent, December 2020

Gen Z

Millennials

Growth in consumer spending on Clearpay for ‘Supporting Small’%, Year-on-year

100

846

0

100

200

300

400

500

600

700

800

900

1,000

Mar-20Jan-20 Oct-20Apr-20Feb-20 Jul-20May-20 Jun-20 Aug-20 Sep-20 Nov-20 Dec-20

+742%

Page 20: Millennials and Gen Z in the UK: Next Gen Index

Gen Z & Millennials spending will be different and is being shaped by new forces

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Scarred by the experience of recessions in their early lives

Value

The median Gen Z was in primary school for the GFC, and is leaving high school during COVID… economic crises are a feature of their psyche

First generations to be mobile & digitally native

Omni-channel experience

Millennials were the first generation to grow up with internet connectivity and Gen Z is the first generation to grow up with smart phones

First generations fully immersed in social media

Brand & imageMillennials and Gen Z are the first generations to be fully immersed in social media

Page 21: Millennials and Gen Z in the UK: Next Gen Index

ThankYou!

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