It might not surprise you that Gen X consumers spend more money than Gen Z, Millennials and Boomers. But a breakdown of their spending by category, as percentages of their total purchases, can reveal far more about generational buying trends. Retailers and brands— opportunities exist in unexpected places.
How Do You Determine Purchasing Power by Generation?
As our How America Shops® consumer insights have made clear, generational buying trends are not so cut and dry.
Sure, the spending power of Millennials can vary sharply from the purchasing strength of Gen Z. But what our insights also make clear is that each generation’s buying power is influenced by a range of factors beyond lifestyle changes – factors that retailers and brands can control.
These elements include convenient parking, the availability of self-checkout and whether products are under lock and key. Different age groups value these features differently. For example, despite rising prices, 43% of Millennials still choose store convenience over price – 10 percentage points above the total population[1].
In short, who has the most purchasing power is just Point A. Getting to Point B, C and even X with each generation requires knowing what’s in their heads – not just their wallets.
Generational Buying Trends: An Overview
Let’s start with consumer shopping basics – the purchasing power of each generation. Based on research by the World Economic Forum (2021; the most recent), here’s how much each American generation spends annually:
- Gen Z: $41,636
- Millennials: $69,061
- Gen X: $83,357
- Boomers: $62,203
- The Silent Generation: $44,683
These overall purchasing power figures serve merely as a starting point, however, because the categories each generation prioritizes can vary widely.
For example, Gen Z and the Silent Generation spend similar amounts on food every year – roughly $5,500, according to the World Economic Forum. Gen Xers spend nearly twice that amount; likely because they support larger households with kids.
Meanwhile, Boomers and Gen Z shoppers spend similar amounts on apparel, $1,300 and $1,500 a year, respectively. Gen X and Millennials spend closer to $2,200[2].
Generational Insights From How America Shops®
Category shifts reflect different points of life – kids are born, kids move out, aging parents move in, married households become solo households. However, these lifestyle shifts also dictate the circumstances of purchasing the products needed.
This suggests the shopping behaviors that should matter more to retailers and brands aren’t driven by categories, but by how each generation makes their purchase decisions and discovers new products.
Take this sampling from our How America Shops® research:
The physical store still reins.
Each generation makes most of their stock-up trips in the store, according to our How America Shops® population and generational research. Yet Millennials are the least likely to at 48%, compared with 58% of Gen Z, 68% of Gen X and 78% of Boomers.
Easy-to-navigate stores matter more with age.
Half of all Gen X and Boomer shoppers prefer to shop stores they can get in and out of quickly, compared with just two in five of Gen Z and Millennial shoppers.
Millennial shopping habits are online.
Stores, even easy-to-navigate ones, may matter less to Millennials because online convenience matters more, especially in a pinch. For example, 40% of Millennials now make their stock-up and quick trips online, compared with nearly 20% of shoppers overall[3].
Gen Z clips less.
The youngest consumer demographic is far less likely to use retail flyers than any other generation. Roughly half of these shoppers use online flyers, and only 46% use in-store flyers. But flyers still matter to other generations, by 22 percentage points more than Gen Z.
Category sensitivity matters.
Online retail is driving new health categories. Two-thirds of Gen Z and Millennial women seek information about menstruation symptoms and relief online, while 30% of all ages look online for information to treat thinning hair[4].
Emotional wellness is a booming category.
But not among Boomers. Rather, 34% of Gen Z increased their spending on mental health needs in the last three years, by +13 percentage points more than our total sample.
Store brands should target non-Millennials.
Millennials already are more likely to choose a store for its house brands (by +9 percentage points above total shoppers). Our thinking is Millennials grew up seeing store brands that were well packaged and innovative. National brands can capture more market share if they promote their value and quality directly to Boomers, Gen X and Gen Z.
What About All the Sub-Categories?
Our research also shows that generations don’t always shop sub-categories as typically expected:
- Cosmetics – 75% of Gen Z buy cosmetics, not surprisingly. What did surprises us is the gap between the generations: Just 60% of Millennials and 56% of Gen X shopped cosmetics.
- Frozen treats – Gen Z and Millennials are twice as likely as Boomers to buy pizza rolls, Hot Pockets and other freezer snacks (76% vs. 37%).
- Caffeine drinks – Gen Z is less interested in home-brewed coffee than Millennials – 49% vs 63%. Yet 55% of both generations purchase energy drinks, suggesting an opportunity for coffee-infused energy drinks.
- Nutrition and supplements: Boomers are most likely to buy vitamins (69%), but least likely to buy adult nutrition products (16%). Gen Z, meanwhile, is least likely to buy vitamins (51%) and most likely to buy adult nutrition (27%). This insight can be significant in the context of how GLP-1 weight loss drugs are changing the shopping basket.
Access More Consumer Insights From WSL Strategic Retail
Like we said, generational buying trends are not so cut and dry. They also aren’t static. Energy drinks might fall out of favor among the maturing Gen Z consumers, while the growth of single Boomers might trigger a hike in pizza roll sales.
What matters is following all shoppers from Point A to Point X in their journeys, because common (and avoidable!) biases can cost retailers and brands market opportunities.
What’s your next generational opportunity? Access our new report, “Seismic Population Shifts Demand New Retail Strategies,” here. If you want to know more about where all your shoppers are now and next, contact an expert at WSL Strategic Retail.