As the next generation of consumers, Gen Z is at the forefront of businesses’ marketing strategies. By 2025, Gen Z will make up more than a quarter of the global workforce, according to the World Economic Forum. In addition, research and analysis company GlobalData predicts that up to $8.6trn in assets will be transferred to younger generations within the next decade.

Gen Z’s growing spending power is set to shape the way businesses deploy technology to reach this important demographic. The millennial and Gen Z contribution to the retail industry is predicted to increase to 48% by 2030 from 32% in 2020, according to financial technology company Afterpay’s 2022 Gen Z Report. All of which makes it vital that businesses address their consumer demands and expectations.

What are Gen Z’s consumer demands?

Gen Z has high expectations of rapid technological advancements that will allow for a more streamlined customer experience. According to GlobalData analyst Amna Mujahid, Gen Z expects frictionless, gamified and personalised consumer experiences. “Gen Z will continue to expect quick, personalised and engaging efforts from companies to win them over,” says Mujahid.

Indeed, Twilio’s 2024 annual State of Personalisation Report revealed that Gen Z consumers expect greater personalisation and efficiency in their engagement with businesses. Gen Z consumers want their issues solved remotely, with increased efficiency and limited effort.

Gen Z expects the businesses that they are interacting with to have relevant user information immediately accessible and that they cater the experience to a user’s personal tastes. Such optimisation allows the user to find the product that appeals to them, without the inconvenience of searching for it.

GenZ’s demands are increasingly being fulfilled using AI and other emerging technologies. According to GlobalData’s Thematic Intelligence Report on Gen Z, a third (33%) of Gen Z “would like to see more brands entering the virtual world where products can be browsed and purchased virtually”. With increasing adoption of both virtual reality and augmented reality (AR), Gen Z expects greater integration between the real and digital worlds, allowing for more convenient interactions with brands and companies.

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Why have Gen Z’s demands changed?

As digital natives, Gen Z has never experienced a world without high-speed internet. There is a general expectation amongst Gen Z for continued technological evolution.

The past 100 years of human history have seen rapid development and people have become accustomed to this rapid change and improvement. Therefore, Gen Z’s expectations are simply a reflection of the ongoing technological revolution, not an unrealistic demand.

In addition, as a consumer group, GenZ is choosing businesses that appeal to their moral and ethical standards, as well as businesses that provide the best service. If businesses take note of this demand, GenZ as a cohort become loyal consumers. According to a global survey conducted by the IBM Institute for Business Value, 66% of Gen Z respondents stated that they purchase goods or services from a brand for a long time if they like the brand. However, this loyalty is contingent on the brands ability to quickly engage with the consumer and fulfil expectations.

How can businesses appeal to Gen Z?

Businesses are harnessing the power of AI to meet the need for higher-quality customer service. AI can provide businesses with real-time information and ensure a more efficient customer experience. Reducing the duration and complexity of an interaction between the customer and the company benefits both the customer and the company.

Customer-focused AI software companies such as Zendesk have successfully found ways to ensure real-time customer support and accuracy with AI.

In June 2024, Zendesk announced key developments to its use of AI to improve customer to AI agent interactions and customer to human agent interactions.
AI can be used to enhance customer to human agent interactions by providing the agent with all the relevant user information to make the customer experience more efficient. Reducing the time of the interaction will not only improve the efficiency but also customer satisfaction.

Zendesk’s European CTO, Matthias Goehler, explained that, by combining the different user information into one user profile, AI can provide the human agent with real-time insights and information that will dramatically decrease customer interactions whilst ensuring good customer service.

AI can “search the data, understand the data and analyse them in real time” and give the agent detailed real-time insights into the issue at hand, says Goehler.

Social media platform Snapchat is another company using emerging technology to help businesses appeal to GenZ. The app’s AR features have been incorporated by businesses into their marketing strategies to appeal to a young demographic.

Qi Pan is director of computer vision engineering at Snapchat maker Snap Inc. Pan says that Gen Z now wants physical experience to be incorporated with their digital experience. By introducing interactive elements to a brand’s marketing strategies, Pan’s team at Snapchat is providing businesses with an effective means of engaging Gen Z consumers, which will in turn consolidate Gen Z’s brand loyalty.

“The younger demographic is much more willing to adopt, embrace and see what benefits we can provide for them compared with previous generations,” says Pan.

In a two-week advertising campaign, watch brand Fossil successfully used Snapchat’s AR features to target Gen Z consumers. The campaign resulted in more than 60,900 Snapchat user engagements and drove 219 purchases, increasing Fossil’s visibility across a wider audience.

At its first pop-up in London in 2023, leading online shopping retailer ASOS partnered with Snapchat to create an AR catwalk show. By pointing their cameras at the building, customers were able to use their Snapchat app to see “digital avatars wearing a range of ASOS that can be purchased in-store”.

Not only does this remove the inconvenience of having to try on clothes in person, this interactive use of AR is also enjoyable for customers, increasing the attractiveness of the brand.

In March 2024, Snapchat launched its sponsored AR filters, which allow brands to create personalised lenses – or filters – to advertise their products.

Snapchat has made its latest feature accessible to both small and larger businesses by removing any production costs or need for technological expertise. The accessibility of this AR filter means that AR is becoming more widely used by different businesses to access the Gen Z consumer base.

Emerging technologies like AI and AR are rapidly driving the development of customer experience by blurring the edges of the real and digital worlds. Businesses will continue to leverage these technologies in customer service, marketing and advertising strategies to appeal to a generation coming into its own with increasing spending power.