They are the teenagers with acne, the high-school jock, the freshman college nerd, the 21-year-old graduating magna cum laude.
They are the first demographic to have never lived a day without the Internet.
They are the United States’ most ethnically diverse generation and are growing up with conversations about global warming, wage fairness, transgender rights and health care for all. Their preferred forms of communication are instant messaging, Snapchat, Instagram, Wink and Nimbuzz.
Most of them still live at home, with little income of their own, and are at the crossroads between post-pubescence and adulthood. But by 2020, they will make up 40% of consumers and already possess $44 billion in spending capacity.
They are Generation Z.
The second annual CSP-Technomic Inc. exclusive consumer research study plows into the next emerging population group, the one whose age by definition leaves them hard to define, but whose traits and expectations are rapidly forming. While demographers peg Gen Z as being born roughly between 1993 and 2012, we are focusing on the older, leading edge of the group—the 16- to 22-year-olds—who make up 9% of our nation.
For retailers who take the time to understand Gen Z, the rewards are enormous—potentially 50 to 60 years of consumer fidelity, a stretch of time unparalleled since the Industrial Revolution.
In the following pages, we’ll take you into Gen Z’s umbilical attachment to technology and how gizmos will influence every purchase behavior, from the cars they’ll drive to the food they'll digest.
But the challenges are just as great, considering how much is competing for Gen Z’s focus.
“You’re definitely going to have to work harder to get their attention,” says Nancy Nessel, a Connecticut-based consultant who specializes in Gen Z. But once you get it, you’ll have a loyal consumer. “As a whole, they’ve got really great values. They don’t have a ‘what’s in it for me’ attitude. If they like a brand, they’ll stick with it, because they want to form connections.”
Our report is not the final word--it is just the beginning. Our hope is to activate your creativity and spark your curiosity.
Table of Contents
Gen Z: The Supersized Millennial
How kids these days are using your stores
If you thought millennials were techno-maniacs, stand back. Gen Z knows no other way than flying their fingers across touch screens to dispatch communications.
These teenagers and nascent 20-somethings don’t remember a nanosecond without the Internet. Whereas millennials can recall cellphones, grainy digital cameras and life without Twitter, the next generation is all about the smartphone.
Besides a required focus on technology, what does the emergence of Gen Z mean for you?
Ethnic flavorings: As the most ethnically diverse population in modern times, Gen Z will crave more creativity and fusions in foodservice, more spices and surprises. Pizza and chicken will still be in play, but plan for more unusual toppings. It’s OK to take risks with this group.
Time for Z: Because most are still in school, Gen Z will not be a big part of your breakfast rush, as opposed to millennials. But the Zers love c-stores in the afternoon, especially after school, for a snack or drink.
Put the coffee away: These kids are not so hot on coffee--at least not yet. They do love your made-fresh cold and hot drinks, though. Think frozen beverages, milkshakes and hot cocoa.
Breakfast club: Yes, we just told you not to worry much about the Z’s for breakfast. Well, that’s not totally accurate. Though many get their breakfast at home or in school, the older Gen Zers, say those 20 to 22, are going to c-stores for breakfast. Compared to their older millennial sibs, these kids favor cereal, fruit and yogurt, as well as an indulgent doughnut or baked good.
Next: Technology Expectations
The first fully plugged-in generation uses technology as a tool
A teenager has her face glued to her smartphone, typing away and seemingly oblivious to the world around her. It’s a common--if somewhat misleading--scene.
“The majority of Gen Z had some screen, whether a phone or something else digital, from the age of 5,” says Nancy Nessel, a Connecticut-based consultant who focuses on Gen Z. According to the CSP-Technomic survey, 85% of Gen Zers have a smartphone, while 38% have a tablet. Another oft-cited fact: Millennials grew up with three screens--a TV, laptop and desktop computers--but Gen Z is juggling five of them, with the addition of the smartphone and tablet.
While initially there was concern that Gen Z would have terrible social skills because of their tech immersion, this is proving to be unfounded, Nessel says.
“It’s given them a platform to be confident,” she says. “They are using it more as a tool, to compare prices and check on how they are doing on Instagram. They use it very pragmatically.”
And more so than earlier generations, Gen Z sees technology as a “basic amenity” in brick-and-mortar stores, according to Technomic, and an expectation for completing tasks such as ordering food.
The survey shows nearly 60% of Gen Z consumers say they are likely to use self-service checkouts, and more than half would likely use touch-screen ordering/payment systems and food-order kiosks at the pump.
Compare this to a 2014 CSP-Technomic survey that found 52% of all consumers, on average, interested in self-service checkouts, and only 47% likely to use a pump-side kiosk.
Perhaps Gen Z’s most valued tech tool is the one they carry with them everywhere: the smartphone. And they use it to control and direct their spending. You can thank their parents, Generation X, for this propensity.
“Generation X is raising Generation Z in a more pragmatic way,” Nessel says. Gen X, the first “latchkey” kids, encourage independence in their Gen Z children and tend to be more financially frugal because most of their households are dual-income or single-parent, Nessel says.
“They are not spending a ton of time with Generation Z, who tend to be more independent and less coddled than Generation Y,” she says.
It’s about striking a balance in life, says Nessel. One result of this parenting style is that Gen Z is proving to be highly practical with its money. “While they want to shop, they don’t want to pay high prices,” she says, pointing out that Gen Z likes to shop online and at discount stores such as T.J. Maxx. They are more likely than earlier generations to examine user reviews for big-ticket items.
“They take purchases very seriously, because they are so practical with their money.”
The survey reveals a few ways c-store retailers can play to this trait. Asked what would encourage them to visit c-stores more often, Gen Z picked “lower prices” (53%) as their top trigger. It’s understandable, considering most still live at home and are on a fixed income. Because of this, off ering a loyalty program that rewards customers with special offers can help Gen Zers feel as if they are getting more for their money, which in turn may spur more store visits. “Better overall value” was the second-most-selected way that c-stores could trigger more Gen Z visits.
Next: Get to Know Gen Z
Get to Know Gen Z
Get out of the way, millennials—there’s a new kid in town. Gen Z, very broadly defined as anyone born between 1993 and 2010, is the first age group to grow up plugged into smartphone technology.
This shapes not only how they view the world but also prioritizes how they interact with it. And considering they will make up 40% of consumers by 2020, retailers should know what makes them tick.
With news of world chaos and tragedy all over, Gen Z takes solace in giving back.
“Generation Z is really into altruism and charities, so they like brands that have a cause, and a brand with a cause justifies the price point,” says generational expert Nancy Nessel. “They are also big into volunteering, and want to save the world.”
Say hello to the most ethnically diverse generation in American history, roughly one-half Caucasian and one-half Hispanic, African-American, Asian or multiracial. Meanwhile, 74% of Gen Z surveyed by Northwestern University believe in equal rights for transgender people.
Any message intended for this group must reflect this multicultural, inclusive viewpoint.
“Be your own boss” is a motto for Gen Z.
According to a Northwestern University survey, 42% of Gen Z expects to work for themselves at some point in their working lifetime. (Only 11% of Americans are currently self-employed.)
Focused on Better Food
According to Technomic, Gen Z is more likely than the general population to say better-tasting, higher-quality, more varied and more healthful options would encourage them to buy prepared food at c-stores.
And a survey by The NPD Group shows Gen Z is more likely than millennials to prefer home-cooked over ready-to-eat meals.
Like millennials, Gen Z shows less of an interest in driving or owning a car than older generations. For those who do want an automobile, their wish list is topped by fuel efficiency--think compacts--and hybrids.
Next: Hungry Youth Truths
Hungry Youth Truths
C-stores have a chance with Gen Z--if they focus on fresh
They may be pizza-pounding teens and early 20-somethings, but Gen Z has a healthier hankering for more freshly prepared, made-to-order and do-it-yourself consumables than you might assume. Consider these CSP-Technomic report findings:
- More than one-third of all Gen Z food/beverage purchases within c-stores are from the foodservice/prepared retail area.
- Nearly 40% of this age group is purchasing prepared foods and beverages more often from c-stores than a year ago.
- Nearly every time they visit a c-store, Gen Z shoppers purchase food (55%) and beverages (69%) from foodservice areas.
“When Generation Z visits a convenience store, they’re generally looking to satisfy an immediate craving,” says Rachel Kalt, senior strategist for The Culinary Edge, San Francisco. “However, it’s important to remember that this generation prefers freshly cooked meals to frozen and has a greater interest in cooking compared to previous generations,” which plays into their purchasing decisions of prepared foodservice items.
Want to get more high school and college students in the door? Made-to-order food stations, hot/cold food bars, roller grills and restaurant chains inside the store are among the amenities that make Gen Zs more inclined to visit a convenience retailer, according to the CSP-Technomic survey.
“Gen Z is do-it-yourself oriented,” Kalt says. “Their hands-on approach to life means they’re interested in opportunities to customize their food and beverage items.
Being able to allocate their dollars as they wish and having a lot of food options within one environment is convenient for them.”
Tom Vierhile, innovation insights director for Canadean Consumer, which has global headquarters in London, says teens today are raised on dining out, “so it’s not much of a surprise that younger consumers are more likely to visit convenience stores that offer enhanced food options.”
To help you get over any inferiority complex about fast-food competitors, consider this: According to the CSP-Technomic survey, Gen Z views c-stores as comparable to or better than QSRs when it comes to beverage variety and beverage quality (89% each); speed of service (85%); overall value (78%); food flavor/taste (71%); healthy-food availability (71%); food variety (64%); and food freshness/quality (60%).
“This is a generation that has grown up in the car, getting ferried from one thing to another, with snacking and food consumption habits established early,” Vierhile says.
In fact, 15- to 17-year-olds had the lowest preference for eating at home rather than a café or restaurant, according to results of Canadean 2014-2015 surveys of U.S. consumers.
Gen Z also yearns for a social experience in which their power as a consumer can be felt. “A lot of Gen Zers aren’t old enough to drive or go to a bar, and many don’t have the financial means to sit in a restaurant and enjoy a full meal. But they can go to a c-store, buy a bunch of items, demonstrate agency and independence, hang out with their friends and socialize, which is significant,” says Kalt.
Make ’Em Happy
To spike foodservice sales among Gen Z, c-stores should focus on choices that offer better ingredients, taste and value, Technomic data indicates. Fifty-seven percent of respondents say they would be more inclined to purchase prepared foods if c-stores offered higher-quality options, and 51%--only a percentage point below more affordable options--said the same for healthier options.
“Gen Z is more food-aware and more informed about healthy foods and nutrient density, due in large part to pervasive food media around them,” says Kalt. “It’s cool these days to be young and into food, and there’s a hipness to knowing about ingredients and where ingredients come from.”
Vierhile agrees that younger consumers increasingly expect healthier, higher-caliber products. “Think about the quality message an offering from a foodservice outlet like Panera Bread may convey vs. a stereotypical roller-heated hot dog from an old-style convenience store,” he says.
But don’t kid yourself: Technomic reports that classic c-store fare remains tops among 16- to 22-year-olds. Pizza is the menu item most often purchased, followed by doughnuts and desserts, by Gen Z.
“Some indulgences never go out of style. Doughnuts are timelessly appealing. And there’s an element of shareability to pizza when they’re hanging out with friends,” Kalt says.
Also, Gen Z is more likely to opt for foodservice liquid-refreshment staples such as fountain soda and brain-freeze favorites than other beverages, including packaged energy drinks, per the Technomic report.
Tap into Gender, Generation Gaps
Be careful not to adopt a “one-size-fits-all” approach to Gen Z, because male and female constituents differ on many foodservice preferences. For example, regarding made-to-order offerings, the Technomic report indicates females more strongly prefer salads (43% vs. 25% for males), frozen desserts (56% vs. 41%), smoothies/slushies (50% vs. 38%), coff ee (39% vs. 28%), healthier options (58% vs. 48%) and samples (56% vs. 46%).
“Women at this age are concerned about their image, and some of these healthier options offer reduced calories,” Kalt says.
“Males may be buying less healthy options, but many Gen Z boys could be burning a ton of calories being involved in sports and activities.”
Gen Z and millennials are decidedly different demographics, too, when it comes to foodservice preferences. For example, Gen Z is less likely than millennials to say that combo meals, made-to-order food stations, food bars and roller grills would encourage c-store visits, according to Technomic.
Compared to millennials, Gen Z is also less likely to purchase hot dogs, retail frozen breakfast entrées and packaged side items such as chips, but more likely to buy fruit, cereal and yogurt at c-stores. In fact, many Gen Zers polled by Technomic indicated an interest in vegan/veggie foods.
Next: Fuel Futurists
Don’t expect Gen Z to fuel up the way their parents do
For most people of driving age, the concept of alternative-fuel vehicles is just that—still an idea, possibly a good one, but not yet practical during this era of low gasoline prices.
For Gen Z, many of whom have a learner’s driving permit or are still bumming a ride from their mom and dad, the future car has no such limitations.
For example, while Gen Z consumers were somewhat less likely than millennials to say they would lease or buy an alternative-fuel vehicle, the two generations’ enthusiasm for electric vehicles (EV) was about the same, according to the CSP-Technomic survey.
Nearly 40% of Gen Z says they would within the next 20 years buy or lease a plug-in hybrid, which can run on a battery or a gasoline-powered engine, or pure battery-powered EVs.
Gen Z bested millennials’ interest in using EV charging stations, whether they are at the gas pumps or have their own dedicated parking space.
About the Survey
Techonomic conducted an online survey of 1,000 c-store customers ages 16 to 22 in September 2015, with roughly an equal percentage of male and female respondents.
Questions for gas and tobacco were asked only to respondents of legal driving or smoking age, which was based on a state-by-state basis.
The following charts show how the survey sample breaks out by age, geography, ethnicity and c-store shopping frequency.