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Next generation consumers: the customers to come

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As the focus moves from Millennials to Generation Z as the new consumer, Tina Nielsen explores the behaviour and characteristics of this new group, how operators can attract them and what comes next

Are Millennials killing mayonnaise? This was the question hotly debated on the internet this summer after an article in Philadelphia magazine, accusing Generation Y of abandoning the traditional condiment, went viral.

According to Melissa Abbott, vice president for culinary insight at the US-based Hartman Group, articles like these are created with one purpose. “It’s click bait,” she says, adding the claim is unfounded – while consumers may be eating less traditional mayonnaise, new variations are proving popular.

Overstated though they may be, there could be some truth to the sentiment at the heart of the claims. New generations of consumers are looking for different flavours and they are not afraid to try new products, as Don Fox, CEO of Firehouse Subs can testify. “Millennials in particular are more experimental and there is an aspect of them looking for more unique flavours; they set us some challenges for traditional cuisine,” he says.

Operators are grappling with a very different consumer profile from what they have been used to. Millennials, and the generation that has followed, Gen Z, are more adventurous, better informed and more health conscious. Those looking to attract this group are facing a challenge to stay relevant.

Industry experts have spent the past decade talking about how to attract Millennials, or Generation Y as this group is also known. Born between 1980 and 1994, the oldest are hitting their late 30s and as a customer group can be considered mature.“We have been so focused on Millennials in the industry and now it is interesting to say, ‘maybe it is not all about them anymore, maybe they aren’t changing everything’,” says Abbott.

The industry should take a keener interest in Generation Z, which according to Bloomberg, is set to outnumber Millennials soon. In 2019 the younger cohort will comprise 32% of the global population, ahead of Millennials who will account for 31.5%.

So what’s next?

“Generation Z, or Gen Z, is the emerging consumer,” says Mark McCrindle, social researcher at Australia’s McCrindle Research. “The youngest are nine years old, the oldest 23 and they have been shaped totally in this 21st century digital era.”

Where Millennials came of age at the same time as social media, Gen Z is much more immersed. “Gen Z is a more technologically-saturated version of Millennials, the oldest edge of the Millennials were shaped in the 1990s at the start of the internet before the smartphone era and they are not as integrated into tech as Gen Z is,” says McCrindle.

He points to five standout traits that characterise Gen Z: “They are global, digital, mobile, visual and social,” he explains. “They live in a digital-connected world, connectivity is truly global and they can access information whenever and wherever they are. They live in a very visual world and social infl uence is more important than experts or authority figures.”

Dan Schawbel, partner and research director at Future Workplace and the author of Back to Human, says Gen Z has a different outlook on the world to Millennials. “They are more realistic than optimistic, so they have a better sense of the world they live in and what the future may hold whereas Millennials were so much more optimistic when they were growing up,” he says.

Abbott agrees. “Millennials were raised in a ‘you can do anything’ way, but a lot of lessons have been learned over the years,” she says. “Gen Z has picked up on the practicality of Gen X; they are more cautious.”

The key factor in these changes is information, according to Schawbel. “We can make better decisions based on information and, since these generations are better connected, they can quickly ask friends for advice on what to buy and what to avoid,” he says. “You can be anywhere, pick up your phone and connect with so many people at once.” As a consumer Gen Z is happy to spend the extra money if they perceive it to be of value. “They spend a higher proportion of their money on travel, hospitality and recreation than previous generations,” says McCrindle.

Extended adolescence

The usual milestones in life – buying a property, getting married and starting a family – have been pushed back for them and it means they have more disposable income. “They have this extended adolescence and they are happy to spend money on lifestyle pursuits,” he says.

They are also much more interested in food than previous generations, according to Abbott. “We said that about Millennials too, but we see a lot more emphasis on food quality and seeing food for the true value rather than looking for the best deal,” she says. “We are seeing early glimmers of this with Gen Z and we can thank social media and education for this. They have grown up with so much information about nutrition and ingredients.”

A Big Mac just won’t do anymore? “No. There is the understanding that there is a place for it, but they are very aware that you don’t do it all the time,” says Abbott.

There may be an increased appreciation of food, but the social element is equally important. People want to share experiences on social media channels such as Instagram and Facebook. “My friends created a pop-up in New York City and it got featured everywhere because they created an environment that was fun and instagrammable,” says Schawbel. “Sadly today it is not just about the product, but what the product says about you as a consumer. People care more about the likes and comments they get on social media than they do about actually being present in the moment.”

Being woke

Abbott says that for the Gen Z consumer making a difference is important and this a ects spending habits. “They really do want to make changes that reflect who they are as a generation. It sounds kind of hokey, but it is true that they want to reflect their values – they are much more politically active than any other generation and they feel they can make a difference,” she says.

The notion of being woke – defined as being aware of and alert to racial discrimination and social injustice – is considered both a negative and a positive and it is often attributed to Generation Z.

This is something she expects to carry over and have an impact on the way foodservice businesses are run. “With the #MeToo movement, it is interesting to see how people are saying, ‘this person doesn’t get to have a restaurant anymore’. People are being called out for unacceptable behaviour,” she says. “These younger generations are saying, ‘this is who we are, that’s enough – people need to be treated fairly and equitably’. I think there will be a lot of strife in the next decade but hopefully the outcome will be a more equitable foodservice industry.”

And while operators will be concerned with attracting customers, it would be foolish to forget about recruiting from this changing talent pool.

“There is a huge problem with staff shortages in the sector – people don’t want these jobs at the moment – so it is not just about attracting Gen Z to spend their money, but actually getting these people to work with them,” says Schawbel, adding that the integrity of the company matters both for potential customers and staff members. “If a business doesn’t have a purpose and it is not supporting the local community it will lose market share.”

Gen Z on steroids

But to consider the genuine consumer of the future, people like McCrindle are already looking ahead to what has been dubbed Generation Alpha – many of them the children of Millennials. The generation officially starts in 2010 when the word of the  year was app and Apple launched the iPad; a neat reference to this group of consumers who will know no other reality than a digital one. “If you are born now you will never hold a phone that can’t take a photo and you’ll never know what Blockbuster Video or Toys’R’Us are,” says Schawbel.

He describes Alpha as “Gen Z on steroids. All the attributes you see with Gen Z are going to be tenfold for Alpha”.Though the Alpha cohort are not even 10 years old yet, much has been said to describe them already. “They will be the largest generation of history because of birth-rate growth internationally,” says McCrindle. “They are called multimodals because they learn not just through the written form but video-based form; they are global; they are called generation glass in a reference to the fact that glass is the new medium for content, not paper.”

Technology will continue to play a key part in this drive for convenience. Virtual reality and artificial reality are still in early stages today, but by the time the Alpha children grow up, things like using a headset to order groceries at home will be a normal part of their lives and they will expect it.“In just a few years virtual reality is likely to be in a third of all households,” says Schawbel.

Alpha consumers are expected to be even more mobile, even more connected and even more global. Recognising the fact that each generation is shaped by the behaviour of its parents, McCrindle says Gen Alpha kids will live a very different life to their parents, raised by baby boomers. “We are likely to see more change – two income families where both parents work, but they might have career breaks to study or start a business,” he says. “Life is more fluid and post structured than what we used to see.”

Put together, Z and Alpha present the market with a consumer group that is better informed than previous generations. They want change and in a globalised world they benchmark experience by what’s available abroad as well as in their own market.“People are used to getting the update on the apps or on products – and they expect it in every category. If they see something in another market, they want it here too.”

As Schawbel says, attention spans are “probably in negative”, which means the life span of a brand or a menu item is a lot shorter than it used to be. “If you are not producing in a city like New York you are probably not even going to last a year,” he says.

For operators this means opportunity as well as challenge. “This emerging consumer responds to change and they are not purely brand loyal. In the past people often used to identify themselves with a brand and they liked consistency, but the generation of young people today are non-category, they can’t be de ned. They will enjoy a takeaway but then they will enjoy something a bit more cutting edge,” says McCrindle. This, he adds, cuts across socio- economic and class boundaries in what he calls a post-category world.

Schawbel predicts operators will be more consumer driven in the future. “For that casual fast food segment and certain restaurants in the middle it could be mixed,” he says. One thing is for certain with this discerning and demanding new consumer group: “The quality of food will have to be much higher. Any operator today will have to reinvent itself, test new things on the menu. If you have new dishes, are creative and provide really good service, I think you will stand out. And there is more pressure than ever to stand out.”

The task for operators

The industry is trying to get to grips with this new potential customer group to tap into the change pro le. The priority is the urgent need to establish online engagement. “If you don’t have a clear digital presence then the restaurant doesn’t exist as far as this generation is concerned,” says McCrindle.

This helps to build the brand and visibility in the online space, but it is also a great channel to build relationships through offering deals and discounts. As a consumer group Gen Z have limited funds, but if they identify with a brand they will invest in it. “Whereas previously we might have used coupons, this generation – more so than Millennials – is creating those relationships on Instagram,” says Abbott.

Cultivating a local community element to connect with new consumers is important. “Even if they are a very long-standing multinational chain, they can really tap into that local community in a way that speaks to their clients,” she says. “It enables younger consumers to feel connected to that brand.”

Consultants have a part to play in helping operators respond to the challenges and look ahead to the next trend. Ken Schwartz FCSI, CEO, ssa foodservice design + consulting, acknowledges the world of insta-instances where younger people increasingly want instant gratification.

“The ability to wait for ‘the moment’ seems to be fading, but sometimes waiting makes the experience more intense,” he says. “Therefore, I think as creators we must think about how to slow down the pieces of an event like dining to allow the guests to have a greater experience. I have begun to think this way and speak to clients about this. Often it is something they have not thought about or considered in their operation but it is a welcomed perspective.”

For a generation where the majority still is not even able to buy alcohol or make significant life choices, the Gen Z population wields considerable influence at home. Where children in the past were told by their parents what they were eating, now they are part of the decision-making process, especially in urban environments, such as New York City, Chicago and Seattle. “Parents might give kids an UberEats account and they trust them to order and eat the right thing. There is a partnership,” says Abbott. “The democratisation of the family is in full display with this generation.”

By now operators have shifted their focus from Millennials to Gen Z, but McCrindle says smart players will be looking beyond to Gen Alpha before they become the key spenders. “They are already the key influencers over the spenders now,” he says. “It used to be that parents made the choices and children were just stuck with it but these days it is definitely children influencing parents. They have an influence power beyond the economic power.”

While the debate about the death of mayonnaise was still raging, Business Insider decided to fact check the issue and established that mayonnaise isn’t exactly dying. According to Euromonitor, mayonnaise sales fell 6.7% in the US between 2012 and 2017, but there is whole lot of variations of mayonnaise available. So while hipsters might reach for the sriracha before the mayo, there is still a place for the traditional condiment. Or as Abbott says: “We still like our aioli.”

Tina Nielsen