Gen Z & millennials prioritise quality amid cost crisis

New research indicates that Gen Z and millennials are altering their shopping habits by prioritising quality, sustainability, and security in their luxury purchases amid the ongoing cost-of-living crisis.

Tink, a payment services and open banking platform, conducted a study involving over 2,000 UK consumers and more than 500 UK high-end merchants. The findings underscore how these younger generations are redefining luxury shopping by consistently purchasing a significant share of luxury items annually, with Gen Z averaging 16 items and millennials 14 items per year.

Lucy Grant, Tink Commercial Strategy Director, said, "Understanding the evolving preferences of Gen Z and millennial shoppers is key for merchants looking to stay ahead in the high ticket and luxury market. These high-value customers demand more than just a premium product, they expect an exceptional experience, from sustainability and quality, to seamless and secure payments."

Security and payment experiences play a crucial role in this new retail landscape. A streamlined payments process is now a critical component of the shopping journey for 62% of Gen Z and 68% of millennials surveyed. Concerns about payment security lead over half of the surveyed millennials (52%) and Gen Z (56%) to hesitate when making high-value online purchases. This increases the importance of secure payment methods, with 68% of high-end retailers planning to upgrade their payment systems this year.

The study highlighted that sustainable practices and brand reputation have become pivotal factors in the buying decisions of these age groups. About 73% of millennials and 64% of Gen Z participants expressed a desire to invest more in quality purchases that offer longevity. Moreover, 75% of millennials and 76% of Gen Z indicated a willingness to pay a premium for brands with established reputations.

Grant continued, "Trust and brand reputation have never been more important for consumers when parting with their hard-earned cash, so it's essential that merchants give shoppers peace of mind when it comes to making high-value purchases. By investing in modern payment solutions, such as Pay by Bank, high-end merchants can offer a secure, trusted checkout option – with authentication happening in the customer's familiar bank environment."

Tink's findings also reveal that Gen Z and millennials expect payment methods with transparency, as 36% of Gen Z and 42% of millennials seek options without hidden fees. Additionally, 34% of Gen Z and 38% of millennials demand payment methods that minimise fraud.

This evolving consumer mindset presents both challenges and opportunities for retailers, particularly those offering luxury goods. With Gen Z and millennials continuing to place an emphasis on ethics and security in their purchasing decisions, merchants must adapt to cater to these expectations and gain a competitive edge in the market.