How to Invest in the Next Generation? Exploring Brands Popular Among Gen Z in the U.S.

Shopping at discount stores is one of their methods for cutting costs, with 48% of Gen Z preferring to shop at these locations. As consumers, members of Generation Z are also typically reliant on the Internet to research their options and to place orders. The hashtag #tiktokmademebuyit has been viewed more than 6.70 billion times. Affordable online beauty brands like $e.l.f. Beauty (ELF.US)$ are favored by the younger generation.

Gen Z still shops brick-and-mortar, though. In the past two years, Sam's Club has seen a more than 60% increase in membership among individuals 27 years old and younger. However, Gen Zers seem to love a good deal and tend to favor foods with lower per-unit costs compared to earlier generations. Bulk purchases from $Costco (COST.US)$ or Sam's Club, such as toilet paper or canned goods, are frequently shared among roommates, friends, or family members, making this approach particularly effective for non-perishable items.

Social media platforms are an important source of inspiration for young people to entertain, seek information, stay connected with friends, and shop. $Meta Platforms (META.US)$ 's Instagram Reels short videos are popular among young people for content creation.

At the same time, Generation Z's preference for information retrieval is shifting from traditional search engines such as Google to community-based internet platforms such as $Reddit (RDDT.US)$ . On Reddit, users are exposed to new and diverse topics through a constantly updating feed of posts from subreddits they subscribe to, along with suggested content from related communities. Text-based discussions and comments encourage more in-depth engagement with content, compared to traditional platforms that may prioritize quick browsing.

$Netflix (NFLX.US)$ and $Spotify Technology (SPOT.US)$ are favorites among the younger generation for binge-watching shows and listening to music, respectively, allowing for a highly personalized experience.

Additionally, as the younger generation watches traditional television less, this has created market opportunities for sports streaming services. Fox, Warner Bros. Discovery, and $Disney (DIS.US)$ -owned ESPN have announced plans to create a new "super platform" later this fall, which will consolidate their sports broadcasting rights under one "roof," thereby creating the strongest sports streaming service ever to attract young viewers who typically do not watch much television.

Gwi's report indicates that Gen Z's preferences for pets (+22% YoY) are one of the fastest-growing purchase drivers behind the brand of pet food they choose. As social media becomes a key influencer in purchasing decisions, partnerships with pet influencers are proving to be highly profitable for both brands and consumers. Regarding their preferred retailers, $Chewy (CHWY.US)$ is gaining popularity, showing an 18% increase year-over-year.

A recent EY survey has shown that Gen Z is at the forefront of adopting digital payment methods among all age groups. They favor fast and simple payment experiences and show less concern for data privacy. Cash (owned by its parent company $Block (SQ.US)$ ), Apple Pay, and $PayPal (PYPL.US)$ are the most popular cashless payment methods among young people.

Besides, Gen Zers prefer debit cards to credit cards. Only 39% of Gen Z reported frequent use. Instead, they switched to BNPL (Buy Now Pay Later) services, such as those offered by the company $Affirm Holdings (AFRM.US)$ . Discovery's research shows that the usage rate of pay later in Gen Z is as high as 40%.

Additionally, more Gen Zers are diversifying their sports interests, with significant increases in following leagues such as ONE Championship (+60% YoY), Formula 1 (+53% YoY), and WWE (+47% YoY). Interest in women's sports leagues has also seen a notable rise during this period, especially for events like the FIFA Women's World Cup (+26%). There has also been a 24% increase in Gen Z women following the NFL, contributing to the expanding user base of online betting platforms. $DraftKings (DKNG.US)$