BDO’s Consumer Trends survey

Increase in Gen Z’s everyday discretionary spending over the next six months is six times higher than the average consumer

Generation Z intend to increase spending more than any other age group on everyday non-essential products and services, whilst those aged 45+ plan to reduce their spending in this area
Limited exposure to rising living costs means Gen Z are more willing than others to up their spend on leisure activities and personal care
Entertainment subscriptions are the category with the highest rate of projected increased spend across all age groups, whilst takeaways are the lowest

A survey of current and future consumer spending revealed that Generation Z (those between 18-24) have the highest rate of spending increase across all age groups, according to new research by business advisory firm, BDO.

BDO’s latest ‘Consumer Trends’ survey of 1000 UK adults asked consumers what they intend to spend in the next six months on non-essential goods and services such as entertainment, eating out and personal care.

When anticipating their spending over the next six months, Gen Z’s predicted spend increase (+12%) measured six times higher than the overall average consumer intention (+2%). Consumers aged between 18-44 anticipated an increase in spending across all categories, while those aged 45 and over planned to cut back on everyday discretionary spend.

Building on this trend, Gen Z also said they had increased their spending in the past six months, with a positive net spend change of +7%, compared to the total consumer sentiment of -6%. Those aged 55 and over recorded the lowest discretionary spending in the past six months.

Gen Z’s spending habits can be largely attributed to their financial position. Gen Z are less likely to own a home or to live independently, and the total number of adult children living with their parents has increased by 14.7% from the 2011 Census to the 2021 Census.

Now with 1 in 4.5 families having an adult child living at home, Gen Z are more protected from current rises in rental prices, mortgages, energy bills and groceries, leading them to record a higher rate of anticipated savings growth over the next six months than any other age group.

Comparing spend across categories

Across all everyday discretionary categories and age groups, consumers are showing an intention to increase spending the most on entertainment subscriptions and beauty and personal care. The intention to spend is lowest in the takeaway category.

While Gen Z demonstrate a rising spending trend across all everyday discretionary categories, they particularly favour leisure activities, recording a significantly higher intention to increase spend in this area than the average consumer. This suggests they are placing serious value on maintaining social experiences post-pandemic.

Further exhibiting their preference for socialising, Gen Z also have stronger spend intention than other demographics towards dining out; 12 times higher than the consumer average for eating out, and eight points higher than average for drinking out.

Tom Holt, partner at BDO commented:

“High inflation, coupled with the current cycle of interest rate rises, have no doubt had an impact on overall consumer spending. However, with Generation Z less likely to be directly affected by rising rents, mortgages and energy bills, it is of little surprise that this age group has come out on top of consumer spend intention for everyday discretionary items.

“Gen Z’s willingness to spend, especially on leisure experiences, should be a focus for everyday consumers brands. However, the caution we are seeing exercised by those aged 45+ will still have an impact on the market.

“In order to compete, brands must ensure they are utilising consumer insights to understand exactly what their target demographics want and need, and which channels will most effectively capture them. Armed with this information, consumer businesses will be able to make strategic investments and benefit in the long-term.”

ENDS

Note to editors

The survey referred to in this article took place in July 2023. The discretionary spend categories covered include: beauty and personal care products; beauty services; entertainment subscriptions; apparel; sports and outdoors; leisure activities; eating out; drinking out; takeaways.

The survey included 1005 consumers aged 18+ split across different age groups and income brackets.

Net spend intention is based on the question "How do you anticipate your spending to change in (category) in the next 6 months?" with five response options ranging from "Reduce my spend greatly" to "Increase my spend greatly".

The figure is calculated by analysing the percentage of consumers who intend to increase their spend less the percentage of consumers who intend to reduce their spend

Therefore net spend intention is the net spend movement anticipated in the next 6 months per consumer group

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Betsy Vaughan
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Bethany.vaughan@bdo.co.uk