Businesses brace for impact as cost-of-living squeeze forces Gen Z to reduce non-essential spending

Students are feeling financial pressure due to the cost-of-living squeeze with 40 per cent depending on parental support and loans, according to a new Tech Report from student affinity network UNiDAYS.

Rising prices have led to one in four students feeling “financially insecure”, meaning that expenditure on goods deemed to be non-essential has fallen. This becomes especially apparent when analysing Gen Z expenditure on tech items.

The findings suggest that over half (51 per cent) of UK students spent nothing of their monthly expenditure on tech. While students still prefer to buy tech items outright, the number of UK students buying items independently such as tablets fell by 10 per cent from 2020 to 2022 as many turned to their family for help with payment.

And, alongside the fall in expenditure, Gen Z are also spending less time researching the products they are purchasing, a trait which goes against the traditionally ‘savvy’ nature of the demographic. This is reflected in the 7 per cent fall in Gen Z consumers researching products on YouTube before purchasing since 2020.

Less surprisingly amidst the ongoing cost of living crisis, Gen Z has maintained a “keen eye for a bargain”, with 40 per cent actively looking for offers or discounts; over one quarter (29 per cent) actively wait for a discount before making a purchase.

For brands this means that incorporating a year-round pricing strategy can be lucrative, helping to drive brand affinity with Gen Z.

Alex Gallagher, chief strategy Officer at UNiDAYS, explained: “Driving affinity with Gen Z, a generation with a $200bn annual global spend power, is crucial for brands in the current climate, especially given that 60 per cent of Gen Z have admitted that their brand loyalties have changed since the start of the pandemic.”

“Despite student expenditure on non-essential items decreasing, there is a clear opportunity for brands to resonate with Gen Z by adopting the right pricing strategy. Gen Z are connecting with brands offering discounts and offers on their tech products.

“Brands that take the right pricing approach will capture the attention of this savvy demographic, as well as generation Alpha who are in a similar financial predicament.”