With a population of 377 million, Gen Z has become the largest generation in India. While often viewed as teenagers, this group is anything but uniform. Their purchasing power and distinct perspectives demand the attention of businesses and marketers.
To distinguish fact from fiction and gain a deeper insight into this influential generation, Snap Inc collaborated with the Boston Consulting Group (BCG) to produce a report titled 'The $2 Trillion Opportunity: How Gen Z is Shaping the New India'.
The research provides fresh insights into the unique spending habits of Indian Gen Z across various categories, an area that has not been extensively examined before. The report also uncovers how they engage, influence, shop and spend, shaping the future of India's economy.
With 90 per cent of its daily active users falling between the ages of 13 and 34, Snapchat is one of the leading platforms representing the voice of young people in India.
Commenting on the findings from the report, Pulkit Trivedi, Managing Director, India, Snap Inc said, “India is a young nation with a 377 million Gen Z population which will shape the future of India's growth in the next two decades. Gen Z will be the biggest contributor to India's consumption growth driving $1.8 Trillion worth of direct spend by the year 2035. In partnership with the Boston Consulting Group we are excited to share deep insights on the economic potential, values and shopping behaviour of Gen Z in India. As a platform that serves the Gen Z audience, we look forward to working with brands and businesses to harness this growth potential.”
"Our research evaluated the substantial impact of Gen Z on consumption in India. Gen Z is already driving 43 per cent of India’s consumer spending. Their influence is not limited to select categories – it cuts across categories ranging from fashion, eating out, to automobiles and consumer durables. It is important for marketers to take note that this generation is driven by unique values and beliefs and therefore have distinctive purchase behaviours, however we noticed that only 15 per cent of brands we spoke to are actively taking steps to tap into this opportunity. For businesses, understanding and authentically engaging with Gen Z isn't just good to have; it's necessary for winning today and will be imperative for survival tomorrow”, said Nimisha Jain, Senior Partner and Managing Director at BCG India.
Gen Z’s Collective Spending Power
Gen Z is not merely influencing the market but fundamentally reshaping it. With a collective spending power of $860 billion, they account for 43 per cent of the country’s overall consumption. The group significantly impacts spending in various categories including 50 per cent of total footwear expenditure, 48 per cent on dining, 48 per cent on out-of-home entertainment and 47 per cent on fashion and lifestyle. Their spending power is set to grow even more, with projections indicating it could reach $2 trillion by 2035.
One in four members of Gen Z is already in the workforce, granting this generation a total spending power of $860 billion. However, the distribution of this spending reveals that about $200 billion stems from direct spending - money they earn and spend themselves while $660 billion comes from influenced spending, encompassing purchases swayed by their recommendations or preferences. By 2035, these figures are anticipated to shift significantly, with direct spending expected to rise to $1.8 trillion, indicating that every second rupee of consumer spending will be driven by Gen Z.
Authenticity Of Gen Z
Often mischaracterised as a detached generation, Gen Z is firmly grounded in authenticity and meaningful connections. Approximately 70 per cent view their inner circle, comprised of close friends and family as their main sources of guidance, actively sharing daily experiences, concerns and seeking advice on important decisions such as purchases and content consumption. Eight out of ten GenZers consult their close friends when deciding what and where to shop.
Demand For Visuals & Immersive Experiences
With a strong preference for visual communication, nearly 80 per cent of Gen Z utilises images, GIFs and immersive visuals to express themselves and engage with their peers. The group is deeply committed to showcasing their authenticity to loved ones and prefers to communicate through visual sharing. Their strong connections underscore their desire for interaction and the value they place on seeking input from trusted individuals.
Gen Z places a higher emphasis on immersive visuals than previous generations, with 77 per cent of this cohort finding augmented reality and interactive visuals more engaging. The trend underscores the necessity for brands to develop captivating content. They embrace 'shopcialising', sharing shopping experiences with their inner circle through photos or video calls. The seamless 'phygital' integration of online and offline shopping is evident, as half of Gen Z are likely to check wish lists or creator pages on their phones while shopping in-store, higher than the 32 per cent of millennials.
Shift In Brand Loyalty
When it comes to brands, this generation prioritises trends over traditional loyalty. They are 1.7 times more likely to opt for trending styles rather than brand names, with 72 per cent of Gen Z shoppers seeking inspiration from creators' social media channels.
Despite Gen Z's undeniable influence in India, a substantial gap exists between recognition and action. While 45 per cent of businesses recognise Gen Z's potential, only 15 per cent have actively utilised these insights. The discrepancy offers brands a valuable opportunity to establish stronger connections with the generation that is shaping the future of Indian consumerism.
To seize this opportunity, brands and marketers should prioritise five essential strategies - swiftly innovate to keep up with trends, incorporate social interaction throughout the shopping experience, offer visually immersive experiences both online and offline, establish seamless omnichannel purchasing pathways and engage with the appropriate influencers in meaningful ways.
