The cost-of-living crisis is in full swing. While most of us are now feeling the squeeze, soaring prices have become a particular worry for Gen-Z – living costs have recently overtaken climate change as the generations’ number one concern.

Despite Gen-Z having an estimated $200 billion annual global spending power, brands are facing a dual challenge in their attempt to build brand affinity as prices continue to rise alongside worsening global supply chain woes.

In order to succeed in the new economic climate, brands must accept the reality that Gen Z consumers have less income to spend on non-essential items such as clothing, beauty and tech. In fact, recent research with UNiDAYS panel of over 20 million verified students shows that one in four students are feeling financially insecure.

So, during a time in which Gen Z, the apex customer, accounting for 40% of all consumers, are turning their focus to spending on necessities first, how can brands successfully build affinity with the demographic among the economic chaos?

Understand their motivations

In the current environment there is no excuse for brands to ignore the fact that price is the key motivator for Gen Z (and most other generations). 

Gen Z were getting ready to snap a bargain even before the cost-of-living crisis hit. Over half, 58%, of students saved in preparation for last year's sales weeks and holiday season.

And having witnessed this digital-native generation redefine social commerce, it should be no surprise for brands that Gen Z are particularly savvy when it comes to bagging a deal. 86% of Gen Z look for better prices online and read reviews before making a purchase in store, according to Adobe.

A further 40% are always on the lookout for a good deal, while over a quarter, 29%, actively wait for a discount before making a purchase. 

Brands must ensure campaigning is targeted at the 18-25 audience in order to grab their attention, steer their search towards goal products and ultimately gain their loyalty.

Adopt the right pricing strategy

With Gen Z set to shift spending towards necessities, including a massive 40% increase in spend on groceries alone, brands need to ensure their pricing strategy enables their product range to remain competitive in a highly saturated landscape.

To achieve this, retailers should be ready to tweak their offerings to meet Gen-Z expectations during key shopping periods and capitalise on these retail flashpoints. For example, Nike regularly runs tests on different product categories so they can optimise their discounts in the run-up to Black Friday.

While these discount levels are not sustainable all year round - particularly given inflationary and supply chain pressures - brands can still develop all-year-round discount strategies to drive brand affinity. Gen-Z's loyalty can be hard to win, but with a greater focus than ever on discounts, many will embrace brands that can provide exclusive, personalised offers - 82% say they are loyal to brands that offer regular discounts. These offers can then be upweighted during key retail calendar moments.

Live your values

However, discounts alone are not enough. They need to come hand in hand with an authentic, value-led approach. As digital natives, Gen-Z are hyper-informed and switched on to social issues – from sustainability to inclusion. Gen-Z's values fuel how they shop – so a purely transactional relationship just won't cut it. 

Gen Z is often sceptical about a brand's motivations, with 57% stating that inclusion efforts can come across as tokenistic. To overcome this, brands need to live and breathe their key values and work hard to identify and solve issues that could undermine their company’s ethos and reputation. 

With the internet at their fingertips, Gen-Z’s research led approach means that brands can no longer rely on any potential supply chain or employment issues remaining out of the public eye. Gen-Z have a no tolerance approach to unethical behaviour and their voice has the power to drive corporate decision-making, so brands must work hard to win their trust. 

Listen and act first

Finally, brands need to identify and capitalise on emerging trends if they want to win this audience's affinity. For example, UNiDAYS research found that over two-thirds of Gen-Z agree there should be greater gender inclusion and representation in the fashion industry. 

Specifically, 65% of Gen-Z consumers believe brands should provide the option to search for gender-neutral clothing. However, while brands like Schuh - who opened its gender-neutral store on Oxford Street in 2020 - are leading the charge, most physical and online stores still categorise according to gender.

Despite this, 64% of Gen-Z consumers have purchased clothing that is marketed to the opposite gender. Rather than being impacted by traditional labels, Gen-Z’s shopping habits are now driven by their own personal style and a freedom for self-expression – creating an opportunity for brands agile enough to take first mover advantage.

By using these emerging trends to provide Gen-Z with unique experiences that tie into and reflect the generation’s cultural values, brands will gain a head start on the competition.  

Through building on this with focused campaigns and innovative pricing strategies that support Gen-Z through the fastest price rises in over 40 years, brands will earn their trust and drive the long-lasting affinity they desire.