Today’s youth will be the consumers of tomorrow.
That’s why I think it’s essential to consider how Generation Z — also known as Zoomers — behaves.
In this post, I’ll discuss how young people behave differently from us in the older generations. I’ll also discuss the impact of those behaviors on the demand for a variety of consumer products and services.
Finally, I’ll conclude with some thoughts on what this implies for stocks previously discussed here on Asian Century Stocks.
Table of contents:
1. Generation Z
2. Seeking community online
3. Trusting influencers over brands
4. A greater focus on health
5. Ego-building on social media
6. A search for new experiences
7. Ever-shorter attention span
8. A shift in dating patterns
9. Online gambling
10. Conclusion1. Generation Z
Generation Z — also known as “Gen Z” or “Zoomers” — is the demographic cohort that came of age during the smartphone and social media revolution.
According to the most common definition, Zoomers were born between 1997 and 2012, meaning that they’re currently 13–28 years old. They are the generation coming after the Millennials, which came of age during the turn of the millennium:
This way of classifying people into generational labels started with Karl Mannheim in 1928. It gained popularity after the Second World War, when soldiers returned to civilian life and started forming families en masse. Children born after the war — the baby boomer generation — were not only large in numbers, but they also exhibited similarities in terms of being more liberal than their parents. These patterns were picked up by sociologists, and generational analysis was thus born.
Generation Z is different from previous generations because they were below 10 years old when the first iPhone came out in 2007. Most of them will have been glued to their smartphones and scrolling social media feeds during their formative teenage years. That’s led to consumer behavior that’s distinct from what we’ve seen in the past.
So why do I care enough about Generation Z to write a Substack post on them? Because I think their way of life will shape future consumption patterns. Young people tend to be first adopters in terms of fashion and technology. As they enter the workforce, their spending power will increase, lending to greater revenues for the companies that sell to them.
Besides, in many parts of Southeast Asia, half of the population already belongs to Generation Z or younger:
So, paying attention to their spending patterns matters a great deal if you want to understand the consumer of tomorrow.
2. Seeking community online
In the book The Anxious Generation, author Jonathan Haidt makes the case that smartphones and social media have had a massive impact on the younger generation.
According to data quoted in the book, the time that US teens spend with friends has gone down from 150 minutes in 2003 to just 40% minutes in 2020. And this decline preceded COVID-19:
So, if they’re not hanging out with friends, what are they doing instead? Spending time on their phones. A study from the UK government agency Ofcom suggests that Zoomers spend over 4 hours per day online, compared to just 3 hours for the population as a whole:
Percentage of UK individuals aged 16+ with access to the Internet at home by year. Source: Ofcom
Similar numbers have been observed in Asia. According to 2019 numbers from McKinsey, Zoomers in Indonesia and Thailand spend a whopping 8–9 hours per day on their phones on average and 6 hours per day for developed Asia.
The key draw seems to be social media platforms such as Instagram and TikTok/Douyin. Global data from McKinsey suggest that Zoomers spend over 1 hour on social media per day — roughly twice as much as long as their older counterparts:
The 2023 US Bureau of Labor Statistics American Time Use Survey provides greater granularity on how Zoomers spend their time. A few highlights from that study:
- In 2022, Zoomer spent twice the amount of time playing video games as they did ten years earlier
- In 2022, they spent 35% more time doing homework and research than ten years earlier
- They spend 1/3 less time socializing and communicating
- And they also spend less time watching TV
In other words, Zoomers are on their phones constantly, scrolling social media or playing video games.
Meanwhile, we’re seeing children mature more slowly than in the past. Key milestones such as having had a part-time job, getting a driver’s license, having a girlfriend or boyfriend, or drinking alcohol are delayed into later in life, into their 20s. They also report feeling lonely and isolated more often:
Zoomers also live with their parents a lot longer than in the past. That trend is particularly clear for women. Perhaps it is related to rising home prices and greater difficulty saving for a down payment.
The fact that Zoomers increasingly live with parents means that they’re less likely to bring their partners home and that they’re less likely to host get-togethers with friends.
In Asia, the problem with smartphones is widely recognized. For example, in China, schools prohibit students from bringing phones into schools. Here in Singapore, many schools force children to put their phones away in a locker at the start of their school days. Which means they’ll spend recess time socializing instead of staring at their phones.
One consequence of the loneliness epidemic is that many young people seek community online through WeChat, TikTok and other social media apps. Another trend is that Zoomers are far more likely to adopt pets than other generations, with cats being particularly popular, a trend that I wrote about here.
This greater time spent at home scrolling social media also has an impact on the demand for streaming services and online food delivery, which remains far more popular among Zoomers than older generations. Essentially, Zoomers seem to favor products and services that can be delivered to their homes.
3. Trusting influencers over brands
In microeconomics, we’re taught that brands provide costly signals of quality. Consumers know that companies have strong incentives to maintain quality control so as to avoid destroying their own brand names.
But there’s a case to be made that brands are losing some of their relevance. There are now other ways to improve the likelihood that a consumer is satisfied with his or her purchase:
- Product reviews and ratings also provide costly signals about quality, at least when it’s difficult for sellers to game them
- The emergence of an influencer economy, with Zoomers looking for individuals they trust and then following their product recommendations
There’s clear evidence that Zoomers use restaurant ratings far more than in the past. For example, they might go to Booking.com or Trip.com for hotel ratings. Or to Tmall or Amazon for product ratings.
Zero recognizable brand names among Amazon best-sellers for silk pyjamas, just to cite one example of where brand names have become less important
Influencer marketing occurs on platforms such as TikTok, Instagram or YouTube. Many argue that the superstars of tomorrow won’t be tech entrepreneurs or Hollywood stars such as Johnny Depp or Brad Pitt but rather influencers such as MKBHD or Xiao Yang Ge. Famously, a UK study showed that 30% of kids listed being a “YouTuber” as their top career choice.
The numbers for some of these influencers are insane. Mr Beast’s main YouTube channel is now racking up over 2 billion monthly views, enabling him to launch Mr Beast-branded burgers and chocolate and disrupt those industries.
I think this is just the beginning of influencers disrupting existing industries through the power of attention and eyeballs.
There’s evidence that Zoomers tend to make purchase decisions based on video sources more so than text or e-commerce websites. That means TikTok and YouTube are gaining relevance and worth tracking if you want to understand how products are trending.
User-generated content is also taking over the music industry. The accessibility of music on Spotify or TME’s platform means lower barriers to entry for new talent. Over half of Zoomers listen to music via streaming services on a daily basis, far more than their older counterparts. This means that artist product endorsements are likely to matter a great deal more than in the future, as we saw when Cardi B endorsed Samyang Food’s Buldak Ramen:
Artists on Spotify are no longer making much money from selling the music themselves. Instead, concerts are becoming their main way to monetize their music, leading to a blossoming of the live concert industry.
4. A greater focus on health
Jonathan Haidt’s book argues that loneliness and the stress from social media have led to poor mental health among Generation Z. Data quoted in the book showed a ~150% increase in depression among American teenagers and a decline in self-satisfaction. This trend is especially serious among young girls:
Another Oliver Wyman report shows that Zoomers are 83% more likely to report feelings of anxiety than other generations. Such anxiety implies a reduced willingness to engage in social interactions. And could explain their preference for QR code ordering systems, and the mobile payments offered by companies such as Luckin Coffee, where customers don’t need to interact with service personnel at all.
Another consequence of the mental health epidemic is that a higher number of individuals are now treated for depression. SSRIs (selective serotonin reuptake inhibitors) such as Prozac are becoming increasingly commonplace in developed markets, with roughly a quarter of US Zoomers reporting having taken them.
Physical health is deteriorating as well. Childhood obesity in Asia is still unusual but has deteriorated significantly over the past two decades. In China’s case, by a factor of five:
In developed markets, Zoomers seem to have a preference for high-protein snacks. Meats are popular, especially among the gym-going population. Zoomers also seem to favor eggs, fruits and vegetables, presumably due to a greater focus on health.
Meanwhile, they spend less on sugary products, including cereals and bakery products. They also seem to be skeptical about artificial sweeteners such as aspartame. The only exception to the trend is chocolate, which Zoomers seem to consider a health food due to the anti-oxidative properties of cocoa.
This increased focus on health is evident when looking at the success of influencers such as Andrew Huberman and Peter Attia. The word “biohacking” has become common parlance.
However, it does seem like biohacking and extreme food diets are still far more popular in the United States than in Asia. The number of Google search queries for “calorie counting” is increasing in Australia and New Zealand but steady in most Asian countries.
In theory, this greater health focus should be a death knell for fast-food restaurants. Though the data on that remains unclear, with fast-food consumption continuing to grow in much of emerging Asia. This suggests that the health obsession remains mostly a developed market phenomenon at this point in time.
In 2022, I wrote about continuous glucose monitors and how health-obsessed individuals will want to track sugar levels to optimize their diets. I still believe this to be true, though with the caveat that pricking your skin remains too intrusive for the general population: link here.
Regular wearables such as Apple Watches and fitness trackers remain popular among Generation Z. Wellness apps such as Headspace also seem to appeal to the younger generation, at least in developed markets such as Singapore.
When it comes to alcohol use, the data is mixed. Younger individuals seem to be less likely to drink than older in the Asia-Pacific:
Underage drinking seems to have gone down, as many surveys from Hong Kong and the United States have shown. However, some of this decline might be attributable to delayed aging, cannabis use and COVID-19, with some studies showing that alcohol use picks up once Generation Z enters the workforce. The alcohol market in Asia still seems to be growing.
5. Ego-building on social media
Haidt’s book commented that the mental health epidemic has disproportionately hit younger women, with depression rates far higher than for young men. He blames Instagram for this trend, whose users tend to skew female. The primary issue seems to be that women compare themselves to others, with some feeling excluded from online communities.
A feeling of inadequacy might plausibly lead to a drive to outdo friends who are exhibiting their lives on social media. The demand for luxury handbags is stronger than ever despite greater isolation among the younger generation.
A need to show off might also explain the popularity of sportswear products such as sneakers. The Netflix documentary Sneakerhead shows how sneakers have turned into an obsession. This could be a way to deal with a feeling of inadequacy by spending your way to an “ideal self”. Similar trends can be observed for mechanical watches, whisky and even Pop Mart blind boxes.
It’s not all about status, however. Many Zoomers report being value-conscious, with them being the prime customer demographic of e-commerce apps such as Shein and Temu. They will typically get inspiration from TikTok or Instagram and then buy products from Shein.
6. A search for new experiences
Zoomers seem to have a great interest in travel. Their spending on travel following the end of the COVID-19 pandemic has increased faster than for other age cohorts. Zoomers tend to use online travel agents to make bookings and use social media for inspiration on where to go.
Generation Z’s love of travel could be the increased availability of foreign-language TV series and music on online streaming services. I strongly believe that the success of Buldak Ramen noodles in the United States might be related to the success of Korean dramas and movies on Netflix. Generation Z knows more about other cultures and is more willing to consume foreign products.
While e-commerce continues to grow, there are signs that Zoomers have a greater interest than other generations in experiences. According to this survey, Zoomers actually enjoy the Treasure hunt experience of discount and Dollar stores, suggesting they maintain relevance even in a post-Shein and post-Temu world:
But even so, it’s clear that offline retail is more used by Generation Z to find new experiences outside the home. Even in the mid-2010s, mall operators like Pakuwon started emphasizing lifestyle malls that attract customers through pop-up shops, food & beverages, bowling, events and other spaces. So, just like travel, offline retail does serve a purpose in creating experiences beyond what Zoomers can enjoy from the comfort of their homes.
In other words, Zoomers seem to consider offline retail as being a social event with something to do with friends. Shopping offers excitement, but they won’t necessarily buy products on the spot. That seems to suggest that malls are increasingly used for marketing rather than storing inventory.
The mall that I think best exemplifies this demand is Funan in central Singapore, with its climbing wall, esports tournaments, pop-up stores and stores focusing on products that appeal to the younger consumer.
7. Ever-shorter attention span
Streaming services such as Netflix and Tencent Video continue to take market share from linear television across almost all age groups.
However, according to a global study from WARC & GWI, Generation Z (16 to 24-year-olds) actually consume less from online streaming services than their millennial counterparts:
While there are confounding factors, there are reasons to believe that Zoomers’ reluctance to watch long-form videos on Netflix has to do with a shorter attention span than older generations.
A widely reported statistic has put the average attention span of Generation Z at 8 seconds, shorter than the 12 seconds reported for Millennials.
That could explain why the younger generation is drawn to user-generated content on YouTube instead, which tends to be shorter in duration and frequently optimized to provide short-term rewards. Even Instagram and YouTube are moving towards short videos in the form of Reels and Shorts.
Zoomers’ short attention span has implications for Hollywood. There’s an open question of whether Zoomers have the patience to sit through 2-hour movies. And having to resist the temptation of bringing up their phones during the screening. They’re used to getting what they want, when they want it — not having to adapt to the fixed schedule of traditional theaters.
There are also implications for the book industry. Only 36% of US Zoomers identify themselves as avid readers, whereas the same number for Millennials is 48%. And when Zoomers read, they tend to spend less time doing it than older generations.
Generation Z also tends to receive its news from social media feeds such as Instagram or TikTok rather than media outlets such as the New York Times. They’ll cherry-pick articles or follow influencers on Substack.
I also think that Zoomers’ short attention span has implications for the gaming industry. They seem to favor mobile games and more casual platforms such as the Nintendo Switch. In contrast, AAA games on consoles such as Sony PlayStation and Microsoft Xbox tend to have more complex storylines that require greater commitment and attention. This seems to suggest that first-person shooters, racing games and casual mobile games are going to win out over MMORPGs.
Finally, Zoomers are much more likely to use generative AI tools such as ChatGPT than older generations. This might be attributed to them being tech savvy, but also due to an impatience with finding answers quickly.
8. A shift in dating patterns
I’m sure you’ve seen this chart. It’s from a Stanford study showing that the vast majority of American couples met through dating apps:
However, there are some signs that Zoomers are moving away from dating apps. The Knot 2020 Jewelry and Engagement Study suggest that more Zoomers are more likely to meet their partners in school than online. Though that could well change as they move into their late 20s and 30s.
The average age of first marriage is moving higher and higher across almost all geographies, crossing the 30-line for most of the developed Asia-Pacific.
This could be related to higher education levels for women and, hence, greater focus on careers, greater access to contraceptives and a reduced role of religion in people’s lives. But I also think that the perceived greater availability of potential partners on dating apps has made it less important to tie the knot quickly.
Lower marriage rates and higher age of first marriage have direct implications on fertility. The birth rate is falling almost across the board, partly due to the fact that female fertility drops fast after the age of 34.
This increases demand for in vitro fertilization in countries such as Thailand and Australia. I wrote about the IVF trend here.
9. Online gambling
Chinese online broker Futu recently did a survey of young people in Hong Kong, suggesting that they are three times more optimistic about the future of cryptocurrencies than property. Another study by crypto exchange Independent Reserve Singapore suggested that 47% of Zoomers surveyed owned cryptocurrencies. A US study showed that more than half of cryptocurrency holders are under the age of 35. So, they’re definitely receptive to the idea of investing in virtual assets.
I personally think that cryptocurrencies are speculative assets. And that they’re competing with other forms of speculation, including casinos and individual stock trading. This means that Zoomers have greater options when it comes to speculation in the past.
Zoomers also seem to have taken to speculation in tech stocks. They dominate the user base of trading apps such as Robinhood and Futu’s Moomoo. And the competition is heating up, with GCash starting to offer mobile trading in 2023 and Robinhood coming to Asia in 2025. They’ll be less likely to buy mutual funds from the likes of Value Partners or Magellan.
10. Conclusion
This post has been an attempt to understand the minds of younger consumers. It’s tentative, given that it’s hard to generalize across borders.
But I think we can at least draw the following conclusions:
- Many Zoomers feel lonely. This should increase the demand for services that offer a feeling of community.
- Status symbols continue to hold relevance, especially if they’re easy to display on social media
- Zoomers care about influencers, so it’s worth watching what products are pushed by these online celebrities
- Zoomers seem to love travelling and experiences, increasing demand for online travel agents such as Trip.com
- Sugary foods seem to have gone out of fashion in favor of salty snacks
- Health gadgets such as Apple Watches, Oura rings and continuous glucose monitors will continue to be in demand
- Zoomers have shorter attention spans. This should be bullish for user-generated content on TikTok and YouTube, as well as easy-to-pick-up mobile games
- Online gambling is here to stay, whether in the form of lottery, sports betting, stock trading or perhaps even cryptocurrencies
A more recent trend is generative AI tools. There’s little data on how they affect consumer behavior among the younger generation. But presumably, they should be making consumers better-informed. Hence, generative AI tools should benefit from best-in-class products that are ranked the highest typical product reviews.
So, what does all of this mean for stock-picking in Asia? My goal is to skate to where the puck is going. From that perspective, companies like Samyang Foods, DigiPlus, JD.com, and Fairfax India seem better placed than old-industry names such as Major Cineplex and Multi Bintang.
There’s a price for everything, of course. However, I believe that the true home runs will be sellers of products or services that appeal to the younger generation.
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