Gen Z's direct spending power expected to hit $1.8 Trillion by 2035

Generation Z, now the largest demographic group in India with a population of 377 million, is making waves in the consumer market. Often stereotyped as merely teenagers, this diverse generation is far more complex, possessing significant purchasing power and unique perspectives that marketers cannot afford to ignore.

To better understand this, Snap Inc collaborated with Boston Consulting Group (BCG) on a report titled 'The USD Two Trillion Opportunity: How Gen Z is Shaping the New India'.

Pulkit Trivedi, Snap’s Managing Director for India, stated, “By 2035, Gen Z will be the primary driver of India's consumption growth, with a direct spending power estimated at $1.8 trillion.”

Nimisha Jain, Senior Partner at BCG India, emphasized, “Gen Z currently accounts for 43 percent of India’s consumer spending, impacting various sectors, from fashion to automobiles and dining out.”

Redefining consumer behaviour

Gen Z is reshaping the consumer landscape, wielding a spending power of $860 billion, which translates to 43 per cent of the country’s overall consumption. This generation is particularly influential in categories such as footwear (50 per cent of total spending), dining (48 per cent), and fashion (47 per cent).

The report forecasts that by 2035, Gen Z’s spending could soar to an impressive $two trillion.

Insights into their spending patterns

With 25 per cent of Gen Z already in the workforce, their total spending power stands at $860 billion. Of this, $200 billion comes from their direct earnings, while $660 billion is influenced spending—indicating purchases shaped by their preferences and recommendations.

By 2035, direct spending is projected to rise dramatically to $1.8 trillion, suggesting that Gen Z will drive half of all consumer spending.

The importance of community

Contrary to the notion of being aloof, Gen Z places a high value on authenticity and close connections. Approximately 70 per cent look to their close friends and family for advice, often sharing details about their lives and seeking input on purchasing decisions. Notably, 80 per cent consult their peers on shopping choices.

Visual communication is crucial for this generation, with nearly 80 per cent favouring images and immersive visuals for expression and engagement. This preference highlights their commitment to genuine interactions and the importance of peer recommendations.

Trendsetters in shopping experiences

Gen Z is increasingly drawn to immersive shopping experiences, with 77 per cent preferring augmented reality and engaging visuals. They enjoy “shopcialising,” where shopping is a shared experience through photos and video calls. Remarkably, half of Gen Z checks wish lists or online creator pages while shopping in stores, a notable contrast to just 32 per cent of millennials.

When it comes to brands, Gen Z is more inclined to follow trends rather than demonstrate traditional loyalty. They are 1.7 times more likely to opt for popular styles over established brands, with 72 per cent seeking inspiration from social media creators.

The need for action among brands

Despite recognizing the potential of Gen Z, only 15 per cent of businesses are actively leveraging these insights, highlighting a gap that presents opportunities for brands looking to connect with this key demographic.

To effectively engage Gen Z, the report outlines five strategies for marketers:

1. Innovate quickly to stay in line with trends.
2. Integrate social interaction into the shopping experience.
3. Offer visually engaging experiences across channels.
4. Ensure seamless shopping across online and offline platforms.
5. Collaborate strategically with the right influencers.