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Forget traditional recruitment methods. Here’s how to reach - and retain - young employees

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They are young; they’re well-educated; they’re technologically savvy – recruiting and retaining Gen Z and Millennial workers should be a crucial part of any employers’ recruitment strategy.&nbsp;Why? Not only are Millennials becoming the leaders of today, they’re the customers and consumers of today, too. Meanwhile, Gen Z are the leaders of the future – the changemakers who bring a fresh perspective to the job.&nbsp;So, how can businesses attract, hire and retain the labour market’s newest next-gen recruits?First, it’s important for employers to understand the differences between the two cohorts when hiring, and to set aside any preconception they may have about them.

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<h2>The secrets to hiring Millennials and Gen Z</h2>1.&nbsp;Speed up your recruitment process&nbsp;Millennials and Gen Z have been dubbed the ‘on-demand generation’, having grown up with everything from food deliveries to movies available when they want it, where they want it. Having grown accustomed to instant gratification, they have little patience for long delays - and that includes slow recruitment processes.“Time to hire is important – you have to move fast,” emphasises HR leader<a href="https://www.linkedin.com/in/lucy-wilson/?originalSubdomain=au" rel="noopener noreferrer" target="_blank" style="background-color: rgb(255, 255, 255); color: rgb(0, 0, 0);"> </a><a href="https://www.linkedin.com/in/lucy-wilson/?originalSubdomain=au" rel="noopener noreferrer" target="_blank" style="background-color: rgb(255, 255, 255); color: rgb(17, 85, 204);">Lucy Wilson</a>, founder of<a href="https://www.linkedin.com/company/that-people-culture-co/" rel="noopener noreferrer" target="_blank" style="background-color: transparent; color: rgb(0, 0, 0);"> </a><a href="https://www.linkedin.com/company/that-people-culture-co/" rel="noopener noreferrer" target="_blank" style="background-color: transparent; color: rgb(0, 0, 255);">That People &amp; Culture Co</a>. “Consider the pace of the recruitment process; is it fast? Is the form easy to fill out? Can you do it on mobile? How long does it take to complete the process and how long till [you] make contact with them? Millennials and Gen&nbsp;Z don’t wait.”2. Get clear on your purpose&nbsp;Millennials and Gen Z care about purpose and values – so, as an employer, you need to be able to define and articulate your business’ mission, vision and values.&nbsp;Three easy ways to ‘show the why’:<ul><li>On your website – either your main site or a special portal for candidates&nbsp;&nbsp;</li><li>A special handout pack outlining your vision and mission&nbsp;</li><li>Organise for candidates to talk to other employees&nbsp;</li></ul>3. Create an attraction strategy&nbsp;With employers grappling with retention rates due to the so-called <a href="https://hbr.org/2021/09/who-is-driving-the-great-resignation" rel="noopener noreferrer" target="_blank" style="background-color: rgb(255, 255, 255); color: rgb(17, 85, 204);">‘Great Resignation’</a>, it’s time to get crystal clear about what your workplace offers potential new recruits when hiring. Enter: the attraction strategy – a document that clarifies who you are trying to recruit, your key messages, and the benefits you offer.&nbsp;That might include your culture, the tools or tech you offer and the career opportunities available.4. Use platforms that Gen Z are using&nbsp;Don’t wait for Millennials and Gen Z to find you – go to them by using the platforms you know they’re on.&nbsp;Nearly half of all under-30s have a TikTok account for example, and some<a href="https://www.cnbc.com/2021/07/18/chipotle-target-using-tiktok-to-find-workers-in-tight-job-market-.html#:~:text=Chipotle%2C%20Target%2C%20WWE%20and%20Shopify,war%20for%20talent%20rages%20on." rel="noopener noreferrer" target="_blank" style="background-color: rgb(255, 255, 255); color: rgb(17, 85, 204);"> </a><a href="https://www.cnbc.com/2021/07/18/chipotle-target-using-tiktok-to-find-workers-in-tight-job-market-.html#:~:text=Chipotle%2C%20Target%2C%20WWE%20and%20Shopify,war%20for%20talent%20rages%20on." rel="noopener noreferrer" target="_blank" style="background-color: rgb(255, 255, 255); color: rgb(0, 0, 255);">employers</a>, like Target and Shopify, have experimented with using the video-sharing app to recruit young workers.Other options are to build a company presence for your business on platforms like TikTok and LinkedIn and, if you’re engaging recruitment agencies, ensuring that they are using these platforms on your behalf.&nbsp;5. Create an inclusive workplace - and recruiting strategiesInclusivity and diversity are key for Millennials and Gen Z – and it’s all-too apparent when companies are lacking in this area.“Diversity and inclusion need to be a part of your organisational hiring and professional development strategy. Millennials like everyone to be included across all minority groups – culture, race, gender, disability, neurological – as they believe everyone has value to bring to the job,” explains Wilson.So, it’s important to use inclusive practices when recruiting.&nbsp;The 2021 Deloitte Millennial and Gen Z study encourages business leaders to “use systems and processes that are gender and colour-blind and think differently about the types of experiences and qualifications that might prepare people for specific jobs.&nbsp;“That may include hiring for curious mindsets instead of specific skill sets, or seeking people who have demonstrated they’re agile, comfortable with ambiguity, and able to overcome adversity.”&nbsp;For example, removing names from resumes helps decrease gender and race biases –<a href="https://www.theguardian.com/sustainable-business/2016/jul/05/blind-recruitment-aims-to-stamp-out-bias-but-can-it-prevent-discrimination" rel="noopener noreferrer" target="_blank" style="background-color: transparent; color: rgb(0, 0, 0);"> </a><a href="https://www.theguardian.com/sustainable-business/2016/jul/05/blind-recruitment-aims-to-stamp-out-bias-but-can-it-prevent-discrimination" rel="noopener noreferrer" target="_blank" style="background-color: transparent; color: rgb(17, 85, 204);">a practice big Australian businesses, such as Australia Post and Westpac</a>, have tried and adapted.&nbsp;Another recruiting technique is using appropriate skill-based tests, rather than relying on past education, to better give candidates an equal footing.&nbsp;Beauty business,<a href="https://www.thebodyshop.com/" rel="noopener noreferrer" target="_blank" style="background-color: transparent; color: rgb(0, 0, 0);"> </a><a href="https://www.thebodyshop.com/" rel="noopener noreferrer" target="_blank" style="background-color: transparent; color: rgb(0, 0, 255);">The Body Shop</a>,<a href="https://www.smh.com.au/national/no-resume-no-reference-the-body-shop-s-radical-approach-to-hiring-20211029-p594a8.html" rel="noopener noreferrer" target="_blank" style="background-color: transparent; color: rgb(0, 0, 0);"> </a><a href="https://www.smh.com.au/national/no-resume-no-reference-the-body-shop-s-radical-approach-to-hiring-20211029-p594a8.html" rel="noopener noreferrer" target="_blank" style="background-color: transparent; color: rgb(17, 85, 204);">has done away with resumes, references and background checks altogether</a> in an effort to provide more opportunities to single parents, young carers, homeless and First Nations Australians. The company has streamlined their Christmas casual hiring process into three key questions: ‘are you legally authorised to work in Australia’; ‘can you lift up to 11 kilograms and work an eight-hour shift’; and ‘are you happy to work with customers?’&nbsp;6. Ask current employees in that generation&nbsp;No one knows Gen Z and Millennials better than those in that demographic, so ask current team members about what attracted them, how they and their friends that age search for jobs, why they like working at your company.7. Be honest&nbsp;This may seem obvious, but if you mislead a candidate in an interview about what it’s like to work at your company, they’ll find out – and fast.&nbsp;Gen Z and Millennials value transparency more than any other generation - and they are used to using technology to get the information they want.“If you say: ‘this is our employee experience’, they’re going to check that for themselves,” emphasises Wilson. “They’re researching, they’re going on [employment site]<a href="https://www.glassdoor.com.au/index.htm" rel="noopener noreferrer" target="_blank" style="background-color: transparent; color: rgb(0, 0, 0);"> </a><a href="https://www.glassdoor.com.au/index.htm" rel="noopener noreferrer" target="_blank" style="background-color: transparent; color: rgb(17, 85, 204);">Glassdoor</a>, they’re reading reviews – remember [Gen Z and Millennials are] very capable at finding information.”

<h2>Secrets to retaining Millennials and Gen Z team members&nbsp;</h2>1. Flexible working&nbsp;Flexibility in terms of working arrangements, hours and tools are crucial – even more so following the pandemic, which has demonstrated the success of remote-working models.The<a href="https://www2.deloitte.com/content/dam/Deloitte/global/Documents/2021-deloitte-global-millennial-survey-report.pdf" rel="noopener noreferrer" target="_blank" style="background-color: rgb(255, 255, 255); color: rgb(0, 0, 0);"> </a><a href="https://www2.deloitte.com/content/dam/Deloitte/global/Documents/2021-deloitte-global-millennial-survey-report.pdf" rel="noopener noreferrer" target="_blank" style="background-color: rgb(255, 255, 255); color: rgb(17, 85, 204);">2021 Deloitte study</a> reinforces this, as Millennials and Gen Z participants both list flexibility/ adaptability as the most critical employee characteristic for successful businesses.&nbsp;&nbsp;Remember: flexible working isn’t just remote working or offering flexible hours, but includes investing in collaborative tools to connect remote staff.&nbsp;&nbsp;The<a href="https://www.wgea.gov.au/publications/flexible-work-post-covid" rel="noopener noreferrer" target="_blank" style="background-color: rgb(255, 255, 255); color: rgb(0, 0, 0);"> </a><a href="https://www.wgea.gov.au/publications/flexible-work-post-covid" rel="noopener noreferrer" target="_blank" style="background-color: rgb(255, 255, 255); color: rgb(17, 85, 204);">Australia Workplace Gender Equality Agency collected data from private sector organisations with 100 or more employees</a> on the uptake of flexible work arrangements due to COVID-19, finding that nearly four in five employers have a formal flexible work policy or strategy, with larger organisations more likely to have formalised flexible working arrangements compared to small and medium organisations.&nbsp;Their<a href="https://www.wgea.gov.au/sites/default/files/documents/flexcovidinfographic.pdf" rel="noopener noreferrer" target="_blank" style="background-color: rgb(255, 255, 255); color: rgb(17, 85, 204);"> recommended actions for employers to build an effective flexible work policy or strategy</a> include:<ol><li style="text-indent: 1em;">Make ‘all roles flex’&nbsp;</li><li style="text-indent: 1em;">Trust your people</li><li style="text-indent: 1em;">Role-model flexibility by managers and leadership</li><li style="text-indent: 1em;">Communicate effectively</li><li style="text-indent: 1em;">Acknowledge the adjustment</li><li style="text-indent: 1em;">‘Log off and check out’ at home and in the office</li></ol> 2. Invest in technology&nbsp;Great tools and technology are crucial in retaining digital natives. Stay up-to-date with industry tech trends and invest in AI tools if possible, suggests Wilson.&nbsp;“Gen Z often have way more tech knowledge than the people hiring them – they’re not scared to try things and break things. They’re growing up in a social environment and social media community” says Wilson. “The technology experience needs to be amazing.”For a small business, this might mean using software like Slack, rather than simply email, or offering logistics, inventory or marketing software that makes employees’ everyday roles easier.3. Clear communication&nbsp;“Millennials want direct access to leaders,” says Wilson. “They want less hierarchy, and they don’t want to be micromanaged. They want to come in, do great work, head off – and switch off.”Create opportunities for Millennials to have direct access to leaders, such as regular informal group team meetings where questions are encouraged – either by submitting prior or asking on the day.&nbsp;&nbsp;&nbsp;Seemiller explains that Gen Z aren’t as concerned about direct access to leaders, but that “they want to be informed about the decisions leaders are making. As long as they’re informed about a decision, they’re good.”&nbsp;Weekly leadership blasts – either via text, emails or<a href="https://slack.com/" rel="noopener noreferrer" target="_blank" style="background-color: rgb(255, 255, 255); color: rgb(0, 0, 0);"> </a><a href="https://slack.com/" rel="noopener noreferrer" target="_blank" style="background-color: rgb(255, 255, 255); color: rgb(0, 0, 255);">Slack</a> – with updates and key info dot-pointed are also a great way to make team members feel as though leadership are keeping them up to date.&nbsp;4. Make your culture a focus&nbsp;Millennials and Gen Z care about culture and the environment they’re in. Creating positive, mental-health-led cultures boosts productivity and retention.&nbsp;&nbsp;&nbsp;“Prioritise mental health support and resources and create cultures where it’s OK to acknowledge stress,” recommends the<a href="https://www2.deloitte.com/global/en/pages/about-deloitte/articles/millennialsurvey.html" rel="noopener noreferrer" target="_blank" style="background-color: rgb(255, 255, 255); color: rgb(17, 85, 204);"> 2021 Deloitte study.</a> “Leaders need to destigmatise the conversation around mental health in the workplace and encourage their people to be transparent about their needs. Ultimately, this will help employees to feel healthier and happier and boost productivity.”

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5. Promote career development&nbsp;&nbsp;Deloitte’s previous studies have shown that Millennials are more likely to leave an organisation in two years or less if their leadership skills aren’t being developed.&nbsp;“It might seem like they’re quick to jump but consider the fast pace we expect them to operate at… yet we don’t mirror career advancement in the same way,” highlights Wilson. “The expectation is to operate at that pace, so organisations need to offer learning and development at the same pace.”&nbsp;6. Build an experience strategy&nbsp;A good employee experience isn’t something that just happens, it’s built.&nbsp;“Your people-experience strategy should include your employees’ technological and digital experience, as well as their physical, professional development and cultural experience – but it has to be true to who you are as a business,” explains Wilson. “The drivers and attractions may be different for the two generations, but your people-experience strategy can be all encompassing to create a workplace people want to work at – and continue working at.”How do you build a people or employee-experience strategy? You can work with experts like Wilson, a people-experience strategist, or<a href="https://www.thestrategygroup.com.au/what-we-do/employee-experience-strategy/" rel="noopener noreferrer" target="_blank" style="background-color: rgb(255, 255, 255); color: rgb(0, 0, 0);"> </a><a href="https://www.thestrategygroup.com.au/what-we-do/employee-experience-strategy/" rel="noopener noreferrer" target="_blank" style="background-color: rgb(255, 255, 255); color: rgb(17, 85, 204);">start building your own</a> by looking at how your team's day-to-day experience at work plays out.

7. Review your policies&nbsp;Pointless policies – particularly around meetings, working methods, office hours, and remote working – are going to quickly become a thing of the past.&nbsp;&nbsp;&nbsp;Dr Corey Seemiller, professor of organisational leadership at Wright State University. believes, “moving forward [after the pandemic], people aren’t going to put up with the old-school shenanigans, like the inflexibility around remote working, unless there is a good reason that’s being communicated to them. Gen Z – along with everyone else – are going to have a low tolerance for policies that don’t make sense to them. There’s currently this ‘get back to the office’ shift which doesn’t make sense [to Gen Z] and is contributing to the Great Resignation.”However, if you can adapt and focus on building a thriving, flexible, diverse and inclusive culture and workplace, you can greatly benefit from hiring more Millennial and Gen Z staff.&nbsp;

<h2>Want to understand Gen Z and Millennials better?</h2>Here’s what you need to know about the workforce’s newest generation. They are values-drivenBoth groups share a focus on social change and accountability, according to the<a href="https://www2.deloitte.com/global/en/pages/about-deloitte/articles/millennialsurvey.html" rel="noopener noreferrer" target="_blank" style="background-color: rgb(255, 255, 255); color: rgb(17, 85, 204);"> </a><a href="https://www2.deloitte.com/global/en/pages/about-deloitte/articles/millennialsurvey.html" rel="noopener noreferrer" target="_blank" style="background-color: rgb(255, 255, 255); color: rgb(0, 0, 255);">Deloitte Global 2021 Millennial and Gen Z Survey</a>.&nbsp;“In the 10 years Deloitte has been conducting the Millennial Survey, Millennials and Gen Zs’ lives have changed, but their<a href="https://www2.deloitte.com/global/en/pages/about-deloitte/press-releases/in-its-10th-year-the-deloitte-global-millennial-and-gen-z-survey-reveals-two-generations-pushing-for-social-change-and-accountability.html" rel="noopener noreferrer" target="_blank" style="background-color: rgb(255, 255, 255); color: rgb(0, 0, 0);"> </a><a href="https://www2.deloitte.com/global/en/pages/about-deloitte/press-releases/in-its-10th-year-the-deloitte-global-millennial-and-gen-z-survey-reveals-two-generations-pushing-for-social-change-and-accountability.html" rel="noopener noreferrer" target="_blank" style="background-color: rgb(255, 255, 255); color: rgb(0, 0, 255);">values have remained steadfast</a>. They have sustained their idealism, their desire for a better world, and their belief that business can and should do more to help society,” said Michele Parmelee, deputy CEO and chief people and purpose officer at<a href="https://www2.deloitte.com/global/en.html" rel="noopener noreferrer" target="_blank" style="background-color: rgb(255, 255, 255); color: rgb(0, 0, 0);"> </a><a href="https://www2.deloitte.com/global/en.html" rel="noopener noreferrer" target="_blank" style="background-color: rgb(255, 255, 255); color: rgb(0, 0, 255);">Deloitte Global</a>.They are diverse<a href="https://www.pewresearch.org/social-trends/2018/11/15/early-benchmarks-show-post-millennials-on-track-to-be-most-diverse-best-educated-generation-yet/" rel="noopener noreferrer" target="_blank" style="background-color: rgb(255, 255, 255); color: rgb(17, 85, 204);">Millennials were the most racially and ethnically diverse, until Gen Z came along</a> – one factor that contributes to their drive for diversity and fighting against the status quo.&nbsp;&nbsp;They are educated<a href="https://www.nytimes.com/2015/08/02/opinion/sunday/were-making-life-too-hard-for-millennials.html" rel="noopener noreferrer" target="_blank" style="background-color: rgb(255, 255, 255); color: rgb(17, 85, 204);">Research reported by the New York Times,</a> found that while Millennials are the most educated, they’re the worst paid. It’s important to note that they have been greatly financially impacted by this century's most defining moments – global debts, 9/11, the Global Financial Crisis and following recession, and now the COVID-19 pandemic. <h2>How are Gen Z and Millennials different?</h2>They are motivated differently“Gen Z is motivated by relational factors – such as making a difference for someone, having an impact,” says Dr Seemiller. “Tell a Gen Z employee that the work they do is important, whatever it is, and it will motivate them.”“Whereas Millennials at that age were incentivised by accolades, benchmarks, doing well and moving up – the ‘if you do this, I will give you that’ motivation continues,” says Seemiller. “Gen Z wants to be rewarded too, but it’s not what drives them. Millennials just want to hit the mark and be given positive feedback in some way.”&nbsp;They learn differently&nbsp;Another key difference is the way they learn. Seemiller explains that Millennials are collaborative – they want to come together and work in groups. Whereas Gen Z are a ‘DIY generation’ – the self-taught YouTube generation.&nbsp;“Millennials want think-tank rooms, while Gen Z want a weblink to their online-learning programme so they can sit in the corner with their headphones on. If Gen Z comes together, they want it to be purposeful – ‘why are we coming?’ – there should be a reason,” explains Seemiller.&nbsp;They have grown up with technology differently&nbsp;While both generations are ‘digital natives’, their experience is different. Gen Z have never lived in a world without tech – whereas older Millennials likely remember dial-up internet.One last thing? Forget the stereotypesIn the recruitment process don’t believe everything you hear or read about Millennials and Gen Z. There’s more to these 20- and 30-somethings than avocado toast…Professor Seemiller has been at the<a href="https://www.coreyseemiller.com/" rel="noopener noreferrer" target="_blank" style="background-color: rgb(255, 255, 255); color: rgb(0, 0, 0);"> </a><a href="https://www.coreyseemiller.com/" rel="noopener noreferrer" target="_blank" style="background-color: rgb(255, 255, 255); color: rgb(17, 85, 204);">forefront of Gen Z research</a> and says that in today’s post-pandemic era, it’s common for employers to believe that younger employees don’t want to return to the office and prefer digital communications.&nbsp;“Gen Z actually prefers face-to-face communication over other types of communication. Not just in-person, but video, too – they like to see expressions and have a conversation.”Another popular misconception is that Millennials are disloyal and tend to ‘job hop’. However Wilson says that when Millennials move between jobs, it’s less about a lack of loyalty and more about a mismatch in terms of their expectations of their employee experience and the reality of the organisation’s values and culture. Economic conditions (and the need to pay off student debts) also often play a role.

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Hiring Millennials is different to other generations. Read our resources for recruiting Millennial and Gen Z candidates.

Read our top tips about hiring millennials and Gen Z at your workplace. Learn from experts and employers 

Hiring millennials: tips on recruiting millennials and gen Z

Hiring millennials: tips on recruiting millennials in your workplace

What young Australians are thinking, feeling and doing – and how they’re shopping.

Normal programming may have been put on pause for 20 months, but young Australians are hoping for a new chapter - and are enjoying summer armed with a new outlook on life.&nbsp;These are the findings of a new study commissioned by Afterpay and undertaken by<a href="https://mccrindle.com.au/" rel="noopener noreferrer" target="_blank" style="color: rgb(0, 0, 0); background-color: transparent;"> </a><a href="https://mccrindle.com.au/" rel="noopener noreferrer" target="_blank" style="color: rgb(5, 99, 193); background-color: transparent;">McCrindle Research</a>, which provides insights into how Gen Z and Millennials are feeling right now.Afterpay’s<a href="https://afterpay-corporate.yourcreative.com.au/wp-content/uploads/2021/10/Lockdown-Liberation-Report.pdf" rel="noopener noreferrer" target="_blank" style="color: rgb(0, 0, 0); background-color: transparent;"> </a><a href="https://afterpay-corporate.yourcreative.com.au/wp-content/uploads/2021/10/Lockdown-Liberation-Report.pdf" rel="noopener noreferrer" target="_blank" style="color: rgb(5, 99, 193); background-color: transparent;">Lockdown Liberation Study</a> surveyed 1000 Gen Z and Millennials aged 18-41 across the country, and analysed the impact the pandemic has had on their lives and spending habits.<h2>A new outlook&nbsp;</h2>Almost half of respondents (45 per cent) say that taking care of their mental health was the biggest lesson from the past 20 months. Meanwhile, the vast majority of Gen Z and Millennials (82 per cent) say they have become much more aware of their mental health during the pandemic.

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And this new outlook on wellbeing doesn’t end with mental health; 62 per cent report that they’re eating better compared to before the pandemic, and 75 per cent say physical wellbeing is more important to them now, too.<h2>The Great Resignation</h2>The pandemic has forced this new generation to learn to adapt, with many Gen Z and Millennials putting plans on hold – whether that’s buying property (21 per cent), moving house (18 per cent), getting married (16 per cent) or having a baby (14 per cent).The pandemic has also prompted many to re-evaluate their careers, and in 2022, more than half – 55 per cent – have realised they want to change jobs. The past two years have taught many Australians (32 per cent) that they want a better work-life balance, but more than half admit to missing seeing their work colleagues more than they expected.<h2>The social set&nbsp;</h2>For a generation raised on technology – and who used social media as their go-to for updates during the pandemic – a quarter of Gen Z and Millennials say they plan to use social media less frequently than they did during COVID-19.<h2>Shared meals</h2>After months of harsh lockdowns, young Australians say that it’s the simple pleasures they missed most during the pandemic - like shared meals - and, pending further restrictions, one in two people are looking forward to grabbing a bite to eat with family and friends. And given 77 per cent missed out on celebrating key milestone events, there’s a lot to catch up on.&nbsp;<h2>&nbsp;Escape time&nbsp;</h2>It comes as no surprise that everyone’s busting to get out and about, with some of the most popular planned purchases related to travel and experiences. More than half of Gen Z and Millennials (56 per cent) say that travelling again is the number one thing they’re most excited about: 59 per cent will be booking an international holiday as soon as restrictions ease, while 82 per cent are dreaming of a local break.&nbsp;

<h2>Retail therapy&nbsp;&nbsp;</h2>Before they go anywhere, though, hitting refresh on the style front is on the agenda, with 42 per cent of next-gens planning to hit the shops, and 34 per cent booking in those long overdue personal care appointments.&nbsp;And it turns out that plenty of Australians have missed in-store shopping.

Shoppers might be looking at the price tag more carefully than pre-COVID though, with 82 per cent of people becoming more conscious of finances during the pandemic. However, with more than half reaching their savings goals, it’s likely that Gen Z and Millennials have money to spend.Heading into 2022, there’s a sense of getting back on track. After so many cancellations, and so many plans put on hold, Gen Z and Millennials are finally hoping for liberation from lockdowns.&nbsp;

What young Australians are thinking, feeling and doing - and how they're shopping.

Afterpay's report into how young Australians are thinking, feeling and doing post-lockdown in 2022 - and how they're shopping

Inside Gen Z’s ‘Lockdown Liberation’ mindset: new survey 

New research reveals consumer spend has exceeded pre-Covid levels

As politicians plot the country’s route out of lockdown, retailers and brands are engaged in their own post-pandemic planning. At the heart of any strategising lies one basic question: How will consumers behave once lockdown lifts?The answer, according to a new report on consumer spending from Accenture Strategy and Afterpay, may be welcome news for retailers.<a href="https://afterpay-corporate.yourcreative.com.au/wp-content/uploads/2021/08/Afterpay_NextGen_report_AUS.pdf" rel="noopener noreferrer" target="_blank">The Next Gen Index</a>, which explores how consumers are spending and what they’re buying, suggests that retailers should prepare for a high-growth period as pent-up demand coincides with Christmas shopping.&nbsp;“There’s no doubt some younger Millennials and Gen Z [shoppers] may feel cautious, particularly if they were working in hospitality and hence lost income during lockdowns,” says consultant Atharva Karandikar of Accenture Strategy.

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“With household saving at a record high, we’re likely to experience a bounce in retail spend on reopening.”

“But… household saving is at a record high, which means we’re likely to experience a bounce in retail spend on reopening.”For retailers, this means that strong supply chains and robust stock levels will be key, says Karandikar. Here are some of the top insights from Afterpay’s second Next Gen Index report into consumer spending:

<h2>Gen Z and Millennials’ spending power is growing</h2>Shoppers aged under 40 are becoming an increasingly powerful force in the economy. Currently, Gen Z and Millennials account for 36 per cent of the total retail spend in Australia. However, that’s predicted to grow to 48 per cent by 2030 as more Gen Z (currently aged 9-24) enter the workforce.

<h2>Spending is down, but is likely to recover quickly post-lockdown</h2>Since Christmas 2020, spending has slowed across all generations, with spending by Millennials and Gen Z now 5 per cent and 7 per cent below pre-COVID-19 levels.That said, lockdown has accelerated online sales growth through Afterpay. In New South Wales, for example, Afterpay has seen 70 per cent year-on-year growth for Gen Z and 43 per cent for Millennial consumers.And months of lockdown mean that many shoppers have a cushion of savings.“There is $200 billion in household savings economy-wide right now,” says Karandikar. “When restrictions eased in Victoria last year, in-store spend quickly recovered.”In fact, Karandikar predicts above-average consumption until the normal spending – and saving – rates are re-established.

“When restrictions eased in Victoria last year, in-store spend quickly recovered.”

<h2>Younger Australians are spending more on recreation</h2>Thanks to lockdowns in the eastern states, recreation – including books, electronics, confectionary, games and hobby items – has been the fastest-growing category among all generations in the past year.Growth has reached 90 per cent year-on-year for Gen Z and 51 per cent for Millennials.

<h2>Gen Z and Millennials are championing small business</h2>Gen Z and Millennials account for roughly two-thirds of spending through Afterpay on small and medium-sized businesses. The vast majority – 80 per cent – of these sales are made online.&nbsp;Karandikar says that retailers can help drive conversions by ensuring marketing is targeted to those groups.

<h2>Buy Now Pay Later (BNPL) and debit are on the rise</h2>The number of credit cards and the value of balances has been declining since 2017, and spending on credit cards has stagnated since the start of the pandemic.In contrast, BNPL payments have risen 120 per cent since January 2020 – and while Millennials remain the biggest users of BNPL, Gen X and older generations are catching up.How retailers can adapt:

Offer a seamless omnichannel experienceGen Z and Millennial consumers appreciate value for money, says Karandikar – a purchasing consideration that’s going to be even more pronounced as we emerge into the post-pandemic world.&nbsp;&nbsp;“They will research products online before going in store, and vice versa, which means merchants who can offer a seamless omnichannel experience will be well-placed to take advantage of the boom that will come once lockdowns end.”

“They aren’t necessarily driven by budgetary constraints, but a large payment seems psychologically easier to manage when it’s split into four payments.”

Ensure customers know you offer AfterpayMillennials were the first to use BNPL, but now Gen X and older generations are jumping onboard. “They aren’t necessarily driven by budgetary constraints, but a large payment seems psychologically easier to manage when it’s split into four payments,” says Karandikar. He adds that highlighting the Afterpay cost is an important sales driver.&nbsp;Buy Now, Pay Later options will be hugely popular in the lead up to the holiday season because they help customers get&nbsp;what&nbsp;they need&nbsp;when&nbsp;they want. Ensure your customers know you offer Afterpay by promoting it across your channels, including social media, emails and website. Letting shoppers know they can split payments with Afterpay can help increase conversion rates and average order value – that’s why we recommend you include it where possible.

Prepare for a surge when stores reopenThe Next Gen Index shows fashion continues to be a strong category for Afterpay. “Once lockdown lifts, we’re likely to see the realisation of pent-up demand,” says Karandikar. “Retailers may want to use sales mechanisms to clear any backlog of stock in those first few weeks.”&nbsp;&nbsp;A note from Paul Zahra, CEO of the Australian Retailers Association (ARA):&nbsp;“Gen Z and Millennials are becoming a powerful force in the economy. Within the next 10 years, they’ll represent nearly half of Australia’s total retail spend.&nbsp;“The Next Gen Index shows how the spending habits of younger Australians has shifted throughout the pandemic, from increased spending on household goods in the latter part of 2020 to more purchases on recreation and experiences in the first half of this year before the latest lockdowns hit.”&nbsp;“It’s important that retailers can adapt to the consumer trends that are emerging, and through the Next Gen Index, business owners have access to the data, insights and tools they need to grow and innovate.”&nbsp;

All the insights into how to reach consumers as they return to stores

Inside the latest Afterpay report on Millennial & Gen Z shopping trends

<h2>With over 8 million customers globally and over 48,000 merchants, Afterpay is uniquely placed to offer insights into one of the hardest to reach consumer cohorts - introducing Gen Z.</h2>

Afterpay was founded on the premise that Millennials had developed a strong aversion to credit, having witnessed their parents enduring the fallout of the Global Financial Crisis of 2008.&nbsp;&nbsp;Although the full impact of Covid-19 has yet to be measured, it is predicted that Gen Z is the most likely cohort to be impacted financially due to the nature and areas of work they take up (part-time, casual, hospitality, tourism).Like Millennial customers who quickly embraced Afterpay as a smarter alternative to manage their budget, using their own money to pay for things they wanted, post the financial crisis, we predict this will continue to be the case with Gen Z post Covid-19.&nbsp;As our full attention turns to the Gen Z customer (the oldest of whom turns 25 in 2020), there are some notable differences in what they value and how they operate, but one thing remains clear – they distrust credit as much as their Millennial counterparts and they too have fully embraced a new way to pay and manage their finances through Afterpay.&nbsp;We hope you find this report useful in helping to navigate the Gen Z retail customer.

With over 8 million customers globally and over 48,000 merchants, Afterpay offers insights into one of the hardest to reach consumer cohorts introducing Gen Z.

With over 8 million customers globally and over 48,000 merchants, Afterpay offers insights into one of the hardest to reach consumer cohorts introducing Gen Z

The Afterpay Global Gen Z Report: Financial Feels

They may still be at school or university, but Gen Z shoppers should not be underestimated. That’s the message from social demographers.

Not only is Gen Z on the cusp of stepping into its spending power, but it is the largest demographic generation ever – comprising 30 per cent of the world’s population.Besides, says social demographer Mark McCrindle, Gen Z has “leverage even beyond their numbers because they influence parental purchasing decisions, too. They are the golden demographic that any brand wants to target because they influence the generation below in terms of leadership and the generation above in terms of ‘what’s cool’.”McCrindle emphasises that Gen Z should not be viewed simply as ‘Millennials 2.0’, and to effectively target them it’s important to appreciate exactly how they differ from their Gen Y counterparts.

<h2>Gen Z is digitally-savvy and globally connected</h2>Although Millennials are tech-savvy, having grown up with the internet and witnessed the dot-com boom, Gen Z are true digital natives. “They have always been just a few clicks away from any piece of information on the planet,” says McCrindle.As a result, Gen Z are savvier and more globally connected than any generation. “They’re the most global youth culture we’ve ever seen,” says Gen Z author Claire Madden, who explains that teens today share a common language and watch the same YouTube videos or share the same memes, whether they’re in New York or Newcastle. Globally, too, they are accessing the same brands.Because Gen Z has been exposed to online technology and shopping at a much younger age than Millennials, Madden explains that, when it comes to retail, they have high expectations around conveniences like free or same-day delivery. “They know what’s possible.”

Retail tip:&nbsp;An online and social media presence is crucial to reach Gen Z, who live “phygital” lives that blend physical and digital realms, while flexible (and free) delivery and payment options, including Afterpay, are important, too. With Gen Z’s global outlook, there’s also an opportunity for local brands to tap into a wider, international audience via digital marketing.

<h2>Gen Z is financially conservative&nbsp;</h2>While Millennials have an optimistic outlook on their financial future – thanks partly to the success of their Baby Boomer parents – Gen Z are much more cautious. Their global connectedness means they “see the complexities of the world”, says McCrindle, who adds that Gen Z have also been hit hard financially by COVID-19. “They’re a very sophisticated customer. We call them ‘up-agers’ because their purchasing behaviour is more like someone in their 30s or late-20s.”

Retail tip: A generation that prefers saving to spending might sound like a worrying prospect for retailers. But McCrindle recommends that sellers emphasise products’ longevity and value for money to appeal to Gen Z shoppers. Brands like&nbsp;<a href="https://www.patagonia.com.au/" rel="noopener noreferrer" target="_blank">Patagonia</a>, which provides repairs or recycling for its products, tap into this modern desire for value.&nbsp;

<h2>Gen Z values individuality&nbsp;</h2>Gen Z is the most diverse and multicultural generation the world has ever seen, and they value individuality more than ever, eschewing mass communication for a more personalised approach. As they’ve grown, they’ve witnessed many larger legacy fashion and beauty retailers give way to smaller, more niche DTC brands.Madden says that Gen Z has grown up accustomed to having a “voice” and being able to express themselves and collaborate with each other - and with brands. “They’re not just passive consumers,” she says. “Online, they’re not just consuming pages of information produced by an organisation, they’re on social media or YouTube – platforms that they themselves can contribute to. Think about their idea of an encyclopaedia: it’s not Encyclopaedia Britannica, it’s more likely to be Wikipedia, where there are 20,000 new articles written every month.”

Retail tip: Consider product personalisation to “help Gen Z feel like they’re part of shaping a brand”, suggests Madden. Take accessories brand&nbsp;<a href="https://www.thedailyedited.com/" rel="noopener noreferrer" target="_blank">The Daily Edited</a>, for instance, where shoppers can customise purses, iPhone cases and other leather goods with their own name or colour palette. Madden says that a unique brand tone of voice will also help engage Gen Z, as will facilitating user reviews, with younger shoppers more likely to trust their peers than brands themselves.

<h2>Gen Z values authenticity rather than curated perfection</h2>While Millennials have taken a curated and carefully art-directed approach to social media, Gen Z prefers a more authentic – and often low-fi – aesthetic, and this trend has flowed into the wider marketing and advertising world. For example, while the polished and glossy world of Victoria’s Secret was popular among Millennials, the raw aesthetic of lingerie brands such as&nbsp;<a href="https://www.afterpay.com/en-AU/business/articles/success-stories/authenticity-the-key-to-modibodis-50m-success" rel="noopener noreferrer" target="_blank">Modibodi</a>, who feature real women in their comparatively gritty campaigns, has found favour more recently with younger consumers.&nbsp;Madden says that this is partly because Millennials have often viewed social media as a way to communicate their ideal selves to the world “whereas for Gen Z social media is woven into the fabric of their daily lives… you could say [their social media] is part of their identity”. For them, authenticity and relatability are more important than polished perfection.&nbsp;

Retail tip: Don’t assume that highly produced campaign imagery or brand messaging will be successful with Gen Z. Instead, consider an approach that includes real people as models or shares real stories of your team or staff.&nbsp;&nbsp;

<h2>Gen Z value purpose and ethics</h2>You only have to think back to the global climate change marches, the Women’s Marches or the #BlackLivesMatter movement that has swept the world to realise that Gen Z is passionate about social change.And although it’s true that Gen Z didn’t invent activism, they have become a more powerful force for social change because of their global connectivity. “They are united as a global youth culture tribe. That means that when there’s a cause like climate change, as we saw last year, it becomes a global movement and takes off,” says Madden.McCrindle adds that while Millennials are also driven by a desire to make a difference, Gen Z has moved the trend on from digital “clicktivism” to activism. “They’re actually out there on the streets.”

Retail tip: Brands with ethical and purposeful products will be especially popular with Gen Z, and retailers should look to ways to reduce their carbon footprint. However, warns McCrindle, transparency is key. The tech-savvy and sceptical Gen Z, who value authenticity above all, will not be afraid to call out brands that “virtue-signal” or exaggerate their ethical credentials.&nbsp;

Gen Z on the cusp of stepping into its spending power, and is the largest demographic generation ever. Read Afterpay's guide to Gen Z.

Gen Z on the cusp of stepping into its spending power, and is the largest demographic generation ever Read Afterpay s guide to Gen Z

5 Ways Gen Z are Different Than Millennials | Afterpay Access

Your guide to Gen Z: 5 ways they’re different to millennials

Some shoppers have been spooked by the coronavirus pandemic. So how can retailers make them feel safe about going back in-store?

It wasn’t that long ago that young consumers were lured into retail stores in droves due to FOMO (Fear Of Missing Out).Now many are choosing to hunker down at home because of a new pandemic-related phenomenon: FOGO (Fear Of Going Out).Afterpay has released a new report into Gen Z – those shoppers born between 1995 and 2012 who make up the world’s largest (and potentially most powerful) demographic.&nbsp;The report found that seven in 10 members of Gen Z – many of whom work in sectors that have been hard hit by the pandemic – feel “extremely” or “very” concerned about coronavirus. More than half say they will not feel comfortable at events until there is a vaccine and more than one-third plan to avoid shops and continue to shop online once life returns to normal.

So, how can retailers help shoppers with FOGO – particularly Gen Z – feel comfortable about going back into stores?

“Gen Z make up the world's largest (and potentially most powerful) demographic.”

<h2>Build trust&nbsp;</h2>Trust plays a big factor in encouraging the younger generation back into stores says Polly Yule of retail marketing services company Crossmark.“Gen Z want to know that there are rules and a system in place, and that retailers are enforcing social distancing and taking precautions. This means that retailers will need to prove that they’ve got a level of protection in place that will make shoppers feel safe.”Retailers such as Mecca and Sephora have done just this and have introduced temperature checking for consumers before entering stores. It’s a&nbsp;<a href="https://cottonon.com/AU/covid-19-faq.html" rel="noopener noreferrer" target="_blank">similar story</a>&nbsp;for apparel brand Cotton On, with shoppers barred from trying on shoes or sunglasses in-store.Other measures retailers can consider are hygiene stations where customers can apply hand sanitiser, floor decals to indicate appropriate social distances and online queue booking systems.&nbsp;At Dermalogica, beauty therapists will wear masks and face shields during treatments, and salons have been issued with new safety guidelines. Therapists can also undertake a new free online training module in order to be awarded with “clean touch certification”, which they can display in their salon, treatment room or website.“The customer journey, expectations and attitudes to what we do and how we deliver our services are new,” says Dermalogica’s director of education (Asia Pacific) Emma Hobson, who adds that the certification aims to give clients a sense of reassurance.In addition to establishing trust, here are some key actions retailers can take to entice shoppers back into stores:

<h2>Deliver a unique offer</h2>Polly Yule, says one strategy is to deliver a unique offering that can only be accessed in-store.&nbsp;“Young consumers want shopping to feel cool again,” she explains. “Creating personalised shopping experiences they’ve never been able to access before will be important additions to the in-store experience.”&nbsp;Apparel retailers, for example, could promote a new service enabling customers to book a change room with a personal shopping assistant for a new-season wardrobe, whereas tech retailers could offer a 30-minute booking service with an experienced technician, delivering personalised advice on choosing the best laptop to a set budget.&nbsp;Yule adds: “The fact is that retailers needed to step up the in-store experience well before coronavirus. Now, they’ve got no excuse not to.”

“Creating personalised shopping experiences they’ve never been able to access before will be important additions to the in-store experience”

<h2>Provide in-store discounts</h2>Offering a discount that is only redeemable in-store can be a great way to increase the number of shoppers through your doors. A first-in-best-dressed offer to the first 50 customers communicated via social media or email can be hard for shoppers to ignore.&nbsp;“Store-specific sales that mean customers have to pursue that path to obtain the benefit can be a great way to increase foot traffic in those early days,” confirms Yule.Alternatively, a free tote bag with every purchase could work. This approach was recently offered by fashion retailer&nbsp;<a href="https://www.gormanshop.com.au/shop/accessories/bags-and-purses.html?aw_limit=1&amp;limit=24&amp;gclid=Cj0KCQjwlN32BRCCARIsADZ-J4uMdtlzQ-Ow4fgGBr7eHjDNTiwM6u69vUIVTxIW5NHT7s7ZCJJqv_8aAr56EALw_wcB" rel="noopener noreferrer" target="_blank">Gorman</a>&nbsp;with stocks selling out within days.&nbsp;&nbsp;

<h2>Harness influencers</h2>Throughout social isolation, Australians – especially Gen Z – have spent more time online, often engaging with content from influencers.So it makes sense, says Yule, to invite influencers who resonate with your brand to come in-store for a meet-and-greet, and to post about it on social media.This is a tactic that hotels have utilised in recent weeks, with many influencers employed to post about their stays in stylish inner-city accommodations, as a way to grow awareness and promote the hotel’s commitment to health and hygiene. Yule predicts retailers will also turn to influencers in the coming weeks.

<h2>Offer a VIP service</h2>Retailers would be wise to ensure they look for ways to make their customers feel extra-special as they walk back into stores, says Yule, who notes that, for some, it may be the first time they have shopped in-store for months.A shop assistant greeting each person entering the store can be a great way to achieve this, and it also gives customers the opportunity to ask where to find what they’re looking for straight away.

<h2>Reconsider your returns policy</h2>A&nbsp;<a href="https://www.firstinsight.com/press-coverage/women-boomers-feel-less-safe-in-store-dressing-rooms-testing-beauty-products-and-working-with-sales-staff-study" rel="noopener noreferrer" target="_blank">recent US survey</a>&nbsp;by retail analytics company, First Insight, found that even though shoppers were ready to venture back into stores, many wouldn’t feel comfortable trying on clothes or testing beauty products. In fact, up to two-thirds of women reported that they won’t feel safe trying on clothes in dressing rooms – suggesting that many may buy pieces in-store, intending to try them on at home.“[This] begs many questions on how retailers and brands will need to adapt their return and exchange policy in the coming weeks,” said Greg Petro, CEO of First Insight, in&nbsp;<a href="https://www.firstinsight.com/press-releases/shoppers-ready-to-buy-apparel-but-dont-feel-safe-trying-it-on-as-stores-reopen" rel="noopener noreferrer" target="_blank">a statement</a>.To enable and encourage shoppers to try on clothes in the comfort of their home, a clear returns and exchange policy is a must. Retailers could also consider extending returns periods to make the prospect of shopping even more appealing. Country Road, for example, is currently offering shoppers a limited-time 60-day free returns window.

All references to any registered trademarks are the property of their respective owners. Afterpay does not endorse or recommend any one particular supplier and the information provided is for educational purposes only.﻿

Not long ago young consumers were lured into retail stores in droves due to FOMO.

Not long ago young consumers were lured into retail stores in droves due to FOMO Now, retailers are facing FOGO Fear of Going Out