The trend: Gen Z’s spending is set to skyrocket from $2.7 trillion in 2024 to $12.6 trillion globally by 2030, per a new Bank of America Institute report.

• Gen Z’s spending growth outpaces the broader population in both necessities and discretionary categories, according to Bank of America credit and debit card data.
• Entertainment and travel are major drivers, with spending in these categories up 25.5% YoY and 13.8% YoY on a six-month moving average in February, respectively.
• However, Gen Z is spending nearly twice as much as they have in savings, highlighting the generation’s growing financial strain due to high living costs.

While their spending power is rising, Gen Z’s limited savings and increasing economic pressures could shape long-term financial behaviors and shopping habits in the coming years.

Why it matters: Retailers and brands seeking to appeal to Gen Zers need to take note of their distinct and evolving habits, including shopping and spending patterns.

How they shop: Gen Z’s path to purchase is more complex than that of older generations.

• While they embrace digital channels, they also rely heavily on in-person shopping and word-of-mouth recommendations to make buying decisions.
• Gen Z seamlessly blends physical and digital touchpoints, creating a fluid and interconnected shopping journey.
• That mix leads to some unexpected trends. For example, while Gen Z is far more likely than the general population to buy health and beauty products online, they prefer shopping in-store for big-ticket items like appliances or home furnishings, per a recent PYMNTS report.

Gen Zers are also far more likely than other shoppers to vote with their wallets, as 41% have boycotted brands over political differences, per a survey by The Harris Poll.

How they spend: Gen Z prefers debit cards as their primary payment method, a trend likely to accelerate as financial pressures mount.

• At the same time, they are the first mobile payments-native generation, with 85.1% using their phone for in-store or online purchases, according to the Federal Reserve Bank of Atlanta.
• They’re also leading the charge in buy now, pay later (BNPL) adoption. Over the holidays, 54% of Gen Zers used BNPL, outpacing the 50% who used credit cards, per a J.D. Power survey. That’s well ahead of the general public, where only 32% used BNPL, compared to 61% who used credit cards.
• Gen Z’s reliance on BNPL is only growing. Gen Zers will account for 30.2% of US BNPL users, per our 2025 forecast, signaling a lasting shift in how younger consumers approach spending and credit.

Our take: Retailers like Bath & Body Works are smart to adapt stores for Gen Z with video displays and digital integration. To further their appeal, they should emphasize affordable indulgences, flexible payments, and values-driven messaging.

Go further: Read our Gen Z Path to Purchase 2024 report.