How Gen Z is rewriting the rules of consumer engagement

Gen Z’s digital-first approach to consumption rewards the most agile brands and poses challenges to established business models. Global equity investors need to be alert to the market mispricing that may ensue.

Generation Z is rapidly reshaping the global consumer landscape, not only through its sheer demographic and economic weight, but through fundamentally different expectations of how brands are discovered, evaluated and purchased.

Below we explore why Gen Z represents a uniquely powerful and non-Western growth engine; how social media and creator-led commerce have shifted control from brands to consumers, particularly in categories like beauty; and what this means for competitive dynamics across the sector.

We argue that accelerating trend cycles, declining loyalty and rising customer acquisition costs are structurally changing the economics of consumer businesses. The key conclusion is that success will increasingly favour companies that are agile, digitally native and locally responsive, while those relying on scale, legacy brand equity and infrequent blockbuster innovation risk misalignment.

As these dynamics play out, we believe the market is likely to misprice both the challenges facing incumbents and the upside for companies that are genuinely adapting to Gen Z–driven change.

A demographic and economic force unlike those before them

Gen Z are typically defined as those born between 1997 and 2012, now representing one quarter of the global population. They also represent an estimated 17% of spending power, despite many not even being in the workforce yet given the youngest of the Gen Z cohort are only 13 years old. At nearly two billion individuals, they are not only the largest generation in history they are also set to be one of the most economically influential.

Gen Z will also be the least Western generation with only 10% of Gen Z from North America or Europe, and the first generation where less than half of spend will come from Western nations.

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