It's Saturday night, and the only thing “lit” in Ginny Gen Z’s apartment is her laptop screen as she navigates the treacherous waters of online shopping. She gazes longingly at a pair of shoes from her favorite brand that costs two month’s rent.

Welcome to the thrilling weekend escapades of Gen Z, where economic struggles are as real as trying to pronounce “quinoa” correctly on the first try. Ginny’s conundrum is also emblematic of an issue facing brands when trying to win over an increasingly influential generation.

Motivation for Gen Z's buying behavior is not solely rooted in values, environmental concerns or the allure of social media. The all-too-overlooked reality driving Gen Z’s purchasing behavior is that its members are poorer than those who came before them.

While the environment and social justice matter to Gen Zers, their immediate and long-term economic struggles take precedence in making decisions. Brands that fail to recognize this might miss the mark in attempting to connect with and cater to this demographic. 

Only half of American 30-year-olds outearn their parents, down from 90% from 40 years ago. The Harris Poll found that 65% of Gen Zers said they are “starting further behind financially” than previous generations when they were the same age and understand they do not have the same economic opportunity as their parents.

Gen Zers are also spending more on essentials and non-discretionary items such as health care, housing and education. Twenty years ago, the average renter paid 23% of their income on housing; today the average American pays 30%. Adjusting for inflation, the average spending on health care per person has grown from $2,072 in 1970 to $13,493 in 2022.

Educational expenses have also exceeded inflation and left Gen Z poorer than preceding generations. Prior to the pandemic-induced student loan payment pause, the average Gen Zer and millennial who took out a loan spent one fifth of their take-home income on payments.

Some 71% of Gen Z sometimes or always buy knockoff products, compared to 54% of baby boomers, according to YouGov and Business Insider. Civic Science reported that 42% of adult Gen Z shoppers purchase Walmart’s brands “very often,” compared to 25% of Walmart shoppers aged 55+. Low-cost options such as private label products have won over members of a generation looking to stretch their budget as far as possible. 

At one end of the market are high-end brands serving well-off Gen Zers and their older, affluent counterparts. Due to their higher margins and pricing power, many can showcase robust support for causes and values that Gen Zers care about.

Yet if current economic trends continue, even these marketers may struggle if the base of middle class and upper middle-class consumers shrinks. The brands that overwhelmingly are poised to gain are low-cost and generic brands which, through ruthless cost-cutting, keep prices at bargain-basement levels.

Gen Z’s financial challenges are evidenced most clearly in their apparel-buying behavior. ThredUp found that 65% of Gen Z respondents wanted to shop sustainably and buy higher-quality clothing, yet young consumers are fueling the rise of fashion trends that are antithetical to their own stated values. From fast fashion to dupes (low cost, lower quality products that are meant to appear nearly identical to higher quality brands), Gen Z’s obsession with low-cost clothing is not an exercise in hypocrisy, but rather the natural conclusion of consumers who lack the resources to buy anything better.

Research from Untold Insights has found that 96% of their Gen Z and millennial respondents in the U.K. said they were unable to make more eco-conscious purchases due to their cost of living. Moreover, 53% signaled they will buy affordable items over sustainable alternatives because eco-friendly options are often outside their budget. 

While it is easy to criticize Gen Z for its incongruent purchasing behavior, the generation is also embracing fashion segments that marry sustainability and affordability when possible. The well-reported surge in thrifting is driven primarily by cost considerations but is bolstered by its alignment with Gen Z’s pro-environment self-image.

The global secondhand apparel market is projected to double by 2027, a growth rate three times faster than the clothing market overall. Thrifting is one manifestation of how Gen Zers have learned to be scrappy; in the face of declining living standards, they have been able to replicate the purchasing power held by previous generations using second-hand goods. Gen Zers are not simply looking for products that align with their values; they are seeking solutions that allow them to live large within their economic constraints.

It may seem obvious to say that consumers care about price and that competing on cost is of course a tried-and-true method of differentiation. But all too often when brands strategize how to win over Gen Zers, the discussion veers into fanciful statements of aligning with Gen Z values, Tik Tok trends and $7 coffees. While these ancillary factors can help better resonate with young consumers, they miss the key fact that the costs created by these initiatives are ones that Gen Zers often cannot afford.