Gen Z workforce to drive spending to $250 billion by 2025: Report

New Delhi: India's Gen Z population, now at 377 million, is not just the largest generation in the country's history but also a powerful economic force with a collective spending power of USD 860 billion, a report has revealed.

Gen Z is the generation of people born between 1996 and 2010.

The "The USD 2 Trillion Opportunity: How Gen Z is Shaping the New India" report by technology firm Snap (parent company of Snapchat) and Boston Consulting Group (BCG) revealed that Gen Z currently holds a collective spending power of USD 860 billion, accounting for 43% of India's total consumer expenditure.

"Gen Z is already driving 43% of India's consumer spending. Their influence is not limited to select categories -- it cuts across categories ranging from fashion, eating out, to automobiles and consumer durables," said Nimisha Jain, Senior Partner and Managing Director, BCG India.

Gen Zs are poised to play an increasingly vital role, with their spending power projected to reach an astounding USD 2 trillion by 2035, the report said.

Collective spending consists of direct spending -- made by working Gen Zs with their earnings and influenced spending, by dependent Gen Zs; these spends are mostly made by families where Gen Zs play an active role in influencing product/brand choice.

Direct spending currently stands at USD 200 billion, with 1 out of every 4 GenZs in the workforce. The figure is projected to reach USD 250 billion by 2025, when every second Gen Z will be working, the report said.

"By 2035, these figures (direct spends) are expected to change dramatically, with direct spending projected to reach USD 1.8 trillion, implying that every second rupee of consumer spend in 2035 will be driven by Gen Z," it said.

The report is based on the findings of a survey carried out among around 1,000 parents to evaluate their influence, alongside insights gathered from around 1,200 Gen Zs and millennials to identify their core values and purchasing behaviours. It also took insights from the combined expertise of BCG and Snap in the domain.

Further, Jain said it is important for marketers to take note that this generation is driven by unique values and beliefs, however, it was observed that only 15 per cent of brands surveyed are actively taking steps to tap into this opportunity.

"For businesses, understanding and authentically engaging with Gen Z isn't just good to have; it's necessary for winning today and will be imperative for survival tomorrow," she said.

The report said that while 45% of businesses acknowledge Gen Z's potential, only 15% have actively leveraged these insights—a gap that presents brands with a prime opportunity to forge deeper connections with the generation shaping India's consumer future.

It recommended rapidly innovating in line with trends, integrating social interaction throughout the shopping journey, providing visually immersive experiences both online and offline, and engaging with the right influencers in the right way as initiatives brands should take to capitalise on the opportunity.

Other findings from the report:

Trends rule the day for Gen Z

Gen Z are 1.7 times more likely to gravitate toward what's in trend, whether it’s rocking carpenter pants, slipping into boyfriend jeans, or perfecting that graphic eyeliner look. Unlike millennials, who tend to prioritise brand names 1.3 times more, Gen Z finds their inspiration in the ever-evolving fashion landscape. 

It's all about the visual vibes: Gen Z love immersive visual experiences

Gen Z lives through visuals, with nearly 80% of them being captivated by visual content. 77% of Gen Z users visuals as a primary mode of communication, even in regular chats and 78% use varied forms of visuals such as GIFs, stickers etc, in chats. They're 1.4 times more likely than millennials to favour these interactive features in their communications. 

Just Shopping? Nah! It is Shopcialising for the Gen Z

Gen Zers have a tight-knit ‘inner circle’ - set of close friends and family members who help them navigate through life. About 70% of Gen Zers deeply care for connection with this inner circle, sharing every small detail of their lives with them—from shopping to streaming and so much more. They crave real-time feedback from their inner circle, turning every shopping trip into a social event. 64% of them engage in “shopcialising,” sharing their shopping escapades with friends through photos and video calls.

Creators as the new search destinations for Gen Z

72% of Gen Z now turn to creators' social channels as their primary search destinations. Gen Z engages with these influencers more deeply, trusting their recommendations to guide their purchasing decisions. Remarkably, they're five times more likely than millennials to visit a creator's page before making fashion choices. 

The Phygital frontier where online meets offline

For Gen Z, the shopping experience is a beautifully blended “phygital” journey, where online and offline blend effortlessly. 54% of Gen Z shoppers check wish lists or browse creator pages on their phones while in-store—significantly outpacing the 32% of millennials doing the same. This generation's approach to spending is both strategic and savvy; they thrive on inspiration from various channels, whether starting their journey online and completing it offline or vice versa. Gen Z is 1.5 times more likely to invest time in researching their purchases, combing through expert opinions, product reviews, and creator insights to ensure that every dollar spent is smart one.