Shopping to forget unemployment sadness

According to consulting firm Mintel Group, since the beginning of the year, customers born after 1995 have been spending money regularly on services such as movies, beauty treatments, bars, and sporting events. About 40% of respondents spent more money on entertainment in August than in July.

Experience-based spending, from watching movies, visiting exhibitions to outdoor sports, is a popular way for Gen Z to continue life after Covid, said Mintel analyst Blaiz Zhang.

Young people are seen as key to growth in the huge consumer market, but as the economy continues to struggle in the wake of the pandemic and businesses scale back hiring, unemployment among 16-24 year olds hit a record high (22%) in June. Instead of cutting back on spending, Gen Z are reassessing their priorities.

Many people turn to relatively affordable experiences instead of buying big-ticket items like gadgets or preparing for long-term goals like saving or buying a home. Traveling abroad is beyond the means of most people, so they focus on domestic destinations.

Yang Zhifeng, 22, a recent university graduate, was discouraged and gave up looking for a job after seeing hundreds of applicants vying for an office job. She chose to work as a part-time cashier at a Shanghai hotel for 1,000 yuan (US$150) a month.

Still, Yang was able to save money to travel domestically, attend comic book conventions, and try new restaurants with friends. She said that when the job market is so bad, why should we struggle and give ourselves a hard time? This is a good time to rethink which lifestyle suits us better and makes us happier.

Savannah Li, 23, agrees that it’s okay to indulge yourself every now and then. During the lockdown in her hometown of Xinjiang, she defied her diet and secretly bought chocolate to lift her spirits. The thrill of doing something made her want to “live happily right now.” She didn’t hesitate to spend 1,000 yuan or more on a dress, even though she didn’t have a job.

The number of Chinese Gen Zers who want to “lie down and let life be” has increased over the past 18 months in response to an overly competitive job market, according to Zak Dychwald, founder of trend research firm Young China Group.

People are still spending in traditional sectors. Consumption data for the first half of 2023 is strong, and even if sales are below expectations, companies are still expected to see their highest profits in the second half of the year thanks to leaner cost structures and reduced inventory burdens, according to Bloomberg.

Still, retailers with large young customer bases in China – from Unilever, Yum China Holdings to Chow Tai Fook Jewellery – have expressed concern about uncertainties surrounding the country’s economic recovery or have relied on promotions and discounts to stimulate sales.

Some younger consumers are becoming more cautious about their purchases, more pragmatic and looking for cheaper options, said Christine Peng, head of Greater China research at UBS Group AG.

Low-cost brand Miniso saw second-quarter sales rise 40% from a year earlier, with about a third of its stores hitting record sales in July. Post-Covid, Gen Z is more focused on self-worth, personality and emotions, according to Vice President and Chief Marketing Officer Robin Liu. Meanwhile, luxury brand Coach has launched campaigns that encourage self-expression among its young customers, helping build confidence and resilience amid a tough job market.

Still, marketing won't work if customers don't have income. Li, who is still looking for work, admits that if she continues to fail to find a job, she will have to lower her expectations even more and spend less.