Greg Stoller, Master Lecturer of Strategy and Innovation at Boston University’s Questrom School of Business, offers insights into the “Underconsumption Core” trend, which has gone viral on TikTok as a way for Gen Z to cut back on discretionary spending and combat the rising cost of living.
As rent in the U.S. surged by 135% between 1999 and 2022, while incomes grew by only 77% (Moody’s Analytics), Gen Z has turned to a frugal lifestyle, prominently featured on social media under the “Underconsumption Core” trend. This shift reflects more than just a reaction to financial pressures like affording rent or purchasing a home; it represents a broader transformation in spending and technology use. Platforms like TikTok have become a stage for Gen Z to showcase their strategies for cutting back on non-essential purchases and repurposing items creatively, signaling a movement towards mindful consumption.
Research reveals several key insights into Gen Z’s financial and consumer behaviors. Gen Z faces significant challenges in a digital world, grappling with greater financial instability compared to previous generations, as highlighted by (CNBC). Their struggle is compounded by the high costs associated with maintaining a digital presence and aligning with social expectations. While Gen Z is eager to support sustainable fashion, the higher prices for eco-friendly clothing can be a deterrent, reflecting a conflict between their financial limitations and ethical consumer desires (FashionDive). Additionally, their sensitivity to public perception and the fear of being shamed online drive them to avoid repeating outfits, adding another layer of financial pressure (Myindyx). Social media plays a crucial role, with platforms like TikTok influencing their fashion choices and potentially leading to impulsive spending, as noted by (Wild Unlimited). However, trends like the No-Buy Challenge, which promotes avoiding discretionary spending, highlight Gen Z’s growing commitment to frugality and mindful consumption. While this challenge reflects their effort to manage their finances more intentionally, it is too early to determine its long-term effects on their overall financial well-being, as noted by (WJAR). Together, these insights paint a complex picture of Gen Z’s financial landscape, shaped by digital behaviors, social expectations, and a growing awareness of the need for financial prudence.
Retailers are adapting to these shifts with a range of strategies. For instance, they are enhancing their connections with consumers through innovative approaches, personalizing their outreach, and catering to Gen Z’s preference for deals rather than brand loyalty (NRF, Nielseniq, Talon.one).
