Over the last few years, a new demographic is set to become more prominent in the retail landscape. We’re talking about Generation Alpha – or people born between 2010 and 2024. Born into an era of record global birth numbers, when this generation is complete IT will total almost 2 billion globally, and will be the largest generation in the history of the world. Generation Alpha are the first to have been born entirely in the 21st century – and will, therefore, be the first entirely shaped
ed by it. Most of them will also live to see the 22nd century. How we came to the name I’ve been fascinated with the study of people and generations for many years. So much so that it became the focus of one of my previous books – The ABC of XYZ: Understanding the Global Generations. It was during research for this book that I realised no one had given a label to the next generation that was about to commence. At the time, the focus was on Generation Z, those born between 1995 and 2009. Yet, a new generation was about to begin. With Z completing the Latin alphabet, there was no subsequent letter to assign to them. So, I conducted a survey on what the new label could be. As you can imagine, many people suggested the label Generation A. But knowing that Generation Alpha would be the first to be entirely born in the 21st century (with births commencing in 2010), I believe they are not a return to the old, but the start of something new. Using this reasoning and drawing on the scientific nomenclature of turning to the Greek alphabet, I decided to name them Generation Alpha. The evolution of consumerism Technology is developing faster than ever and is shaping consumption habits in ways previous generations have not experienced. The last decade has seen the consumer landscape shift from mass market to personalisation and customisation, from a life of bricks-and-mortar shopping to online goods. Organisations that have thrived in the past decade are those that have understood their consumers and pre-empted the trends. Today’s consumers are increasingly prioritising products and services that are simple and have the ability to be customised to their specific needs. The challenge for organisations is not just to communicate their key brand messages well, but to listen and understand the unique needs of each generation. They then need to respond in a timely manner to set themselves apart from competitors. One of the key characteristics defining the emerging generations is that they are visual. They would much prefer to watch a video summarising a topic than read up on it. The dominant platforms on which these generations spend their time are visual social media sites. For Generation Alpha, their ideal platforms are social, the content visual and the format is story based. Raised in the Great Screen Age In the era of Generation Alpha, this digitally native generation has witnessed the fusion of technology and personalisation that has come to define their childhood. While Generation Z saw the ascent of customisation, Generation Alpha has experienced the era of personalisation, where everything from Nutella jars to storybooks can be tailored with their names. Generations are not static entities; they evolve in response to their times and the defining technologies and societal influences that shape them. Growing up in the 21st century, Generation Alpha stands apart as a digitally engaged cohort, forging their identities in the virtual realms of the Metaverse. Their developmental milestones are intrinsically linked to social interaction, fostering a global connectedness unrivalled by any preceding generation. They are poised to anticipate information presented in engaging, visually captivating formats – a reflection of the predominantly visual online platforms that have moulded them. Within their diverse communities, Generation Alpha is set to be the most educated and globally aware generation, a testament to the online communities that have empowered them from an early age. Technology, for them, isn’t a tool; it’s a service that provides instant gratification in every aspect of life. Smart devices, food delivery apps and personalised algorithms are their daily companions, seamlessly integrated into their existence. As the years roll on, Generation Alpha will transition from being influential voices within their households to technological trendsetters with economic clout to match. Their upbringing coincides with the dawn of digital payments, transforming physical cash and credit cards into relics of the past. With their lives organised around smartphones, they may never need a physical driver’s licence or wallet. In essence, Generation Alpha’s unique upbringing within the digital landscape is set to redefine the future of retail, where personalisation and technology-driven experiences will be the cornerstone of success. As the Alphas come of age, retailers will need to adapt and innovate to cater to this tech-savvy and globally connected generation that is poised to shape the retail industry in ways we can only begin to imagine. Environmentally aware As a generation, the children of today have grown up in environments where they are both seen and heard. Today, children are the focus of the family and influence many household decisions – from what to watch on TV to where to go on holidays. Generation Alpha are still young, and their parents continue to hold a pivotal role in guiding their evolving consumer behaviour. But Alphas are already having an impact on household purchasing choices. In fact, in one of our recent studies, we found that 79 per cent of parents to Generation Alpha said they have had their actions or consumption influenced by their children, to make them more environmentally aware. Generation Alpha have a strong voice in purchasing decisions already, and as they grow up, we expect them to become even more environmentally and sustainability minded. As the next wave of young e-shoppers, they will be hyper-informed and constantly connected. They will only ever know a world where smart speakers are connected to other devices, and this will play an increasingly important role in making their shopping experience the most convenient and efficient possible. Artificial intelligence, smart devices and robotics will also have an impact on the online shopping experience. The generations before Alpha have been ‘marketed’ toward so frequently and from so many different angles that there’s a savviness to them, which Generation Alpha will emulate. This new generation will, in general, make decisions based on peer recommendations, social media influencers and their personal values. As they grow up, they will also be looking at companies’ social responsibility, because they want the companies they interact with to do the right thing. A company that has eco-friendly credentials can help increase consumer trust by showing they are environmentally and socially responsible. A generation of active co-creators The future of retail in the context of Generation Alpha is marked by a significant shift in advertising and consumer behaviour. Children in this generation are no longer passive consumers but active co-creators. For example, traditional advertising involving toys has given way to ‘unboxing’ videos, where kids open and review products manufacturers give them. This trend aligns with Generation Alpha’s digital nature, shaped by YouTube vloggers and social media influencers. Generation Alpha are not passively consuming, but involved as co-creators. We see this in their behaviour around apps like TikTok, and games like Roblox and Minecraft, where they provide, create and build content and solutions. Generation Alpha’s voice matters in the home and in the marketplace. This generation is being heard and is an empowered and involved voice in the consumer and advertising process. Generation Alpha are growing up as super-informed and constantly connected consumers. This means that their attitudes and consumption are different to generations past and are constantly evolving. As they grow up, they will increasingly integrate technology into their consumer behaviour and it will influence how they shop and interact with brands. The future retail landscape will be personal and more easily accessible to them than ever before. As empowered consumers, products, advertising and marketing will best reach them when it involves them and meets their expectations, aspirations and values. The economic footprint of the Alphas While it might seem strange to talk about Generation Alpha as consumers, they have brand influence and purchasing power beyond their years. They influence their parents’ purchasing decisions, shape the emerging social media landscape, and are the future generation of digital shoppers. When the world has welcomed the entire cohort of Generation Alpha, they will total almost a quarter of the global population. Their economic footprint will also be far greater than any generation before. When the entire Generation has been born, at the end of 2024, the oldest Generation Alphas will be just 14. More than US$5.39 trillion will be spent directly on them annually, and much of it they will have directly influenced, if not determined. This will also increase by $10 billion every year. By 2029, when the oldest Generation Alphas enter into adulthood and the youngest reach the age of 5, their economic footprint is predicted to reach more than $5.46 trillion. More noteworthy perhaps, is the spending they will do directly as consumers. As the generation ages, they will have increasing autonomy over their own finances and a larger influence on some household spending (such as clothing, recreation, technology and food/beverages). We estimate that in 2024, Generation Alpha’s direct spending or influence will reach $1 trillion – or 1.5 per cent of the global consumer economy. This will grow rapidly as they become increasingly influential in household expenditure decisions and in their spending capacity. By 2029, their direct spending power will be more than $1.7 trillion globally, an increase of almost $150 billion a year. Generation Alpha is poised to reshape the consumer landscape, wielding an unparalleled economic influence driven by their innate relationship with technology. Unlike any generation before them, Generation Alpha will redefine the consumer landscape by influencing and determining a major portion of their own spending. Given the immense demographic scale and economic sway Generation Alpha will wield, any organisation neglecting to comprehend and actively connect with this global generation will inevitably edge towards extinction. This story first appeared in the November 2023 issue of Inside Retail Australia magazine.