The youngest generation of consumers, Generation Alpha, is already making waves in the market and driving trends. Born from 2010 onwards, these digital natives are shaping spending habits in ways that brands and retailers need to understand now to secure their future success. Our latest report, Anticipating Generation Alpha, provides a deep dive into this emerging group, revealing invaluable insights and trends into capturing the dollars of a generation whose spending power is only going to grow.
Current and Future Consumers: What does Gen Alpha Purchase?
Despite their young ages, Gen Alpha boasts an impressive economic footprint already through their direct and indirect spending power. According to our survey of parents with Gen Alpha children in the US, over half (53%) of Gen Alphas receive an allowance, primarily older members of the generation. Allowances average $22 a week, translating to over $28 billion in direct spending power among these young shoppers.
According to parents, much of this allowance goes into savings, but many Gen Alpha children can also spend their allowance dollars on items that interest them. While younger children prioritize toys and snacks, older ones shift their spending to beverages, entertainment, electronics, and fast food. This evolution of preferences provides a roadmap for brands looking to appeal to Gen Alpha shoppers at different stages.
In addition to their direct spending power, Gen Alpha children also hold indirect power through their overall influences on household purchases. Half (49%) of Gen Alpha parents say they have a shared shopping list for their household that their kids can contribute to, and about two-thirds (69%) say their Gen Alpha children have asked for a specific product they’ve seen advertised. They might be small, but Gen Alpha shoppers have a mighty spending power that increases every year.
How Do Parents Influence Gen Alpha Spending?
Parents play a crucial role in shaping purchasing decisions in Gen Alpha households. Gen Alpha households are more likely to be higher income, but their dollars are stretched across more people, meaning they are making purchasing decision trade-offs. Despite these constraints, Gen Alpha parents are optimistic about their financial future, which bodes well for increased spending potential in the coming years.
But Gen Alpha also influences indirect spending, as most have some level of independence to purchase the products they want. 50% of parents say that they usually or always let their child choose snacks, 44% let them choose apparel, and 41% let them choose beverages. On the other hand, Gen Alpha children are given the least freedom on purchases involving skin care / beauty, personal care, and school / office items.
Brands need to understand the delicate balance between the desires of Gen Alpha and their parents’ purse strings. They must appeal not just to the children but to their parents as well, creating marketing strategies that resonate with the entire household.
How are First-Generation Gen Alpha Households Changing the Market?
The youngest generation is more diverse than ever before. According to the Pew Research Center, foreign-born mothers are giving birth at a rate nearly 38% higher than US-born mothers. With more first-generation households having Gen Alpha children, there will be greater exposure to a variety of global products.
In fact, Numerator data found that first-generation households with Gen Alpha children are purchasing more international snack and candy brands and health & beauty brands, such as Ferrero, Meiji, Barcel, Shiseido Co., Pico, and Salonpas. By incorporating global flavors and products into the US market, brands can leverage the multicultural influences bestowed upon Gen Alpha.
In addition, Gen Alpha households shop differently than other US consumers. To make their dollars go further, they shop at discount retailer Five Below at a rate 2x higher than total US. They are also more likely to shop at H-Mart, a prominent Asian-American grocery store chain.
What are the Digital Dynamics in Gen Alpha Households?
Compared to previous generations, Gen Alpha became deeply embedded in the digital world at a young age. In fact, 69% of Gen Alpha children have already requested something they saw in an advertisement, with 50% asking for something before age six.
This could be why more than half of Gen Alpha parents are concerned about limiting screen time, especially for children 10 and under. They believe social media engagement is starting too early, but those concerns haven’t stopped them from providing their children with their own personal devices. Almost half (49%) of Gen Alpha children have their own personal tablet, and 38% have a personal cell phone.
Gen Alpha opts for video-centric social media apps, preferring YouTube, TikTok, and Snapchat. Children aged 11-14 lead social media adoption, and users check them on an almost daily basis. Parents with children ages 11-14 also say influencers are one of the top two ways they learn about new products (the first is their friends).
Gen Alpha children are in their formative years, and their purchasing influencers are unlike anything seen by Boomers, Gen X, Millennials, and even Gen Z. Gen Alpha has an opinion on what products they want, and they have more independence in purchasing decisions as they age. However, their parents still make the final decision in spending household dollars.
Understanding Gen Alpha is crucial for brands and retailers looking to secure their future in a rapidly evolving market. As Gen Alpha continues to grow, their spending power will only increase, making it essential for brands and retailers to start engaging with them now. For more information on how your business can capture more of Gen Alpha’s direct and indirect dollars, reach out to your Numerator representative or contact our team today. Visit our Generations Hub for insights into other generations.
