Generation Z helping drive nation's consumption boom

Group's monthly disposable income nearly 50 percent higher than average

As consumption is set to drive China's economic growth in the coming decade, discussions abound as to what will characterize the next generation of shoppers.

Widely known as Generation Z, the age group tends to embrace cost-effective local brands incubated from online channels, yet does not hesitate to splurge thousands of yuan tipping a favorite livestreaming host.

Guotai Junan Securities, a leading Chinese brokerage, identifies Gen Z as those born between 1995 and 2009.

This demographic, roughly 264 million strong, represents 19 percent of China's population.

A white paper on Gen Z's purchasing power cited by Guotai Junan found that their monthly disposable income reached 3,500 yuan ($544), which was nearly 50 percent higher than the national average.

It also said around 8 percent of the surveyed Gen Z population said they possess at least one bag from luxury brand Hermes, while that number was merely 2 percent among those born before 1995.

Rising patriotism, together with a propensity to purchase through digital means, has contributed to the stellar rise of several local brands with an extensive online presence.

These have given rise to the likes of cheese-topped tea HeyTea to icecream maker Zhongxuegao.

CBN Data, a Shanghai-based consultancy, said in a report that younger women are increasingly shopping mainly to suit their own needs.

This is evidenced by the increasing allure of bold colors for lipsticks, the choice of cotton as the most preferred material for clothing, as well as the rise in nutritious snacks containing probiotics, dietary fiber with low calories.

For instance, Yuanqi Senlin－a sugar-free sparkling drink brand, has rolled out 32 new products just five years after debuting its first product.

The firm has become a favorite among private equity investors in recent years, thanks to its "zero sugar", "zero fat" and "low calorie" ready-to-drink products, including fruit-flavored teas, milk teas and sparkling water, as key young consumers become more health-conscious.

"We release new products every three months on average, because that constant variety is what Gen Z－our core customers－aspire to," said Zong Hao, the company's vice-president.

"The younger generation doesn't want to be easily defined, propelling us to keep a wide portfolio in beverage types and flavors," he said, noting the company is on course to complete a plant expansion project in Anhui province to beef up production.

Their craving for exclusive experiences and crossover products is propelling retailers like Freshippo to come up with exquisite culinary offerings.

By teaming up with traditional distiller Shanghai Jinfeng Wine, the online-to-offline retail chain of Alibaba Group is releasing more than 60 new products featuring the blending of time-honored brands with popular cuisines.

"We really want to bring old-time memories to local diners, offering them a taste of innovative dishes," said Chen Meijun, Freshippo Shanghai's manager for catering and 3R, which stands for the company's pledge to offer "Ready to cook, Ready to heat and Ready to eat "offerings.

Freshippo uses rice liquor as an ingredient to produce a chocolate cake, a honey cake and a traditional Chinese-style pastry.

Buzz words and trending topics help influence the decision-making processes of purchases.

Xiaohongshu, a social networking site with 100 million daily active users, has become an orchestra baton guiding Gen Z when they search for dining options or travel destinations.

During the five-day May Day holiday ended May 5, camping has ascended to become the new go-to activity among shoppers, with searches of the word jumping 2.3 times compared with a year ago.

Changsha, Hunan province, gained particular traction during the vacation, as many young users shared notes－essentially video or photo posts uploaded by users－on the site, providing travel recommendations through vivid storytelling.