Can Gen Z even afford to shop during Black Friday?

As the holiday season approaches, Black Friday and December are shaping up to be critical for a retail sector that has struggled significantly this year – both in luxury and beyond. Considering that older generations, from Millennials onwards, have established spending patterns, it’s Gen Z that remains the real question mark – as well as the most influential demographic in spending trends, especially since this year’s Black Friday timing is expected to coincide with payday across much of Europe. According to UK data from CACI reported by Fashion Network (which dubbed the day a "Super Pay Day”), this overlap could create a perfect spending storm – emphasis on “could.” This year, 43% more people will receive their salary before the event compared to 2023, benefiting particularly high-income groups defined in the CACI report as "Luxury Lifestyles" and "Established Affluence" ready to make high-value purchases. However, it’s Gen Z consumers who are the potential protagonists of this spending marathon: according to CACI data, 27% of Gen Z plans to use Black Friday for gift shopping, a figure 9 percentage points higher than the UK average, while 84% of this demographic will have already started their Christmas shopping before Black Friday. While they express skepticism about the authenticity of Black Friday discounts, Gen Z members remain among its primary participants, and numerous retailers intend to seize this opportunity. But, to put it perhaps a bit bluntly, can Gen Z afford to shop on Black Friday?

Opinions differ on more specific aspects, but another report, this time from Deloitte regarding the US market, which combines Black Friday and Cyber Monday into a single event, suggests that average per-person spending this year is expected to increase by 15%, reaching around $650 per consumer. Among Gen Z, however, spending growth over the last three years has outpaced others: Black Friday and Cyber Monday spending has accelerated since 2021, with a three-year compound annual growth rate of 13.2%, rising to 25% among Gen Z consumers. In other words, this segment looks for discounts more than others during this period and is becoming accustomed to concentrating its shopping on strategic dates. This spending acceleration involves both Gen Z and consumers earning below $50,000 or above $200,000 annually, while a large portion of shoppers plans to use financial tools to optimize their budgets. Credit card use has risen to 53% this year (compared to 35% in 2023), and nearly 30% plan to adopt "buy now, pay later" solutions. This time, however, Millennials lead this trend with 72%, followed by Gen Z. Interestingly, this surge in spending occurs because many audience segments are becoming more price-conscious. Even though 45% of surveyed consumers reported price increases and a third noticed smaller discounts, nearly everyone is allocating over 51% of their holiday budget to Black Friday and Cyber Monday promotions. Essentially, consumption is rising because people are chasing savings.

Amid this spending surge, however, there’s a calculated increase in payment deferrals and systems that allow the "best deal" to be spread over time – meaning more is spent, but not because there’s more money available. Another recent report from Splitit published again by WWD, for example, revealed that 42% of Gen Z consumers favor installment payment plans for personal purchases, 35% use them for recreational activities, and 25% for dining out. This reliance on flexible payment methods underscores the many financial difficulties young people face, from high living costs to stagnant wages. The report also shows that 47% of Gen Z shoppers are influenced by the availability of installment plans when deciding whether to buy, while 65% opt for installment plans before completing a payment, demonstrating a clear preference for cost amortization. Notably, credit card installment plans have seen the largest increase among Gen Z, with usage up 46% this year, far exceeding Baby Boomers (21%), Gen X (33%), and Millennials (41%). Despite their preference for installment payments, only 60% of Gen Z plans to use them for holiday gifts, the lowest percentage among all groups considered. In comparison, Baby Boomers reach 73%, Gen X 68%, and Millennials 65%. Conversely, Gen Z is more likely to use these tools for personal purchases, with 44% employing them to justify impulsive spending.

In short, this holiday season and the upcoming Black Friday are expected to see stronger consumption than in the past but also more ambiguously motivated and spread out through installment and payment plans. On the one hand, the financial capacity of many consumers, particularly Gen Z, suggests high sales potential. On the other hand, retailers must contend with both the skepticism young people feel toward Black Friday discounts and the economic challenges highlighted by the growing prevalence of installment payment plans, making it difficult to capture this market. The solution is a simple “don’t try anything funny”: consumers will reward retailers who prove to be genuinely consumer-focused – such is the level of mistrust that has been reached. Therefore, the best remedy for spending will undoubtedly be true and transparent discounts that emphasize product value and are perhaps available with flexible payment options. With Gen Z approaching the holidays with a mix of optimism and caution, companies aligning their offers with this demographic’s preferences will be better positioned to capitalize on the spending increase.