With the explosion of the influencer economy and the emergence of the consumer-as-creator, the entrepreneurial attitude and independent livelihoods of Gen Zers and Millennials are giving rise to new ways for brands to reach audiences
Growing up in the shadow of the Great Recession, younger generations learned to take a different approach to work and money in an uncertain climate. It affects the way they see the world; earlier this year, Deloitte found that Gen Z and Millennial trust in the global economy has fallen to its lowest level in six years, with only 26% of respondents expecting economic conditions to improve over the next year.
But that hasn't made them less likely to make money. According to Morning Consult, 70% of Gen Z and 60% of Millennials say making money is very important to them. Now, young people want success, but don’t necessarily hope to take the traditional path to get there. By taking money management into their own hands as digital content creators and influencers, Millennials and members of Gen Z are pioneering new sources of income and monetizing their personal interests and daily lives— and by consequence, are driving a profound transformation in how and where commerce takes place. In this piece, we consider two ways that younger people are making a living as creators in their own right, as well as how brands are tapping into the resulting rich creator-consumer connections as a new vehicle for retail.
Young people still find value in influencers. In fact, 45% of Gen Z follows more than 10 influencers on social media and 10% follow 50 or more, according to the Center for Generation Kinetics. A study by ad agency RPA found that out of a choice of fame, power or belonging, 58% of Gen Z chose power as the most desirable trait—defined as “having the ability to direct or influence the behavior of others.”
Influencers as young as toddlers have found notoriety via social media, and every age group has its own cohort of social media stars. At the center of this phenomenon has been mostly young women, leveraging their own lives to create brands on Instagram, YouTube and other online platforms. Social media has made stars out of normal people like Caroline Calloway, Olivia Rouyre and Makenna Kelly, who gained notoriety by sharing their everyday lives, thoughts and personalities on the internet.
Partnerships with brands and advertisers aren't the only way for social media stars to make money. Platforms like Patreon take the crowdfunding philosophy of Kickstarter and GoFundMe to the next level, giving content creators and influencers a means to directly benefit from fans and supporters. The company claims it currently has over 3 million active “patrons,” who pay a monthly fee, usually only a few dollars, to access content from their preferred creators. Those offerings include newsletters, Instagram perks and other forms of premium access. (Instagram influencer Caroline Calloway also boasts a healthy following on Patreon.)
TikTok is the newest platform to create influencers and stars, and brands are moving quickly to cash in on the attention of young people. Unlike Instagram’s ease of use, which turned plenty of normal people into celebrities, TikTok’s formula is a bit more opaque. The content moves fast, evolving and disappearing faster than ever before. The ability to remix and sample content has turned many of its users—most of them teens and tweens—into overnight celebrities like Haley Sharpe.
This kind of influence often turns into sales potential. In an internal survey, Instagram found that 81% of its users use the app to help research products and services. A 2019 Schwab study reported that 49% of Millennials and 44% of Gen Z are spend money on experiences because of social media—much higher than the combined average of 34%. And WP Engine found that 73% of Gen Z would make a purchase based on a social media recommendation.
Faced with student debt and an unstable gig economy, young people are finding new ways to create income and define their own success. And as a result of increased connectivity and digital financial platforms, peer-to-peer retail has surged in popularity, transforming marketplaces like Depop and Grailed into key tools for connection and collaboration.
Downloads of peer-to-peer marketplace apps grew 25% in 2018, according to App Annie’s State of the Mobile report. Vogue Business reports that 90% of Depop’s 15 million active users are under 25. For many young consumers, reselling has become a natural step of the retail experience. Frugal and sustainability-minded, but also image-conscious, young people are driving interest in reuse. Many consider the resale value of each new item they purchase, whether it's a thrift store find or a brand-new pair of sneakers.
Peer-to-peer platforms combine the model of eBay with the content of Instagram, making them particularly useful to young people. Depop is one of Gen Z’s go-to apps for buying and selling clothes, sneakers, jewelry and even items like cameras. There's a distinct streetwear bent, and sellers flip vintage, new, luxury and self-made items. The platform offers users many of the same brand-building tools offered to influencers on Instagram, encouraging sellers like Chiara Ferragni and Dean Mark to create unique content and leverage personal identity to build sales. Even celebrities like Rico Nasty and Dita Von Teese use Depop.
This entrepreneurial spirit is one element at play in the mainstream ascendance of streetwear culture. Flipping limited-edition sneakers and items from brands like Supreme and Nike has become a side hustle for some, and a full source of income for others. Online secondary marketplaces like StockX, Grailed and GOAT have popped up to serve the demand, as well as brick-and-mortar retailers like Stadium Goods, which was acquired by Farfetch in 2018.
Retailers won't likely be able to sway the buying habits of young people—the change will happen the other way around. Despite some challenges, retailers have found strategies that allow them to cater to Millennials and Gen Z without alienating them or seeming to try too hard. Successful programs make space for young people to buy buzzy products, connect with others, monetize their content and earn rewards. In many cases, young people want to have a direct hand in the sales process.
A few pioneering platforms now offer a look at a the future of the influencer economy, especially through livestreaming. It's a particularly popular and lucrative format in Asia; on Alibaba’s Taobao, for example, Chinese livestreamer Viya sold a reported $66 million of product in a single day, setting a new record for the platform.
SoundCloud, a music uploading and streaming platform, offers independent creators a chance to monetize their music through their SoundCloud Premier program. Any eligible musician who is over 18 and garners at least 5,000 streams a month can join and earn a share of the revenue generated by their music. Facebook has also developed new features to help influencers monetize their content. This helps compete with YouTube, which lets users profit from advertisements, gives them engagement metrics, and partners with MerchBar to allow direct branded product sales below videos.
And instead of running from peer-to-peer sales, some retailers are embracing it. Luxury English department store Selfridges partnered with Depop on in-store and online product launches and activations that cater to a luxury crowd. To cater to the resale market and bolster its sustainability efforts, Millennial-favorite clothing brand Cuyana teamed up with P2P site thredUP. H&M-owned brand & Other Stories turned to the Swedish platform Sellpy to give its customers an outlet to resell their pre-used clothes.
Online marketplace Storr allows users to build a virtual store, curate products, and invite friends to shop. After signing up, users essentially curate and merchandise their own stores by adding products from available brands, including Adidas, Maude and Jenni Kayne, among hundreds of others. When products sell through their stores, users earn a commission and the brand handles fulfillment, incentivizing young people to do the work that traditionally falls on marketing teams.
In each of these manifestations, Gen Z and Millennials have a hands-on role in the process of buying and selling. Whether they're creating content, selling merch, passing on old clothes or designing their own stores, young people are learning the ins and outs of the retail business on their own terms. For an industry in flux, this is a huge chance to change the same old formula and bring young consumers into the fold more than ever before.