CURATED READS ON GEN Z IN THE WORKPLACE

Welcome to the latest edition of Mind the Gap. We hope you find our perspectives useful. Let us know what you think at Alex_Panas@McKinsey.com and Becca_Coggins@McKinsey.com.

—Alex and Becca

first up

As a reminder, to better serve you and combat inbox overload, we’ve changed the cadence of Mind the Gap to once per month.

When McKinsey published our first State of Fashion report, nearly a decade ago, we didn’t mention Gen Z—the oldest of whom were just entering adulthood—a single time. (We did, however, dedicate an entire chapter to the importance of millennial consumers. Were we ever so young?)

Of course, a lot can change in a decade. Today, Zoomers represent an increasingly important demographic for fashion brands. Gen Z’s spending is growing twice as fast as that of previous generations and is expected to surpass baby boomers’ spending by 2029—a trend that, our newest report finds, is fueled by an estimated transfer of $15 trillion to $20 trillion in wealth from boomers to Gen Z and millennials.

But capturing the next generation of fashion shoppers is harder than ever. Zoomers have more access to information, more choices, and a sharper radar for inauthentic marketing. In the latest report from McKinsey Senior Partner Gemma D’Auria and coauthors, Gen Z–specific insights spanned several chapters, reflecting how Zoomers’ behaviors and values are reshaping categories across the industry: from luxury and resale to jewelry and even wellness.

Consider the luxury segment: Over the past decade of growth, many luxury brands have widened their customer base, at times trading exclusivity for broader reach. The luxury sector has faced its share of challenges beyond issues with brand dilution. But it doesn’t help that Gen Z and millennial consumers cite exclusivity as a driver for increased luxury spend, 11 percentage points above the average for all age groups. Younger consumers also expect brands to push the creative envelope: 81 percent of customers under the age of 35 cite design and creativity as their primary reason to purchase luxury goods. (The past year has brought the greatest reshuffling of the designer–brand landscape in at least a decade, as luxury houses look to reinvigorate their labels with fresh, creative energy.)

At the same time, Zoomers and millennials are the core consumers of the resale market, which spans both accessibly priced brands and luxury labels. Our report finds that consumers younger than 35 value uniqueness as a motivation for shopping resale more than older shoppers do—and they under-index on other motivations, such as sustainability.

And as faithful readers of Mind the Gap will remember, Gen Zers love wellness, the $2 trillion global market that is expected to grow by as much as 6 percent per year through 2028. What does wellness have to do with fashion? Wellness is reshaping how consumers eat and socialize and, for the savviest brands, what they wear. Some brands are building out “third spaces” to encourage shoppers to engage in their brand ecosystems while they have in-person and digital social interactions with others (which then creates positive associations with their brands; others are going so far as to launch branded spas). Given how closely fashion brands are tied to lifestyle, there’s ample opportunity for them to align with wellness—as long as the offerings feel authentic to the brands themselves.

If the first State of Fashion captured a world learning to market to millennials, this one captures an industry learning to keep up with Gen Z.

VISUALIZE IT

By making advanced-manufacturing investments within commuting distance of rural US communities, businesses are helping to connect workers in these areas to tech-driven careers—potentially filling employment gaps and sparking major productivity gains.

WAIT, DON’T SCROLL

Aviation innovation. AI and biometrics, personalized terminals, and an airport full of flying cars could become commonplace at the airport of the future. 

Closing the chasm. In Canada, closing the women’s health gap—where women spend more time in poor health than men—is a $37 billion opportunity. 

Office hours. The future of work, and what happens to entry-level jobs, depends on more communication between employers and educators. 

NOT US; STILL GREAT

Hope all is well!!!! Will your exclamation-mark-laden email make you seem less competent? [FT]

Yearn, baby, yearn. Gen Z yearns . . . for more than performative pining. [NSS Magazine]

CROSSWORD

—Edited by Alexandra Mondalek, editor, New York