Brands Briefing: How retail companies are adjusting to the bifurcated Gen Z shopper

Some customers are investing more money in items that will be used and seen more often — like a Coach bag or a wool pea coat. Others are saving money by thrifting their casual clothing or cutting back on one-off purchases like fast-casual dining. In response, brands across sectors are adjusting how they speak to a customer whose spending power is only going to grow as they hit more milestones. That may mean offering more deals that help customers feel like they’re getting a great value or acting fast to jump on pop culture trends.

Chipotle CEO Scott Boatwright, for instance, said on the company’s latest earnings call that the 25-to-35 age group Is “particularly challenged,” and facing headwinds around unemployment, student loan payments and slow wage growth. Looking into 2026, he said the company will roll out more campaigns like its “Summer of Extras” to help bring them back. The three-month promotion gave customers extra loyalty points and chances to win free burritos.

Warby Parker co-founder and co-CEO Dave Gilboa said on the company’s third-quarter earnings call earlier this month that it’s seeing younger customers pull back by choosing lower-priced frames or ordering smaller amounts of contact lenses. Given the medical necessity of glasses and relatively affluent customer base, the company is somewhat insulated, Gilboa said. But the company still reduced its full-year guidance to include growth of approximately 13%, instead of 14-15%.

“We do serve a cohort of younger customers who are increasingly feeling uncertain about their future and are being more selective in their purchasing behavior,” Gilboa said.

Little treats and big luxuries

It’s hardly surprising this generation is watching their dollars. One recent Colliers survey found 48% of Gen Zers said they don’t feel financially secure — the most out of any generation. But that doesn’t mean they’re not spending at all. Nicole Larson, national research manager for retail services at Colliers, said Gen-Z shoppers are stretching their dollars and cutting spending on everyday goods so they can invest in other categories that help them define their identity. That might manifest as jumping into trends — like the Labubu craze — or splurging on luxury items.

“If it pays off with their long-term emotional connection, that’s why they’re buying those luxury items and little treats,” Larson said.

When to treat — and where — also comes down to what’s trending. Andrea Ramirez, customer and consumer insights manager at flavored syrups company Torani, said the company has been able to tap into “little treat” culture to reach Gen Z, especially around seasonal or cultural moments. When “dirty soda” started gaining traction, thanks to “The Secret Lives of Mormon Wives,” the company responded by pushing out more recipes online.

But relevance, Ramirez said, lives in the details. “If people are using clear glasses, you’ll see that every single video we post showing how to make a dirty soda — or people enjoying them — features clear glasses. Not only are they beautiful, but that’s the behavior,” she said.

Tapestry CEO Joanne Crevoiserat said during its fiscal 2026 first-quarter earnings call that new and younger customers are transacting at a higher AUR and have a higher retention rate than the rest of the company’s client base. “They are also influencing all generations, as we achieved growth in acquisition and retention among both Gen-Z and non-Gen-Z cohorts, a clear signal of our growing brand resonance and reach,” she said.

Angelina Aileen, a beauty company marketer who is part of The Z Suite consulting network, said Gen Z leans into “dopamine-driven” purchases, especially when it relates to their well-being and what makes them feel good. One of her most recent splurges was buying a host of adaptogen products to see which she liked the best.

“Gen Z really cares about their well-being. Is it mental health? Physical health? Food? Aesthetics? Travel? These are things they see as essential to feeling good,” she said.

Secondhand, savvy solutions

Still, Gen Z is looking for ways to save. And they may be able to do so in ways that older demographics may not have the time, energy or technical know-how to pull off. Some will scour coupon sites or ask AI for the best deals, Larson said. Or, they’ll finance purchases with buy-now, pay-later plans. One study from the Federal Reserve Bank of Philadelphia, which specifically focused on 4-in-6 payment products, found that 46.1% of users in the fourth quarter of 2024 were under age 36.

They’re also willing to get creative, like “group-buying” items to share. Colliers’ Larson said she has a teenage cousin who pooled their money with a few friends to buy a luxury bag. Each gets “custody” every few weeks. “Someone’s going to get hurt in the end,” she said. “I don’t think it works in the long-term, but they’ll pool money together to buy these nicer items.”

Larson said that value-seeking behavior also fuels secondhand spending, which is becoming an integral part of the Gen-Z shopping experience. Just last week, The RealReal’s third-quarter earnings showed total revenue growth of 17% year over year. Half the company’s customer base is made up of millennial and Gen-Z shoppers.

“We have younger customers who are entering the earning years of their lives, and they look at us as an excellent platform for acquiring items. And then that relationship continues to grow and evolve as they age,” Ajay Gopal, CFO at The RealReal, said on the earnings call.

Bryce Li, a senior at University of Pennsylvania and part of The Z Suite consulting network, said he buys most of his apparel secondhand except for select items. As a member of his school’s dance team, he gets 25% off at Lululemon through its Sweat Collective group. But he and his circle go big for celebrations and professional moments. “Those are options when you can go big on a timeless piece,” he said. “People want to look nice in those contexts, so they’re OK with spending a bit more to look refined.”

Li said his latest splurge purchase was a pea coat from Ash & Erie that fits his shorter frame the right way and scores him compliments. “Right out of the box, it was exactly what I was looking for. It’s super warm, and it just makes me feel confident,” he said.

Li said he was willing to pay more than he would if he was secondhand shopping because it’s an item that he’ll use every day, has a classic and timeless look, and will hopefully last for years.

“People are not not willing to spend,” he said. “But they’re not willing to spend more on the things that they don’t need to.” –Melissa Daniels

One brand’s strategy for using SMS for the first time to promote Cyber Week sales

Native Shoes, which sells water-friendly shoes, has traditionally used texting for customer service. But it’s now extending SMS to promotions, Michel Proulx, the brand’s director of e-commerce, told Modern Retail. Customers can opt into SMS marketing when signing up for emails. For both programs, Native Shoes is working with Klaviyo.

Native Shoes will be one of many brands looking to stand out in a sea of promotional messages this year. Attentive‘s customers sent 3.9 billion emails and text messages during Cyber Week last year. So, to get people to actually open its messages, Native Shoes is leaning on time-sensitive promotions while keeping its remaining text messages informational. 

The brand’s Cyber 5 deals will run from Nov. 24 to Dec. 1. Those who sign up for SMS can get early access to deals, including up to 50% off site-wide, via a text link on Nov. 23. Some deals are extra time-sensitive. For instance, two new colors of the Jefferson shoe will be 50% off on Nov. 23 only. Midway through the week, customers will receive a text with another promotion. Customers will also be reminded about shipping cutoffs, as signing up for email or SMS guarantees free shipping. 

“We’re not a very promotional company, but knowing that SMS is geared toward promotional activities and small bites of content, we felt now was a great time to launch it,” Proulx said. “We want to start giving our customers different ways to hear from us.”

This holiday season, Native Shoes will offer the same promos via email and text. But it wants to have a “lighter touch” with SMS than email, Proulx said. For example, it will send its early-access text at around 8 a.m. or 9 a.m. local time, so as not to disturb people’s sleep. “We want to keep [our SMS messages] intentional, short and clear,” Proulx said.

Native Shoes had been “curious about SMS for a while,” but decided the holidays was a good time to revisit its content strategy and finally use text messages for promotions, Proulx said. In 2026, Native Shoes plans to use SMS to tease product launches, new colors and other personalized offers — as well as separate deals from emails. It will also tailor texts to past purchases. “If we know you’re not interested in kids’ products, [we] won’t tell you about kids’ products,” Proulx said.

“We’re all in SMS programs where you get pinged every day with the latest sale,” he added. “And that gets tiring after a while. It really should be a value add.” –Julia Waldow

What we’re reading

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• Adidas is partnering with specialty run store franchisor Feet Fleet on some local events, in its quest to go after more runners. 

What we’ve covered

• Bogg moved up the launch of its new quilted tote collection to help plug a projected revenue gap caused largely by tariffs and to help “salvage our 2025,” CEO Kim Vaccarella said. 
• Infant formula brand Bobbie launched in Costco stores last week, capping off a year of triple-digit retail growth as the company tries to reach more mass consumers. 
• Shoppers still can’t get enough of Advent calendars, as companies like Bartesian, Spunky Pup and Bonne Maman say they are still increasing production to meet demand.