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NEW YORK — Despite home furnishings being among the most challenged categories when it comes to consumer spending right now, one demographic is funneling more dollars in that direction: Gen Z.
Spenders in the 18 to 24 age group, who are moving into dorms or getting their first apartments, are channeling funds into the home category, according to a new report from Earnest Analytics. Gen Z spending in this sector grew 21% year-over-year for the first six months of 2023. And when drilled down into subcategories, home furnishings was up 26% YoY.
While Gen Zers don’t have a lot to spend vs. other demographic groups — they are averaging about $5,134 per year across all categories — home is getting about 3.4%, or $177 of that total. The biggest spending category for Gen Z is general merchandise, which accounts for 30.7% of spending and goes toward daily goods, staples and groceries at retailers such as Target, Walmart and Amazon.
Despite the small dollar amount, Gen Z’s home spending is currently outpacing that of other generational groups, Earnest reports, outperforming by 27 points year-over-year.
Overall, Gen Z is increasing its spending faster than older generations. As of June 2023, Gen Z spent 9% more YoY compared with all other generations across the Earnest Spend Index, which tracks a basket of retail and restaurant brands.
Looking at specific retailers with whom Gen Z is spending on home, the report found Wayfair was the winner, up 45% YoY for the first six months of the year. Also making the list are World Market, up 24%; HomeGoods, up 23%; and Ikea, up 21%. Other retailers selling home-related merchandising showing positive year-over-year growth include Ace Hardware, Tractor Supply, Menards, Lowe’s and The Home Depot.
Retailers that lost traction with Gen Z include At Home, down 3%, and Bed Bath & Beyond, down 22%.
Gen Z is slightly less likely to buy online than in stores when compared with other demographic groups. While 37% of all other groups shop online, that number is 35% for Gen Z. The report notes, however, that product discovery for Gen Z is much more likely to come through social channels, such as TikTok, than it is for older generations.
The Earnest Analytics report is based on its Vela transaction data and its online Earnest Dash platform.
