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Generation Alpha: The Next Customers for Your Business

Business · 7 min read

Generation Alpha: The Next Customers for Your Business

Just when you'd gotten used to Gen Z, along comes Gen Alpha. What do the youngest people on Earth have in store for the world, and why does your business need to know about them now?

The Generation Recap

From the generation of the Baby Boomers to Gen X, Gen Y to Gen Z, and the latest cohort, Gen Alpha – just who are these different groups, and what can we tell about people from when they were born? Well, more than you might think. And although these definitions are painted with a broad brush, they can spot trends among wider populations, and opportunities for e-commerce retailers to tap into new markets with new products, marketing methods, and ways to pay. Here’s how Pew Research1 defines them:

Baby Boomers – born between 1946 and 1964

Gen X – born between 1966 and 1980

Gen Y/Millennials – born between 1981 and 1996

Gen Z – born between 1997 and 2012

Gen Alpha – born from 2013 onwards

So, to Generation Alpha

“Gen Alpha is the next step beyond digital native. Their understanding of what it means to be connected to other people, what it means to own something and use pieces of your own experience to create something entirely new will result in a group of young people unlike any we’ve seen before – they will be completely untethered to time, space, location or people.”
Dr. Thalia R. Goldstein, George Mason University

According to Mark McCrindle, the Australian demographer who coined the term ‘Gen Alpha’, more than 2.5 million members of this cohort are born each week2. That means there could be two billion of them by 2025, and they are predicted to be the most innovative, creative, and digitally-savvy group of youngsters yet. No pressure then, kids.

What do we know about Gen Alpha?

Well, a characteristic of Gen Alpha is that 24% of them spend more time with friends online than in person3. They have learned to build relationships with people from around the world from a young age, and are routinely exposed to diversity in the media and in real life, helping them shed race and gender stereotypes. They are often the children of Millennials, 76% of which use smart devices to keep their children safe and well behaved4.

In a survey of 8,000 Gen Y parents around the world with children aged four to nine, 65% said the habits of their children influenced their last purchase, rising to 81% among parents in the USA5. Tech, it seems, is at the heart of many Gen Alphas’ existences. Let’s explore this more.

How tech impacts Gen Alpha’s lives

In 2018, a seven-year-old named Ryan earned US$22 million for simply playing with toys. Sounds like a dream, right? Well, thanks to his YouTube channel6, where he’s gained more than 21 million subscribers, the Texas native has become a bona fide icon for the youngest generation. Not bad for someone whose age, even now, isn’t into double digits. And while Pew Research might place him in the bottom bracket of Gen Z, he’s exactly the type of influencer that Gen Alpha are already following.

Due to all the digital exposure they’re getting, the majority of Alphas will learn to use a touch screen as toddlers – and, more likely, will surpass their parents’ knowledge of tech by the time they’re eight7. Unafraid of learning by discovery or interacting with AI (although there are issues around how well voice assistants understand kids), these habits are being recognised (and used) by brands to connect with this young generation. P&G, for example, has sponsored Chompers – a two-minute podcast that encourages kids to brush their teeth8. Smart? Absolutely. Cynical? Maybe.

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Although Alphas are exposed to digital media constantly, their desires are not solely driven by what they see on screens. In fact, they show some traits that might seem a little more traditional. 36% of Gen Y parents say their kids are influenced by their friends’ possessions and behaviors – no shocks there – while 22% say ads have an impact, and just 14% cite online personalities as having an influential role9.

Just under three-quarters (73%) of Alphas think it’s important to question what’s presented to them online, while 31% believe they know how to spot fake news – a concern Google has addressed by making ‘Don’t Fall for Fake’ a key topic in its Be Internet Awesome curriculum10, which aims to teach kids the skills they need to be safe online. Basically, they know what they like, and and can see through inauthenticity online. Not bad, Gen Alpha. Not bad.

Identity in Gen Alpha

An interesting study from Beano Studios found that 58% of under-10s believe gender to be irrelevant, whilst an astonishing one in five kids aged 5-9 have been on a march or protest concerning causes they care about11. Being predominantly the children of Millennials, this could be their parents’ opinions being projected, or evidence that attitudes around the world truly are changing.

Brands have started to respond to Gen Alpha’s views on identity, creating gender-neutral clothing and toys to appeal to the changing clientele. Abercrombie & Fitch, John Lewis, and Target12 all have neutral ranges, with the latter having disposed of its pink and blue toy aisles in 201513. Toys ‘R’ Us, Walmart, and Kmart have since followed suit, and in 2016, the Toy Industry Association abolished its ‘girl toy of the year’ and ‘boy toy of the year’ awards – moving towards a more inclusive, welcoming space14.

“We look at our brands more inclusively than ever. We don’t care who [the buyers] are, we just care they love the brand.” 
Brian Goldner, Chief Executive of Hasbro

The Gen Alpha Opportunity

Though it’s impossible to accurately predict what Alphas will be like as adults, their impact on consumer behavior is currently being felt through their parents, who of course, respond to the preferences and needs of their children in purchase decisions. Like their mothers and fathers before them, it seems that they are likely to want personalized products that use technology, adapt to their changing needs, and are available on demand15.

GEN ALPHA: THE SIGNALS FOR E-COMMERCE

More likely to make purchase decisions based on trust and authenticity

More likely to buy from from positive-impact or ethical brands

Tech-friendly, will respond well to social marketing and trust peer recommendations, comfortable with AI

More inclusive than ever before - and intolerant of those who are not

Will grow up expecting supreme levels of service and fulfillment

 

 

 

 

 

 

 

 

 

 

 

 

 

“The business world is going to be confronted with the most demanding customers and employees in history, expecting speed, responsiveness and customization as a standard. It will be a tougher job to win the attention and loyalty of consumers, and much more likely that established brands will be ditched.”  - Joe Nellis, Professor of Global Economy, Cranfield University

As many Alphas are too young to read and write, screen interfaces and voice-activated tools are essential to connecting with them16 – well, the ones that have been born already.  Augmented reality (AR) is also being used to bring traditional entertainment channels into the 2020s. Lego, for example, now has an app with AR capabilities, and there are similar offerings for much-loved literary characters such as the Gruffalo and the Very Hungry Caterpillar17.

Beyond the screens, this group already seems better placed than their Gen Z peers to prioritize physical play and use technology in moderation. In a bid to boost real-life activity (and sales), Nike has launched its Adventure Club18 – a subscription shoe service for children aged 2-10 that delivers Nike gear to their door, alongside adventure guides, outdoor games, and activities for families to try out together. Meanwhile, Amazon STEM Club19 encourages exploration among three- and four-year-olds with toys hand-picked by experts to introduce concepts such as counting, building, and cause and effect.

But what about COVID-19?

1.25 billion children are at home as a result of the COVID-19 school closures20. As we’ve already mentioned, Alphas are pretty handy when it comes to getting hands-on with tech. And, where screen-time was once seen as problematic, experts say interacting with digital tools can enhance children’s creative thinking. With parks, restaurants, places of worship, daycare, shops, leisure centers, playgrounds, and pretty much everywhere else closed to the public, Gen Alphas are spending more time indoors than perhaps they’ve ever done before.

“One aspect of playful learning – guided play, which is when adults have a learning goal that keeps in mind their child’s skills and subsequently fosters their child’s curiosity to help them learn something new – has been shown by my colleagues at the University of Delaware21 and Temple University22 to have many benefits for early learning.”
Dr. Laura Zimmermann

While parents attempt to juggle their work and life balance, Gen Alpha are benefitting from spending even more time than usual bonding with their parents and caregivers. For parents, it’s been an opportunity to lead to more playful learning experiences at home. Plus, with family members from afar checking in more often, via Zoom, Skype, Houseparty, Messenger, and the rest, relationships can be built even without physical contact.

In Germany, COVID-19 is being treated as an extended home-learning opportunity, according to Dr. Maya Goetz of the International Central Institute for Youth and Educational Television at the Bavarian Broadcasting Federation. “Children haven’t had any tests but as soon as they get grades, everything will change. At the moment, it’s split between those who can learn this way and those who can’t. It always depends on the home environment.”

What’s striking is the difference between the haves and have nots. Educational screen time is likely to be most prevalent amongst those who have access not only to the devices needed to access it, but even the internet, or parents who understand and are willing for their children to engage with the subject matter. In the developed world, there’s almost an assumption that people have internet access. When, in fact, a large number of Alphas lack it – and what the knock-on effect will be, in the long term, remains to be seen.

And, as Dr Goetz continues, “We forget the high percentage of children who are suffering because they’re living in very difficult circumstances and can’t learn because the emotional atmosphere at home is so tense. If children are stressed and aren’t psychologically healthy, they can’t learn.”

Generation Alpha are still finding their way in the world, or even their way into it, but how they see it, react to it, and shape it will surely be unlike any generation before them. Tech is second nature, boundaries are more blurred than ever, and collaboration is at the forefront of everything. If you’re building for the long term, you can’t afford to forget about them – they may be your best customers yet.

 

References

Pew Research

McCrindle

Domain

SWNS Digital

Digiday

YouTube

Forbes

NiemanLab

Hotwire

10 Google

11 Beano Studios

12 Fast Company

13 Washington Post

14 AdAge

15 Cranfield School of Management

16 Forbes

17 Preloaded

18 Nike

19 Amazon

20 United Nations

21 Roberta Golinkoff

22 Kathy Hirsch-Pasek

 

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