From Jordans to Wall Street: How Millennials & Gen Z are Rewriting the Rules of Business
I’m sure many of you have been keeping up with the media spotlight on recent trading activities with GME, AMC, and other notable stocks. I’m not here to pass judgement on these activities, or explain them on a technical level (there are plenty of people doing this already), but to shed some light on the cultural and technological factors that define the generations behind it all -- and why this kind of thing was somewhat inevitable.
Who is Doing This?
For the sake of simplicity, let’s talk about Reddit. The vast majority of Reddit users in the US are Gen Z and Millennials:
22% of users are ages 18-29
14% are 30-49
Only 7% are 50+ years of age
Image courtesy of: Statista
For years, these generations have been accused of “killing” a wide swath of thriving industries, from record labels, to movies, to mayonnaise. From an economic standpoint, disruption of legacy brands has been one of the most consistent traits in consumers under the age of 40.
Image courtesy of: BrandWatch
These shifting behaviors aren’t coming from nowhere, however. While older generations tend to have a very individualized relationship with new technology (i.e. “What do I do with this new tech?”) Gen Zers and Millennials -- who largely grew up with social technologies as part of everyday life -- tend to have a more connected mindset (i.e. “What do WE do with this new tech?”).
Further, these generations are smart and resourceful when it comes to utilizing online search and forums to engage in transparent discourse with their peers. These scalable peer to peer communications have completely transformed the factors that drive purchase decisions, and have allowed for the development of a much more robust and manipulable secondary/resale market for products like shoes, watches, whiskey, and even stocks.
For example, traditional advertising tactics like celebrity endorsements are cited as among the least trustworthy sources when this demographic is deciding to purchase a product or service. At the other end of the spectrum, online peer reviews and recommendations are among the most trusted sources (70-80%), highlighting the role transparent online discourse has on purchase behavior.
Image courtesy of: eMarketer
How Brands Are Adapting
Brands like Adidas and Nike have been successfully leveraging these new behaviors to great effect, creating win-win situations with their younger audience by increasing their investment in unique collaborations, releasing numerous products with a limited quantity -- designed specifically to explode in value on the secondary market. The resulting bidding frenzy from resellers translates into greater hype and perceived brand value across the entire product line.
Think about how many food & beverage brands have had to adjust the way they approach their branding, nutritional considerations, civic responsibility, and customer service in catering to transparent consumer discussions online. Whiskey and wine groups on Facebook and online blogs have grown to an all-time high as Gen Zers and Millennials are identifying rare products and fueling demand on the secondary market.
One example of this behavior creating demand: the explosive growth of the Japanese Whiskey market in the United States.
Image courtesy of: whiskystats.net
Graduating to Wall Street
As this demographic has matured, it’s no surprise that their attention -- and their ability to collectively impact market forces -- has now shifted to Wall Street. To traditional institutional traders, this new way of trading may feel like it came out of nowhere. To the Gen Zers and Millennials driving it, however, this is just business as usual.
Change does not come without challenges. As often as new technologies open doorways and opportunities for the world, they can just as easily disrupt and even destroy traditional systems. As we saw with Napster and see with the secondary whiskey market, a lot of these new behaviors may not be completely ethical or even legal, but barring outside interference it’s naive to think they won’t continue to be inevitable.
With the stock market itself now in the crosshairs of the conversation, it’ll be interesting to see how all this shakes out.