The new consumer: Meet Generation Alpha

The glass generation. Millennials on steroids. Screenagers. Generation Alpha has been called many things, but what cannot be denied is the unprecedented power they will wield when they come of age.

Born between 2010 and 2025, Generation Alpha are the children of Millennials and the youngest Gen Xers, and the younger siblings of Gen Z.

The name was coined by Australian social researcher Mark McCrindle around 2005, referring to their status as the first generation born entirely in the 21st Century.

In Australia today, Generation Alpha is aged between zero and 10 years, numbering approximately 3 million people – or 12.39 per cent of the population.

Globally, more than 2.7 million Generation Alphas are born every week and by December 2024, there will be approximately 2 billion worldwide, making them the largest generation in history.

To put that figure in perspective, in just four years, they will outnumber the Baby Boomers.

“Generation Alpha represent the future and provide a lens through which we can look to the next decade and beyond,” McCrindle and fellow social researcher Ashley Fell write in their 2020 report Understanding Generation Alpha.

“While they currently populate our primary schools, over the next decade the oldest will move through the teen years to reach adulthood. But even still, these youngsters are influencing their Millennial family purchasing and are early adopters of technology.”

By the end of this decade, many Alphas will be working and voting, as well as spending. Read on to discover how Generation Alpha will shape the businesses of the future.

Who they are

McCrindle and Fell’s research predicts the Alphas will live longer, work later into their lives, attain more formal education – by 2050, they believe approximately 50 per cent of Alphas will hold a university qualification – eventually forming the “largest generation of middle-class consumers our world has ever seen”.

The average life expectancy for Australian Alphas born today is 80.9 years for males and 85 for females; in 1988, it was 73.1 for males and 79.5 for females.

This makes Generation Alpha the longest-lived of any Australian generation.

However, McCrindle and Fell observe that the beginning of the “adult life stage” – marked by marriage, mortgage, and children – will be postponed even further for Alphas than it has been for Millennials and Gen Z.

“This generation will stay in education longer, start their earning years later and so stay at home with their parents for longer than was previously the case,” they write.

Alphas are also what the researchers term “upagers” – social, psychological and commercial sophistication sets in far earlier in childhood than in previous cohorts.

Put simply, Alphas are more aware of, and engaged with, their surroundings at a younger age and become consumers more quickly.

This is largely a result of their unprecedented global connectivity through technology.

Indeed, the first Alphas were born the same year that the Apple iPad and Instagram were launched, and when ‘app’ was the word of the year, with McCrindle and Fell calling them “part of an unintentional global experiment where screens are placed in front of them from the youngest age as pacifiers, entertainers and educational aids”.

This immersion in technology will lead to what workplace researcher Dan Schawbel terms “the entrepreneurial generation”.

Writing about Generation Alpha in 2014, Schawbel – managing partner of human resources advisory firm Workplace Intelligence – predicted, “Every generation from here on out will become more entrepreneurial than the next, because they will have had more access to information, people and resources earlier.

“We will see a lot of Alpha entrepreneurs starting companies before 10 years old. As most will fail in their business pursuits, they will learn a lot and have much better luck as they get older.”

Schawbel adds, “They will be more successful entrepreneurs because they will have taken more risks earlier, and had time to build reputations and relationships, before Millennials, Gen X and [Baby] Boomers did.”

Indeed, the highest-earning YouTube ‘content creator’ in 2020 was nine-year-old Ryan Kaji, whose channel Ryan’s World generated $US29.5 million ($AU40 million) in advertising revenue, according to Forbes.

Kaji, under the supervision of his parents, has been making “unboxing” videos – unwrapping toys and reviewing them – since 2015 and now boasts his own line of branded children’s products, including backpacks and toothpaste, that is stocked by US retailers including Target, Walmart, and Amazon.

Another Alpha, seven-year-old Anastasia ‘Nastya’ Radzinskaya, was the only female in the top 10 highest- earning YouTube content creators of the past year; her channels generated $US18.5 million ($AU25 million).

Both Ryan and Nastya boast global audiences, and indeed their fellow Alphas are more internationally-oriented and culturally diverse than previous generations.

tABLE 1: cHANGING generations - 2020

Table 2: Changing gENERATIONS - 2050

How they shop

While their vast numbers and material wealth will make these consumers attractive for businesses in the future, their influence – even now, as young children – cannot be denied.

According to US publication AdAge, 81 per cent of Alpha kids “significantly influence family purchases”, with children under the age of 12 influencing purchases valued at $US500 billion ($AU678.3 billion) per year.

However, this influence relationship goes both ways, with Schawbel noting Alphas are being raised by older, more indulgent parents: “[Alphas] will be extremely coddled and influenced by their Gen X and Y parents.

“By December 2024, there will be approximately 2 billion worldwide, making them the largest generation in history.”

“Every generation is now more influenced by their parents – more than friends, strangers, etcetera. Gen Alpha will be no different, so if you want to sell to them or hire them, their parents should be part of your marketing campaign.”

While incredibly technologically literate, Generation Alpha also has a shorter attention span and has been exposed to digital advertising almost since birth.

Unable to remember an era before social networking, Alphas prefer shopping and communication via mobile phones.

They respond to simple, visual information that is customised to their needs, with McCrindle and Fell observing that Generation Alpha has also been “shaped in an era of individualisation and customisation where they can get their name printed into the storyline of books, embroidered onto their shirts or put on a jar of Nutella”.

In 2015, US thinktank the Pew Research Center found that 81 per cent of parents with children aged five and under said their kids watched videos or played games on an electronic device on a daily basis.

Today, many are influenced by social media stars to make purchases; of consumers aged between six and 12 years, a quarter cite social media content creators – operating on platforms such as Instagram, YouTube, and Snapchat – as the primary influence on their purchasing.

This places them only slightly behind friends, according to a 2019 report by UK market research firm Wunderman Thompson Commerce (WTC).

“Young people today are being influenced by a wider range of factors than ever before and more of these factors are external,” the report – based on a survey of 4,000 children aged between six and 16 in the US and UK – stated.

“We’ve moved far beyond the bus and the playground. Now, children are influenced by social media platforms, programmatic advertising and on-demand TV. This means that brands need to be across multiple channels – and more importantly, the right channels – to ensure they’re finding their target audience.”

WTC’s research found that Alphas tend to mirror their parents in terms of shopping method – “If their mum and dad purchase online, so will they” – and are invested in the “emotional rollercoaster of delivery [of online shopping] and expect not to have to wait”.

This provides a clear signal to retailers to invest in order fulfilment and logistics for their e-commerce offering.

The report noted that approximately 49 per cent of the US children surveyed had access to an Amazon account – compared with 42 per cent of UK children – and 72 per cent of children aged six to nine had heard of Amazon.

However, the report emphasises that Alphas aren’t ready to abandon bricks-and-mortar retail.

As Naji El-Arifi, head of innovation at Wunderman Thompson Commerce, notes, “Technology – and the convenience and exciting experiences it can offer – is clearly at the heart of Alphas’ visions for the future of shopping. But at the same time, it’s interesting that the majority of children want to see online channels work alongside physical stores, and indeed better alignment between the two.

“These findings underline the need for retailers to take a truly omnichannel approach to engaging with the next generation of shoppers, and be ready to use new technologies not simply to replace the physical store but to complement it,” El-Arifi adds.

While the age of Generation Alpha may seem far in the future, the pace of technological change in our modern world creates a need for ever-earlier anticipation; and with these tech-savvy tykes already forming consumer habits, it’s up to retailers and business owners to capture the next great generation – before they even begin shopping.

In the world of retail, forewarned is fore-armed.

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