Remember 2010? Apple released the iPad, a baby-faced Mark Zuckerberg was Time’s Person of the Year, and Lady Gaga wore the meat dress. Oh, and a new generation of humans hard launched. Now, they’re starting to come of age.
By 2029, the spending power of Generation Alpha, the cohort of youngsters born between 2010 and 2024, is expected to reach $5.46 trillion, according to research-based advisory firm McCrindle.
Those numbers alone should be enough to make a CFO’s ears perk up. But if you need more convincing, consider this: “Every organization, every brand, every product is just one generation away from extinction,” Mark McCrindle, the social researcher credited with coining the term “Gen Alpha” and founder of McCrindle, told CFO Brew.
Take that as a challenge. In recent years, CFOs have weathered a pandemic; growing global conflict; a tense, ever-changing economic landscape; extreme weather events…we could go on. Could some tweens and toddlers be the thing that throws them off course?
Probably not, but the answer ultimately stands to be seen. Staying on track, and staving off financial extinction, likely rests in meeting Gen Alpha where they already are, experts told CFO Brew.
Of course, if you sell life insurance, dentures, orthopedic shoes, or anything else catering to a more geriatric set, your eyes might have already glazed over. But there’s an added strategic planning benefit to generational analysis that almost any business can benefit from, McCrindle stressed.
“By bringing a generational lens to things we can project forward 10, 20, 30 years and often when it comes to infrastructure investment…we need to have those sorts of time horizons,” he pointed out. “By looking at Gen Alpha, that gives us a more tangible bridge to the future.”
Money talks
The story of Gen Alpha’s seemingly unique spending power is the same story we’ve heard for generations: Right now, they’re all kids. Their money comes directly from the bank accounts of the same people putting food on the dinner table and tucking them in at night. But the story’s different this time around. They’re not getting a nickel from Pop to buy candy at the dollar store, or whatever happened in the Norman Rockwell days of yore.
Cathy Hackl, CEO of spatial computing and AI solutions company Spatial Dynamics and the parent of three Gen Alpha kids, thinks that reaching this generation starts with understanding how they even learn about money in the first place. She notes that, for her own children and their peers, anytime there’s talk of a gift, “many of them have said, time and time again, ‘I want Robux,’” the digital currency of Roblox].
And when discussing money more broadly, she notes, “They [do] the conversion in their heads: ‘Oh, that’s X amount of Robux’…From a financial standpoint, they are learning about money, finances, conversion, and value from these gaming spaces.”
In the virtual spaces where members of Gen Alpha spend so much time, “almost the entire online or digital interaction is commercially oriented,” McCrindle added, whether it’s pop-up ads in video games, goods shelled on TikTok Shop, or skins for purchase via Roblox.
“There’s nothing stopping these younger generations buying online items through other payment platforms that may be connected to a parent’s account,” McCrindle said. As a result, he added, they’re learning “to be serious consumers at a young age more than ever before.”
Remember: Some of this generation’s youngest members have still yet to be born. On any given day, at any given time, they’re “a click away from purchasing things,” McCrindle said, “and that’s why they’re such a slice of the consumer market already.”
New rules
Understanding all of that is just Step Zero: the groundwork necessary before even getting started. Step One? Throw out the old rules.
“I don’t think you can actually go to a traditional consulting company and ask them for a strategy if the people on that strategy team don’t understand the spaces that Gen Alpha inhabits,” Hackl noted.
According to McCrindle, the companies with the best Gen Alpha playbook right now are the ones that are building an early “symbolic connection” to them, often meeting them in the virtual settings where they already feel at home.
“We see this with banks and financial services that are now putting forward some apps that might be more of a gamified sort of way of financial education,” he explained. “Or, it might be a little app that helps children save or even transfer money from a parent’s wallet into their own that they can manage.”
Hackl sees things similarly. Her message to CFOs? “Look at your products, look at your services. Look at how things are working, [and consider] potentially where these services might be going into these virtual spaces,” she said. “Is there a way to start to enter some of these spaces and create that affinity?”
“The crux here, from a financial perspective, is that for a long time, I think corporate America has disregarded gaming as the juggernaut it is,” Hackl added. “Now, it’s starting to click. Disney is investing in Epic. Netflix is going in on gaming, and the New York Times is now a gaming company.”
The costs of targeting Gen Alpha
Though the payoff can be significant, getting a plan together for reaching Gen Alpha isn’t without its own costs.
If your company is planning on a long-term Gen Alpha strategy, “you need to staff for that,” Hackl noted. That might mean looking internally to people with relevant skill sets, she explained, stressing that it might not involve the usual suspects: Maybe one of your senior leaders is a game developer in her spare time.
“You don’t have to break the bank,” Hackl stressed. “I think where [CFOs] do need to invest is starting to figure out training.”
“My advice is: work with someone that understands what’s going on in these spaces; whether it’s an internal resource, whether it’s someone external, [you need] people that truly understand this,” she continued.
McCrindle thinks you could also save money, and build better connections by flipping certain playbooks on their heads. Rather than design for the consumer, and then market products to them, a solid Gen Alpha outreach plan will likely mean designing with them, given their digitally-fostered proclivity for co-creation.
“That engagement can actually be a low-cost, maybe time-intensive, but low-cost activity because it’s research, it’s consulting, it’s maybe setting up a youth advisory panel or maybe getting a trial lab going, maybe bringing the young people in with their parents for an active focus group,” he explained. “There’s some logistical costs, but it’s a pretty low-cost investment, and it’s empowering for the generation.”
___
This story is part of a collaboration with Retail Brew on investing in changing consumer habits.
___
This report was initially published by CFO Brew.
