Gen Alpha: The New Consumer Powerhouse

Gen Alpha is a profoundly unique customer segment. In spite of being the youngest consumer-base, Gen Alpha already drives over a quarter (27%) of their household’s non-essential monthly spend.

Hi there!

This week on Eximius Echo, we dive into the dynamic world of Generation Alpha—an incredibly unique and rapidly evolving customer segment. From their rapid adoption of technology to their active role in shaping purchasing trends, Gen Alpha is setting the stage for the future of consumer behaviour.

If you’ve not heard of us, Eximius is a pre-seed stage VC fund focusing on fintech, AI/SaaS, frontier tech, and consumer tech. You can find out more here. This newsletter is an attempt to share ideas, insights, and context within the realms of our chosen sectors. Let’s dive in.

Gen Alpha is a profoundly unique customer segment. In spite of being the youngest consumer-base, Gen Alpha already drives over a quarter (27%) of their household’s non-essential monthly spend, rising to nearly a third of monthly spend for digital purchases.

This precocity is linked to a couple of inherent traits: a high degree of agency, and their tech-nativity. Addressing the former first, the number of 12-15 year olds making purchases has increased 39% since 2021 with Gen Alpha already being seen as important customers in several key industries like apparel and skin care. For the latter, 49% of mass skin care’s growth is already driven by Gen Alpha.

They are also acquainted with technology earlier than any preceding technology. 41% of parents confess to buying their kids tablets before the age of 4, and 12% of Gen Alpha already possess a VR headset.

When we, at Eximius Ventures, looked at the consumer landscape and how rapidly it is evolving, the onset of Gen Alpha as a new consuming class was a key trend. Thus, through this newsletter, we will look to cover their nuances as customers and how best to serve them.

How do they behave as consumers?

Gen Alpha are highly precocious consumers. They start forming preferences as early as the age of 4 and by the age of 7 they actively start making purchases independently. The biggest motivator for them, however, tends to be social validation. Gen Alpha tend to be socially-driven and usually aim to either conform to the group’s preferences or steer them.

In terms of discovery, Gen Alpha tend to rely heavily on social media in particular with the quotient of Gen Alpha using it to find new products increasing by 11% since 2023. Given that 85% of Alphas aged 8-10 spend up to 4 hours per day in these platforms, social media trends tend to have a major influence on them and how they form their buying sensibilities.

Gen Alpha also seek to distinguish themselves from the preceding generations, and this is evident in their product affinities as well. While other generations co-opted brands like Google and Xerox and used them as synonyms for the general use-case (like searching for information was labelled ‘Googling’), Alphas have already adopted AI-powered chat-bots, ChatGPT in particular, and actively employ them for a multitude of use-cases. This enables them to be hyper-informed consumers, more so than any other age group.

How to best reach them?

As discussed above, social media is the biggest discovery agent for Alphas. However, Gen Alpha prefers platforms which not only offer anonymity and greater personal agency, but also marry that with the presence of large communities. For this reason, they have a proclivity for platforms like Reddit and Discord where they can be active participants in any discourse, while still retaining their anonymity.

Further, Alphas also tend to have an affinity for influencers. Almost half of them profess to trusting their favorite influencers as much as their own family members. However, for this channel to be effective, the influencers appealing to them need to be specialized in their genres, and consistent with the kind of content they put out.

Finally, another key avenue to appeal to them is the metaverse. Gen Alpha tends to spend 3-4 hours on metaverse-based gaming platforms like Roblox and Fortnite, 43% more than they spend on YouTube and TikTok put together. With these platforms becoming increasingly social and event-focused (like concerts in Fortnite), metaverse offers a great channel to reach Alphas en masse and leverage their social tendencies.

How are key brands/platforms leveraging them?

We already see a large number of brand calibrating their marketing voice to appeal specifically to Alphas and create a distinguished appeal to appeal to that segment and create a wedge against the competition.

A key example of a consumer-product that excels in this is Bubble. A skin-care brand, they specifically conduct clinical trials on kids aged 8-13 to ensure the products’ quality and safety, while also creating vibrant packing that is meant to specifically appeal to Gen Alpha. Their wedge is their marketing, however. Alongside licensing partnerships with kid-centered content companies like Pixar for their products, Bubble also runs an extensive ‘ambassador’ program where kids aged 13+ can sign up to act as active promoters for Bubble in exchange for commissions, free products, and a direct cadence with the brand. Currently, Bubble has over 700,000 ambassadors signed with waiting lists hovering around 40,000. This approach has led to the company generating $170 million in annual revenue.

Roblox is another platform that has amassed a legion of loyal Alpha users. The UGC-based gaming platform not just provides them a plethora of unique gaming worlds and the ability to create their own experiences, but also acts as a new-age social media platform where people can interact with their friends while gaming. As a result of this unique concoction of offerings, Roblox has 29.7 million users that are younger than the age of 13. These remarkable features have propelled Roblox into a sensation among both Gen Z and Alpha, with daily active users dedicating an average of 2.4 hours per day to the platform. Additionally, according to Roblox, users exchange an astonishing average of 2.5 billion chat messages daily, underscoring the platform’s immense popularity and vibrant social engagement.

Conclusion

Gen Alpha are a uniquely exciting user-base that can offer a unique wedge to any consumer company. Due to their precocity as consumers and their comfort with technology, catering to them requires brands to entrench themselves in their social circles and appeal to them by being authentic and personable. As they mature as customers, there is a unique whitespace across categories for companies to calibrate their offerings for Alphas and create a unique wedge.

---

If you are looking to build for Generation Alpha, we would love to chat! Please reach out to us at pitches@eximiusvc.com.