The $100 Billion Gen Alpha Economy

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1:48Bloomberg Audio Studios. Podcasts. Radio. News. What is going on with Gen Alpha? I'm genuinely terrified for this next generation of children. There is no before for them. There is no analog childhood or a memory of one. These children have access to so much media and so much content consumption. I decided to work at a summer camp this year, and I didn't understand the severity of the brain rot. Stacey, I'm hearing griping from one generation about the generation that's following it. This is a time-honored routine. This has happened generation after generation after generation. When did all of this start?

2:24OK Boomer has been happening for thousands of years. We have this with Generation X and Generation Y. Here we are. They're now grousing about Generation Alpha. What is being critiqued or criticized among this, the youngest generation? It gets very vitriolic when you start looking into it. If you go on social media and TikTok and things like that, you will see a lot of teachers, camp counselors really complaining about how unruly the Alphas are. I teach seventh grade. They are still performing on the fourth grade level. Your kids cannot read. They cannot write. Gen Alpha students are raised in a world that tells them that it's OK to be as nihilistic and individualistic as possible, that they don't have to care about anything or anyone.

3:06I need to ask millennials, why are your kids so awful? I got to ask you, how deep into the algorithm did you have to go to find this level of criticism? It's pretty out there on the surface. Yes. I feel like there's an issue of the normal criticisms of a younger generation, and it's now amplified by data. Also, the alphas are just about to start entering the workforce. They have a big leg up with AI, with technology, with social media and things like that. So I think there's maybe some fear of their presence in the workforce, too. And that is what you've written about. That is their superpower when it comes to their technological facility.

3:47I mean, obviously, we are all wondering how AI is going to transform our workplace. And these kids are going to be in a much better position than certainly I am. You know, the alphas are digital natives. They're social media natives. They've grown up sometimes inside of virtual worlds as well as in the real world. And so navigating these two worlds is not going to be the challenge for them that it is like for me. The other thing about the alphas is they're about to become consumers. They're about to start earning their own money. But they already command more money than people their age typically have in the past.

4:22They're apparently directly responsible for$100 billion worth of spending, which is extraordinary. $100 billion in annual spending in the U.S. alone is attributed to this generation. Forgive me for just being astounded by that. It is astounding. But also they apparently have more influence over how their families spend money than a lot of previous generations. So they are dictating everything from the cars their families drive to the trips their families take to the streaming services they sign up for. The alphas are just present in the economy in a way that previous generations were not at their age.

5:03I'm David Gura, and this is The Big Take from Bloomberg News. Today on the show, I'm talking to Bloomberg Businessweek senior writer and co-host of the Everybody's Business podcast, Stacey Vanek-Smith, about Generation Alpha. Who are they? Why are they making waves before many of them are out of middle school? And how is their entrepreneurship and spending reshaping the retail landscape?

5:28What are the date parameters that we're talking about here? Well, first, David, I do want to acknowledge that in a certain way, you know a lot more about Generation Alpha than I do as the parent of three alphas. I have three alphas. I said to one of our producers, I'm unsure if any of them identifies as an alpha. I will follow up and ask afterward. But yes, born between what are the date parameters for Generation Alpha? Yes. So there is some disagreement, but generally speaking, Generation Alphas were born between 2010 and 2024, 2025. So basically between the ages of 1 and 16 years old. It is the largest generation that's ever existed.

6:07It's about 25 percent of the population. And I think part of the concerns about this generation are actually not coming from a nefarious place. because a lot of these kids had huge milestones happen during the pandemic, during lockdown. You know, scientists and sociologists are worried about the effect of the pandemic. And then they underwent such a massive transition, you know, being home all the time and then now back in school. And so a lot of the concern and examination of this generation happened because I think people were unsure what the effects of that were. I do think the genesis of a lot of the kind of worry, which has, of course, transitioned into criticism, came from that.

6:50Stacey, what is different about the way these kids have grown up or I guess are growing up compared to past generations? I mean, I think one of the big things is screens, because during the pandemic, we were all home. A lot of socializing, education, all of that happened necessarily, in a lot of cases, entirely through screens. Add to that sort of the growing world of social media, the growing world of games like Roblox, and you've got a generation that sort of moves between worlds in a way that other generations don't. So I think there are a lot of worries about that. Also, attention spans with the screens.

7:29There are a lot of worries about alphas' brains, essentially. Their reading comprehension, their ability to interact with people outside of screens, like in real life. Also, their ability to respect authority, interact in social situations that are offline. So these are some of the worries and criticisms about the alphas. And then also there are comments about their self-discipline. Okay. That there may be a little less discipline. Apparently, some millennial parents engage in gentle parenting, which created a lot of skepticism. We could do a whole other episode on this. Definitely. We don't have to get into that now.

8:04There's a level of tech fluency here. This generation had to do a lot online during the pandemic. And that's led to this kind of early awareness of what's trendy. It's made them this economic force. Yes. So a lot of these kids, I mean, they have a lot of the habits and tendencies that kids always have, you know, starting little businesses, making things, creating. But they can do that on these platforms where they have this ease of use. So we're talking about like Roblox and other virtual worlds. Yeah, or even Instagram, things like that, where they can make something and the world can see it, where they can record something.

8:39They can sing or dance or all the things that little kids have always done. But they have this potentially international audience. Transcends the neighborhood. It transcends the neighborhood. It transcends the state, the country. So they can really build something incredibly fast. I think they think bigger as a result of that. Hi, my name is Riley. This is my dad, John. You talked to a few of these folks. One is Riley Peterson, a 16-year-old in Maine. We own Gunner and Lux together. I'm the manager, obviously. Tell us a bit about Riley. Who is Riley? How'd she get her start as an entrepreneur?

9:13So Riley got her start as an entrepreneur when she was five. And she was making jewelry out of these little plastic toy animals that she had. So I didn't have much jewelry growing up, two dads and all. We just didn't have a lot of jewelry and stuff. We just didn't think about it. So they were like, hey, friends, can you get jewelry? Jewelry? Hello? Yeah, some friends brought over like a box of jewelry and she sort of went through it. I was like, like any of this, this is all horrendous. I need my own stuff. Thank you very much. You know, at the time we were working on some stuff in the house. So we had pliers.

9:47And so I was just kind of teaching her how to use pliers. So I took my dad's tools and like, thank you. This, this, this. Yes, please. This, this, this. Got what I wanted. We had a bunch of these little plastic animals. So we hooked those up onto the necklaces. And I'm like, you know what? I have too much stuff. I need to sell it at my lemonade stand. Which is just a very typical kid thing. But her dad took a couple pictures of this and posted it on Instagram and her business absolutely took off. I mean, I know, right? What happened to my lemonade stand? Nothing like that. I will tell you, David.

10:26You still owe your parents for the concentrate they bought you to get it off the ground. Yes. Yeah, I still owe back pay on the lemons. How quickly did this happen? What do you know about the kind of the speed with which this turned from from that lemonade stand where she was selling crafts into this much bigger thing? I think it wasn't even a year before Barney's contacted them and said, let's have a meeting. We want to talk with you about a partnership. Yeah, I remember you were in dance class and then Barney's New York called like the middle of ballet. My dad like said something like, hey, this is Barney's.

10:59Can you come down? Yeah, it was pretty neat. And then she started getting press and all of a sudden it was this kind of fun international brand of jewelry for kids, essentially, which is a really smart idea. But I think it happened on a scale that it never would have happened before. And now it's about 10 years later and she's done partnerships with J.Crew and all of these huge brands. And she very much considers herself like a partner in this business with her dad. And her dad very much considers her a full partner, too. How unique a story is this? How does this, what Riley has done, what she's doing, fit into this broader conversation about Gen Alpha as a force in business and a force in spending as well?

11:43She's certainly an exceptional case, but I will say that she's less exceptional than she would have been 20 years ago. After the break, why one researcher says the future is bright for Gen Alpha. And is there economic spending power? Really? Here to stay.

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14:32Stacey, you talked to the woman who's written the book on Generation Alpha, or at least a book on Generation Alpha. What did she tell you about this generation? Yes, her name is Ashley Fell. She's the author of Generation Alpha, Understanding Our Children and Helping Them Thrive. And she had great things to say about this generation. Very positive. Very positive. The opposite of what we were hearing from teachers, although she did acknowledge those issues exist. But she really, through studying this generation, sees a lot of extraordinary traits in them as well, including teamwork, empathy, honesty.

15:05They're almost at an older psyche at a younger age. She said they're exceptionally creative. They think really big and sort of across disciplines. And she thinks they're quite a special generation in a lot of ways. partially because, you know, right now we're in a moment where we're all pretty siloed and where, you know, globalization, free trade, a lot of that has gone away a little bit. She thinks the alphas will unquestionably bring that back because they're so connected to each other. They're connected to world events. Because of the technology that they consume and the way that it's presented, they're more likely almost to know what's going on across the world maybe than their local neighborhood.

15:44In good ways and bad, kids under eight now spend a couple hours a day on average looking at screens. By age four, about 60 % of kids own a tablet. Wow. Age four. Yeah, age four. And so they are consumers in an exceptionally sophisticated way. More than two-thirds of alphas own a luxury product by age 10. And that's what? That's a handbag, a perfume? What are we talking about here? Yes and yes. For female alphas, it tends to be a lot of cosmetics, a lot of skincare and a lot of anti-aging skincare. At the age of four. Yes. Yes. Like wrinkle, you know, the sort of 12 step skincare, Korean skincare has become a huge thing, very much fueled by the alphas.

16:32Sephora is packed full of alphas. You think Sephora, you think, you know, Gen Zs and millennial women and other generations, but it was populated by, you know, 13 to 15 year old Gen Alphas who are buying sophisticated retinol products aimed at millennials, you know, so it was, it was this kind of, I think that was almost like upaging in real time. A lot of alpha boys are also into skincare. This has become a big thing. And she said there was a big trend among boys for very, very high-end colognes. For young boys, they would get the – in very rural places, but they're all tapped into these global trends and they're getting very expensive colognes.

17:13But to be clear here, Stacey, whose money are most of the kids and they are kids in this generation spending? I guess in some cases it's theirs, but often. They're spending your money, David. They're spending your money. They are basically wielding, for the most part, enormous power over how their families spend. They are bringing their own concerns into a lot of family purchases, things like environmental concerns, global concerns, political concerns. concerns they're raising the awareness within their families so things like food and streaming services cars groceries not cool is it minivan have you been told that they're not happy with it no well this is very normal tough economy right now it is a tough economy right now and also trips and vacations which apparently is sort of a mix between kids raising concerns and desires to go places also being much more aware of places to go than previous generations were.

18:09They're like, I want to go here. I saw it online, things like that. And, you know, just holding more sway over families than, you know, certainly I did. My parents never asked my input on where I wanted to go. I don't know if you were ever asked your input. Never. Exactly. I mean, I think just like the level of lifestyle and cosmopolitan-ness is huge among kids right now. How are those companies, companies in those sectors capitalizing all of this? Have they acknowledged, are they aware of the fact that there's so much buying power? Oh, yeah. Companies, I think, are excited about this because, you know, there's always this youth obsession with products because they want to lock people in early to their brands because then, you know, that loyalty can stick and this can be a customer for decades.

18:59But now, because the little kids are so much more brand aware, sorry, I shouldn't call them little kids, because these young adults are so much more brand aware. They would appreciate that clarification, I'm sure. I think they would. But I think, you know, they are much more aware of brands than previous generations. And so their loyalty can be won over at a much younger age. Things like they're much more politically involved and aware than kids in previous generations. So you can appeal to them that way. They're much more aware of their own individual preferences. And these were things that Riley talked about, too.

19:33She said the jewelry she sells, political jewelry, like Resist, there was a whole Resist necklaces. But, you know, even things like I love science, I love reading, people want to express that immediately. So brands are kind of locking into that, expressing environmental awareness, environmental concerns, things like that are ways brands can kind of attract the alphas. I imagine there are probably a lot of companies saying, look, we've hooked these kids young. They'll be our customers for life. Is that the sense that you're getting from both Generation Alpha and these companies? How susceptible is all this to economic shocks?

20:09I was wondering that myself. I mean, if as things get more expensive, if budgets start to come into effect or financial distress for a lot of families, I think that could probably have a big impact over the power of the alphas. I mean, during the pandemic was a time of record savings for a lot of American families. That is totally reversed, which means the influence kids can have will probably reverse too, because they're not in direct control of a lot of this money, as you pointed out. So I do think maybe some of this influence will fade a bit. But also the degree to which these kids are tapped in to the economy, to each other, to the world, that's not going away.

20:50So I think this is probably still going to have legs, if not for the immediate future, where maybe families are pulling back for the longer term future, for sure.

21:04Stacey, I want to bring you back in because, you know, I said I didn't know if my kids identified as. Yes, yes, I remember. I asked them. OK. In fact, they are familiar with the term. They use it. OK. And they thought I was totally lame and old for having to ask that question. So they like they they're like, of course, we're alphas. You're old for not knowing. Yeah. Yeah. Dad, come on. Which is just the general general vibe that I get. This is The Big Take from Bloomberg News. I'm David Gura. To get more from The Big Take and unlimited access to all of Bloomberg.com, subscribe today at Bloomberg.com slash podcast offer.

21:43Thanks for listening. We'll be back tomorrow.

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