OK Zoomer：Z世代群体调查报告.docx

BofA GLOBAL RESEARC-BofA SECURITIESThematic InvestingOK Zoomer: Gen Z PrimerThematic InvestingThis is a redaction of a report originally published on November 10, 2020.Here come the Zillennials! Gen Y is out, Gen Z is inThe/ve never known a life without Google, 40% prefer hanging out with friends virtually than in real life, they will spend six years of their life on social media and they won't use credit cards. The/re the 'clicktivists": flourishing in a decade of social rights movements, with 4 in I 0 in our proprietary BofA survey seeing themselves as "citizens of the world,. The Gen Z revolution is starting, as the first generation born into an online world is now entering the workforce and compelling other generations to adapt to them, not vice versa. Thus, about to become most disruptive to economies, markets and social systems.$33tn income by 2030, to pass Millennials by 2031Gen Z's economic power is the fastest-growing across all cohorts. This generation's income will increase c.5x by 2030 to $33tn as they enter the workplace today, reaching 27% of global income and surpassing Millennialsthe year after. The growing consumer power of Gen Z will be even more powerful taking into account the "Great Wealth Transfer' down the generations. The Baby Boomer and Silent generation US households alone are sitting on $78tn of wealth today.9 in 10 live in EM, while DM suffers from “peak youth” Gen Z could be EM's secret weapon. APAC income already accounts for over a third of Gen Z's income and will exceed North American and European combined income by 2035/Peak youth7 milestones are being reached across the developed markets - Europe is the first continent to have more over-65s than under-1 5s, a club North America will join in 2022. In contrast, India stands out as the Gen Z country, accounting for 20% of the global generation, with improved youth literacy rates, urbanisation, and rapid expansion of technological infrastructure. Mexico, the Philippines and Thailand are just a few EM countries that we think have what it takes to capitalize on the Gen Z revolution.Beneficiaries: eCommerce, payments, luxury, media, ESG Gen Z is the online generation: nearly half are online 'almost constantl/ and a quarter of them will spend 10+ hours a day on their phone. In our survey, over a quarter of Gen Z's top payment choice was the phone, while credit cards weren't even in their top 3. This generation is the least likely to pick experiences over goods, and values sustainable luxury - choosing quality over price as their top purchase factor.01 December 2020EquityGlobalBofADataAnalyticsTransforming WorldThematic ResearchHaim Israel >>Eq u ity StrategistMerrill Lynch (Israel)Lauma Kains-Timans >>Equity StrategistMLI (UK)Martyn Briggs >>Equ ity StrategistMLI (UK)Pinaki Das >>Equity StrategistMLI (UK)Felix Tran »Equity StrategistMLI (UK)Francesca Hanania >>Equ ity StrategistMLI (UK)“Peak" generation: alcohol, meat, cars, travel headwinds Only half of US teens can drive, while our survey finds that less than half of Gen Z drink alcohol, and more than half have some kind of meat restriction. A third of them would trust a robot to make their financial decisions. Gen Z's activist focus filters into their interactions with business, too - 80% factor ESG investing into their financial decisions, and they have also driven consumer-facing sustainability campaigns, such as single-use plastics. Harmful consumer sectors, such as fast fashion, may be the next focus.>> Employed by a non-US affiliate of BofAS and is not registered/qualified as a research analyst under the FINRA rules.Refer to "Other Important Disclosures" for information on certain BofA Securities entities that take responsibility for the information herein in particular jurisdictions.BofA Securities does and seeks to do business with issuers covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider th is report as onlya sing Ie factor in making their investment decision.Refer to important disclosures on page 12 to li12221053Education & work: progress has stalled, the long-term impact of CovidGen Z was set to be the most educated generation ever. But progress has stalled and even reversed due to the pandemic. The share of children receiving primary, secondary, and tertiary education had already plateaued pre-Covid. Further, the share of high school graduates going into higher education in the US is declining, as high student loans make the benefits of university increasingly unclear. Covid is set to cost toda/s students at least $ I Otn in lifetime earnings and 50% of lower secondary school graduates are not expected to have the minimum levels of proficiency compared with 40% normally. Like the financial crisis in 2008-09 for Millennials, Covid will challenge and impede GenZ's career and earning potential. This comes after them already seeing how the GFC affected their parents. Gen Z has had the least amount of work experience during the teens; however, their affinity with tech and tech-focused education may help them enter the workforce as I bn people will need retraining over the next decade from automation.Chart 18:Unlikelytomeet 2030 Education UN SDG: 260mn children are still out of schoolNumber of children out of school of primary and seco nd ary ageChart 19: University has been losing its appeal to US high school graduates over the past decadeShare of US 17 year old population graduating high school and enrolling in college'ZbUG:Losz:MN二5Z(sozZ8Zsoz80Z二8Z-666L-Z66L-S6L一g6b二66L.686LSource: National Center for Education StatisticsFinance: responsible, mobile & ESGGen Z experienced the effects of the last financial crisis through their -families, resulting in a more fiscally conservative cohort cautious about taking on personal debt. However, alongside Millennials, Gen Z welcomes new technology as a means of managing finances from phones to cryptocurrencies. This implies that banks and asset managers will need to reassess their services to retain their youngest customers. Finally, GenZ's social activism extends to finance, where four out of five consider ESG in their investments.Exhibit 5: Payment methods: credit is out, new tech is in Top payment preferences by generationSource: BofA Thematic Proprietary Survey n= 14,592, conducted Aug 2020 "What type of payment method do you prefer to use?Chart 20: Open to new tech in finance: Close to 1 in 3 Gen Z and Millennials would trust a robot to make their financial decisions Which decisions would you trust a robot to make on your behalf? ( Afcelecting "financial (e.g. pension, investments)”)Source: BofA Thematic Proprietary Survey n= 14,592, conducted Aug 2020 "Which decisions would you trust a robot to make on your behalf? (Afselecting 'financial (eg pension, investments)Who will be the next generation? Gen C is nextGen C or Generation Covid will not remember the virus or the associated lockdowns. It is the generation that will have only ever known problem solving through fiscal stimulus and free government money potentially paving the way for universal basic income and healthcare access.This generation will feel the impact of Covid long after the pandemic ends in terms of how they trust and show intimacy - being trained not to hug, shake hands or even play in groups. Virtual attendance will be as accepted as in-person attendance for all activities, from classrooms, to talent shows, and even family reunions.Gen C will be unable to live without tech in every aspect of their lives: online virtual tutors will provide personalised schooling; food delivery services will analyse individual's DNA and monthly fitness data to send them each weeks personalised food requirements; and their avatars will protest virtually in the online Total Reality world with their friends on the latest cultural movementEx h i bit 1: 10 things you need toknow about Gen Z in 10 chartsThematicD<esc-ng- 0- December 20201) Gen Z is in, Millennials are outGoogle trend search popularity worldw ide by search term4) Online is the only place to be - 40% of 16-18 year olds prefer to interact virtuallyHow do you prefer to spend the majority of your interactions w ith friends?3) Activism is part of Gen Z*s identityWhat is most important to you? (% selecting "Activism (e g. climate change, social justice, making a difference)")7) Over half of drinking-age Gen Z claim not to drinkHow often do you drink alcohol per w eek? Global survey results. I net Olr*ci OnM wm* Twion O 3-4 tvvwM aAwtrnk oFvwy day cf tiwwMk6) Gen Z arc the 'Cord nevers' - only 1 in 4 under 18s' watch TV vs 45% of MillennialsWhich of the follow ing do you regularly do each month? (select all that apply)8) Even in car focused USA, half of teens can't drive% of population w rth driver's licences by age groupWA GLCHALxESEAxrHg j上 l，一 ，1 c 一 wsonDroadDu YvacmtnaoBons Buy nBKpm Kseaoooto LaEntoraflDIV sportsUndvl8 E&X 阳RGmX 物 Bomr10) Material beats experiences for Gen Z and so does urban over ruralDifference in reality vs preferred Irving location by generationIM Q Runri area =1 SubwtMn area . Uitxn area-16*. undM-19 ie-» MMranMie Q«nx saw Bocmvv9) Doing well and doing good is important for Gen ZWhen making investment/financial decisions, how important are environmental, social, and governance issues (o.g. sustainability, diversity. NodEortant 睢rnsnmcsng mtuns a much mere importimt匚 Indfferert A Enorfacior 工 my fnvetfiDMt dedsknMoAnWng rafajm la m Impcrtent and erwironiieftd, WQi< 91d gwemane neuw匚 An imperttnt parte* my iweatmOTt ctocisionThe top priority m my hwwtm«*td«anKnSource: 1) Google Trends; 2) Euromonitor 3) Bof A Thematic Proprietary Survey n=14592, Aug 2020 *What is most important toyou?" Options: Activism, f am il/, career, bve, religion, other; 4) "How do you pref er to spend the majorityofyour interactions with friends?" 5 BofA Survey "Which of the following do you regularly do each month?*; 6) BofA SurveyB Which of the following do you regular!/ doeach month?" 7) Bof A Survey *How often do you drink alcohol per week?*; 8) US Department of Transportation Federal Highway Administration, Euromoniton 9) BofA Survey uWhen making investment/finandal decisions, how important areenvironmental, social and governance issues within the com pa nies you invest in?”; 10) BofA Survey 'Which best desaibes where you ive?”-Where do you want to live? I would prefer to live inf.How will Gen Z impact industry?Table 1: How will Gen Z impact industry?Sector Beneficiaries/ChallengedGen Z CommentsCommercee CommerceBeneficiary 45% of US teens are 'almost constantly'online, meaning online is the only place to be, social eCommerce integration, Covid behavioural change, & wealth transfer to accelerate transitionWarehouselogistics Real EstateShopping MallsBeneficiary eCommerce trend driving grcwth in logistics demand with 3x the real estate needed for dstribution for eCommerce vs traditional bricks & mortar. Also aided by deglobalisation themeFapid drop in appeal of shopping malls for under 30s in past 10Y, eCommerce to continue to disrupt and reduce appeal. Covid limits switch to 'experience' activities for shopping mallsocom GLOBALXE3EARCTTravelAerospaceAutosConsumer Services (Hotel/Travel)ChallengedChallengedChallengedhir travel likely to remain muted in mediumterm, sustainabilityfflight shaming' reducing the appeal for Gen Z, business demand slow to recoveras alternative low cost tech available Declining share of younger generations have driver's licences, falling consumer income jess commute/travel demand as work from home is sustained, increasing demand for (sustainability, continued improved airquality. Gen Z and Milennial continued preference forshared rrobiliy could bring resurgence post-lockdown.Peak Travel? Gen Z does not seem to be more interested in experiences vs goods compared to prevbus generations, potentialy expanding to travel. The last sector to recover from Icoronavirus crisis.Themac-C -n<esc-ng- 0- December 2020Consumer LuxuryPetsGeneral/Apparel RetailConsumer DurablesBeneficiary BeneficiaryLimitedChallengedStatus symbols continue to matter for the next generation, with social media an'alwayson' place to measure and compare social markersGen Z is the loneliest generation, a surge in petownershp overlockdown, means heightened long termdemand for pet products. Gen Z & Mllennials increasingly wiling to panperpets with high quality productsPeak stuff and shift to online e Commerce will get faster, private label disruption and fragmentation, fast fashion sustain ability concerns, global to local apparel/sourdng automation is costly. However, Gen Z preference for products over experiences and social media a positive long term.Animal spirits ofthe consumer is decreasing, traditional demographics like Boomers, Gen X, EMs slow to recover, lowering abilty to afford big ticket itemsCommunication ServicesTelco Service ProvidersNew Media & EntertainnntBig Tech PlatformsOld Media & EntertainmentBeneficiaryBeneficiaryBeneficiaryChallengedFelco services as necessary a utility as water/electricity as Gen Z increasingly live online with other generations follcwing suit. Risk from 5G capex costs & cyberattacks bringing network downSen Z watches more e Sports than traditional sports, only 26% ofunder 18s watch broadcast TV vs 45% of Mllennials. GenZ will drive faster shift towards e Sports, video & music strearring consumption, total reality will be the nextgen media platform to enable this in the future40% of Gen Z prefer interacting online with friends vs in person. Integrated services (social media, messaging, online shopping, payments) showing connected inportan ce of multi-vertical platforms reducing friction between consumers and products aided by network effects, but beware of data privacy regulatory headwindsGen Z, generation of'co nd n evers' wil accelerate drive away from traditional media that Mllennials started as half the share of Gen Z watch broadcast TV vs Mllennials. Coronavirus will accelerate cord cutting ofTVand switch to streaming, advertising agencies suffer further by lower consumer spend on top ofdigital marketing disiu ptionConsumer StaplesHousehold & Personal CareFood StaplesFood Delivery Beverages/AlcoholTobaccoBeneficiaryBeneficiaryBeneficiary ChallengedChallengedHygiene and health is the new wealth for consumers with growing focus on skin care vs makeupDM and younger generations have a rising focus on plant based alternatives, EM Consumer also structural drh/er