Gen Z drives renewed optimism & new demands in UK retail

Consumer confidence in the United Kingdom has seen a modest increase over the last quarter, with Gen Z emerging at the forefront of renewed optimism, according to a new report by dentsu.

The second quarterly edition of dentsu's 2025 Consumer Navigator report identified five key trends currently reshaping UK retail, with insights into how brands might adapt to align with evolving consumer expectations, particularly among younger audiences.

Confidence uptick

The report points to an increase in economic optimism, with the proportion of UK consumers expressing confidence in the economy rising from under 20% to 28% within three months. Gen Z in particular are driving this trend, with 51% now believing the economy is in good or excellent shape. The report indicates that this renewed confidence is translating into intended spending on travel, wellness, and life experiences, especially amongst younger consumers.

This trend offers brands an opportunity to engage with consumers who are becoming more receptive to forward-looking campaigns. Cautious optimism remains, as challenges such as cost-of-living pressures continue to affect spending patterns among other generations.

Storytelling in retail

In a retail landscape saturated with content, authentic storytelling is gaining traction as a mode of influence, particularly among Gen Z. The report highlights that 30% of Gen Z are most influenced by trusted publications such as reviews and blogs, while 54% rely on peer recommendations. This group reportedly favours credibility and purpose-driven narratives over traditional sales promotions, whereas older generations remain more responsive to discounts and offers.

Campaigns leveraging native advertising, editorial storytelling, and influencer partnerships are suggested to be effective in driving engagement with younger audiences.

Demand for personalisation

The study suggests that consumers now expect a consistent, personalised experience whether shopping online or in-store, with 35% indicating this preference. Gen Z and Millennials reportedly lead the demand for real-time updates, cross-brand offers, and enhanced loyalty perks. Younger consumers' openness to data sharing stands in contrast to the caution often observed with older shoppers.

The report notes that the onus is on brands to ensure personalisation is both transparent and respectful of privacy, while making use of data and technology to enhance the shopping journey.

Evolving loyalty schemes

Loyalty programmes are undergoing change as Gen Z and Millennials show increased willingness to engage in fashion and beauty subscriptions - a trend that has grown by 60% from Gen X to Gen Z. The research also finds that this generation is comparatively more likely to pay for shipping, indicating a prioritisation of experience and exclusivity.

The report advises that brands consider loyalty as a comprehensive value exchange that offers customers perks, exclusive access, and community, moving beyond the traditional points-based or transactional approach.

Sustainability weighed against convenience

Sustainability is identified as a significant consideration for Gen Z shoppers, though convenience remains imperative for one in five respondents in this group. A notable 19% of Gen Z are prepared to prioritise quality over price - almost twice the proportion seen among Baby Boomers. Brands are encouraged to operate transparently, ethically, and efficiently to gain trust and strengthen loyalty with younger demographics.

"Gen Z is reshaping the retail landscape with expectations that go far beyond price and convenience," said Dan Truman, Group Chief Strategy Officer at dentsu UK&I. "They're optimistic, values-driven, and expect seamless, personalised experiences across every channel. But they also demand transparency and authenticity in return for their loyalty. The five trends in our latest Consumer Navigator report offer brands a clear blueprint to not only meet these expectations but to build lasting, trust-based relationships with the next generation of shoppers."

Truman added, "While challenges remain, we're seeing early signs of a shift in consumer sentiment – especially among younger generations. Although modest, this gradual return of optimism signals an opportunity for brands to re-engage audiences. But marketers must remain sensitive to the financial pressures many consumers still face."

The report references case studies from companies including Burger King and Wickes to illustrate how hybrid apps and purpose-driven campaigns have contributed to increased engagement and sales. It further advocates adoption of technologies such as AI-powered personalisation, gamified customer relationship management, and connected packaging to respond to evolving customer needs.

The Consumer Navigator report is drawn from a quarterly survey of UK consumers, capturing responses from 1,000 adults aged 18 to 79. It is intended to help brands understand changing attitudes and priorities, with a particular focus on the shopping behaviours of Gen Z.