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    Generation C: Investing in the connected generation

    At a glance:

    Generation C is an important new consumer segment in modern commerce. 65% are under 35, but they span the generational groupings (see chart 1). Empowered by technology, they search out authentic content that they consume across platforms and screens, whenever and wherever they can.

    Generation C is an important new consumer segment in modern commerce. 65% are under 35, but  they span the generational groupings (see chart 1). Empowered by technology, they search out authentic content that they consume across platforms and screens, whenever and wherever they can.

    As mobile technology spreads, the rise of a more connected “Generation C” is transforming consumer and technology sectors, but also creating significant implications for healthcare, transport and energy.

    Generation C encompasses more than just ‘Millennials’, characterised by a comfort with technology, or the younger ‘iGeneration’, many of whom were born into an internet world. As Millennials move towards their peak buying power, and the iGeneration begin to reach adulthood, we will see an even stronger need for connection and connectivity.

    With the mobile internet expanding its reach globally, the ranks of Generation C will also expand from below, moving connectivity from a disruptive trend to a lasting demographic shift that is both highly commercial and investible.


    Generation Y were born between 1980 and 1995, and are currently aged 20-35, although the age range varies between sources.

    • These so called “Millennials” came of age with the Millennium and make up a fifth of the developed world, accounting for $1.3 trillion of direct spending in the US, a 21% share of consumer discretionary spending even without their influence on other generations through friends or relatives.1
    • Boston Consulting Group point out that Millennials are only just beginning to reach peak buying power so this figure will continue to increase as demographics shift.
    • Increasingly, global research considers Millennials as employees, attempting to understand how to get the best out of a cohort that makes up a significant portion of the working population.2

    In the US, Millennials are widely considered to be more health conscious3, more likely to live at home, delay marriage, and be unemployed4. However, as the US continues to recover and their purchasing power grows, these characteristics are beginning to change: Millennials made up the largest share of home buyers for the past two years (32% in 20145).

    Millennial views and characteristics can of course vary wildly depending on cultural or economic conditions. For example, regulatory or demographic variations mean over 50% of Millennials in Asia Pacific expect to retire by 60, double the level in Europe6. Even within regions, opinion is split on issues like work-life balance. in Singapore, 76% defined work-life balance as having leisure time to spend privately; in Thailand, only 29% did.6

    The central similarly that sets Millennials apart is their close relationship with technology: they developed as the internet grew, making them “digital natives”7, seeking constant connection1. It is this comfort with and need for connectivity that places the majority of Millennials in a wider cross-generational grouping that Google, among others, refer to as “Generation C”8.


    “Generation C” is the growing technology-led subset of the total population that is characterised by a constant demand for connectivity. Indeed, anecdotal research suggests that 91% of Gen C sleep next to their smartphone.8 While technically “a mindset defined by creation, curation, connection and community” (according to Google research8) rather than a defined age range, the fact that 80% of Millennials sit in this category means the terms are occasionally used interchangeably.

    Generation C will organically expand as global smartphone penetration increases and more children are born with connectivity as a way of life. The effect of this shift is currently most visible within consumer and technology sectors, but has an impact across the board, as broadly as healthcare, transport and energy.


    Ubiquitous connectivity has made Generation C more likely to use price comparison sites,9 with studies finding that they value price highly versus quality when it comes to building brand loyalty.10 An unexpected trend is the combining of mobile connectivity with physical shopping: in the US around a third use apps while shopping to find local deals, while almost half make a habit of “showrooming”, using brick-and-mortar retailers to browse physical goods before comparing prices online, often while still in the store.9

    As connected consumers push the retail e-commerce market to almost $24 trillion in 2015, its proportion of total retail spending is creeping up, especially in the UK (14.4%) and China (12%).11 Amazon remains a winner, with just under $89 billion of revenue from 270 million active accounts in 2014, while the huge volume of Amazon consumer traffic continued to benefit online payment platforms: PayPal alone processed $228 billion over the same period.12

    User Generated Content - The draw of online retail is often the access to user generated content (UGC) in the form of social networks or reviews. Generation C surprisingly consider user-generated reviews more trustworthy than their professional counterparts13 and retailers have to adapt, not only through smart marketing but by listening to consumer feedback to give them what they want. Research shows that over half of Millennials inform purchasing on electronics, cars and utilities using some form of UGC14, while over a third “like the brand more” purely if they use social media5.

    The Generation C subset takes it even further: 85% rely on direct peer approval when buying8, making it essential to build up goodwill within social networks. Brands like L’Oréal take time to stimulate public conversations over Facebook, while innovating through their “Makeup Genius” interactive mirror app that allows consumers to “try” the products, share their opinions, eventually linking to platforms to buy online.

    UGC via YouTube - with 128 million active users in the US alone and 300 hours of UGC uploaded every minute12, YouTube appeals to Generation C so much that Google calls them “The YouTube Generation”.8 ‘YouTube stars’ can build up millions of followers and billions of views through the strength of their personality and their social network niche – whether it is gaming, fashion, make-up, or life advice. They are increasingly capitalising on their fan bases to generate advertising revenue and many companies have been quick to see the value in carefully positioning their brands and products with these ‘trusted peers’. While cosmetic brands struggle to get views on their own channels, Michelle Phan’s makeup tutorials have over seven million followers and there is a monthlong waiting list for her “Glam Bags” startup. Smart brands are increasingly partnering up with these YouTube personalities, and Phan now has her own line of L’Oréal products.

    Companies are also stepping in to protect their intellectual property. Nintendo require users to register videos that feature Nintendo games, limiting them to 60% of advertising
    revenue, or 70% if they register the entire channel. For game reviewer Felix Kjellberg (aka “PewDiePie” and referred to as the ‘Undisputed King of YouTube’) who has 35 million subscribers and who amassed almost 4.1 billion views in 2014, this will eat into yearly revenues estimated at around $4 million in 2014.15

    “Online to Offline” - As the rules of e-commerce evolve, connected consumers are demanding increased flexibility and servicing, supplied by Amazon, for example, in the form of their “Prime” faster delivery services, or pick-up lockers in stations and supermarkets. Bricks-and-mortar retailers like Home Retail Group are following suit with collection options from local Argos stores. This growing “Online to Offline” (O2O) model suits Generation C as it combines access to reviews and price comparison with immediate collection and convenience. In China, the O2O model streamlines the consumer experience further through integrated one-stop platforms like Alibaba. In August 2014, online giants Baidu and Tencent teamed up with real estate conglomerate Dalian Wanda to launch “Wanda”, to compete with Alibaba for the rapidly-growing Chinese ecommerce market.

    Access over Ownership - The shift towards the fast, instantaneous consumption patterns of Generation C has had an effect on the business models used in a number of industries. In our previous Perspective on Digital Disruption17, we examined how new media consumption patterns have transformed the entertainment industry, moving from traditional broadcast to time-shifted television, and from an ownership to access model through platforms like Netflix and Spotify. As comfort grows with these models of consumption, they are spreading to disrupt other traditionally physical industries.


    The growth of Generation C is hugely supported by the spread of mobile internet across developing markets as growing middle classes feed strong demand for smartphones.
    Coming off a low base, the number of mobile broadband connections in developing countries overtook the developed world in 2013 (chart 6), pointing to a demographic change that identifiable, consumer-centred, innovative companies will build into their long-term strategies.

    In the present, mobile networks like Safaricom stand to benefit. They dominate the Kenyan market (population c.45 million) with M-Pesa, a mobile phone-based money transfer and microfinancing service that processes over US$1.3 billion of payments per month, equivalent to around one third of Kenyan GDP annually.16


    Transport - In the app war, the most useful and well-designed survive. CityMapper combines real-time information to find the cheapest, fastest or easiest method of public or private transport based on user requirements, while Uber turns any driver with a smartphone into a cheap, app-accessible taxi. In China, February 2015 saw Tencent’s “Didi Dache” taxi app merge with Alibaba’s “KuaiDi Dache” to take almost 100% market share and become the world’s largest smartphone transport service globally.

    The auto industry is also increasingly adapting to the needs of Generation C, partly thanks to the rapid growth of the Internet of Things.18 Cross sector partnerships combine
    capabilities and expertise, with BMW integrating Samsung tablet computers so passengers stay connected while controlling “comfort functions” from inside the car.

    Healthcare - The future of healthcare will be driven by more health-conscious developed market Millennials, and by the positive impact of social media on health and wellbeing.3 In the present, healthcare sector innovations are already targeting Generation C. In March 2015, Apple launched ResearchKit, an open source software framework designed for medical and health research, which turns any willing iPhone user into a research subject. The first research study on asthma for Mt. Sinai Medical Center, saw the app downloaded 50,000 times, with 5,000 patients involved in the first 72 hours alone.19 Similarly, innovations from AstraZeneca allow cancer patients to monitor antigen levels from a smartphone app. This level of connectivity allows for the rapid collection of medical data to accelerate the drug discovery process.


    Just when we are getting used to the idea of Millennials, “Generation Z” or the “iGeneration” is turning 18 and entering the workforce. Already the largest generation in the US, making up over a quarter of the population, they will expand Generation C to over 60% of the global population by 2030. Born post-internet, with no experience of a world without connectivity, their level of connection is even more exaggerated than Millennials: in the US, research sees 92% using mobile internet daily, with around a quarter online “almost constantly.”20

    Faster, shorter connections - The iGeneration has a shorter attention span, an expectation of high bandwidth and a preference for short-burst rich content21. Smartwatches, the next generation of connected devices, eliminate the 5-10 seconds it takes to go from a locked phone to entering an app, saving an estimated 20 minutes per day.22 The result is 300 “digital sessions” per day (smartphones average 120), transferring core communication, entertainment, location and task-based activities to the wrist.

    Smartwatches will also bridge the gap from digital to physical, enabling contactless payment, key-less entry and faster messaging, while location-based innovations like CityMapper featured in a demonstration of the Apple watch at its launch in 2014. Though price is likely to be an issue in determining the total market size, cheaper Android-based models such as the Samsung Gear and the Huawei Watch are already gaining attention.

    Social Networks - With the iGeneration measurably more at ease interacting online than offline,23 companies that take the time to build up a solid social network around their products will see the benefits compounded as more of this generation gains discretionary spending power. China’s Tencent have grown the active user base of their WeChat messaging app to half a billion per month, and are leveraging this ecosystem through partnerships with Western brands like Starbucks, Intel and Nike.

    As Generation C matures, the importance of social networking is not limited to discretionary brands. The Internet of Things allows homeowners to remotely monitor and adjust energy usage through apps from providers like General Electric, and social apps like OPower, a partner with Facebook, enabling users to share and compare energy use. As Bosch noted back in 2012, “For Generation C, energy is social”24, satisfied through  simple price comparison or socially responsible peer-pressure.

    Social Media goes to work - Companies are also accepting the place of social media in the workplace. Even among “older” Millennials (25-34) in the US, more than half (56%) use
    social media at work,25 and while some studies show “cyber loafing” affects performance when left unchecked, the interaction can also stimulate creativity and inspire workers.26

    Facebook began 2015 by piloting their internal “Facebook at work” app with selected partners, while workplace social networking services gain traction: Microsoft bought Yammer for $1.2bn to integrate into “Office 365” and team communication tool Slack was valued at $2.76bn in March 2015 thanks to funding from supporters like Google Ventures.


    Companies must take a dynamic and flexible view on the way connection is achieved. The smartphone dominates at present, but research already tells us that the iGeneration
    constantly switch between devices, multi-tasking across up to five screens (TV, smartphone, laptop, desktop, tablet/gaming device).21 Tech companies like Apple and Samsung are attempting to keep ahead of the curve by making connectivity between devices as slick as possible, but the market is moving faster all the time and some device convergence is also possible.

    Certainly, the direction of travel is clear – Generation C will account for an increasingly large part of total population that will bring further changes in the way information and products are consumed. Investors will need to pay close heed to disruptive industry changes and technological innovations as well as changes in the consumer landscape to identify the companies best placed to benefit.

    “From an investment perspective, we are constantly on the lookout for companies which control the channels through which Generation C fulfil their need for connectivity and content. Companies like Facebook and Apple come to mind in the West, along with Tencent (through WeChat) in China and Naver (through Line) in Japan.

    Interestingly, while forming a valuation opinion on these companies, one has to bear in mind that network externalities result in the value of these companies constantly increasing as more users join their network.”

    Amit Lodha
    Portfolio Manager, Global Equities



    1. BCG “How Millennials Are Changing the Face of Marketing Forever” January 2014
    2. Bentley University “The Millennial mind goes to work” October 2014
    3. Aetna “What’s Your Healthy” Survey September 2013
    4. Goldman Sachs “Millennials: Coming of Age in Retail” October 2014
    5. National Association of Realtors “Home Buyer and Seller Generational Trends 2015”
    6. Universum, Emerging Markets Institute, INSEAD “Millennials: Understanding a Misunderstood Generation” February 2015
    7. Marc Prensky “Digital Natives, Digital Immigrants” On the Horizon 9 (5) 1-6 October 2001
    8. Google “Introducing Gen C: The YouTube Generation” 2012
    9. eMarketer “Adult Millennials as Consumers” October 2014
    10. AIMIA Inc. "Born this Way: US Millennial Loyalty Survey" 2012
    11. eMarketer “Retail Sales Worldwide Will Top $22 Trillion This Year” December 2014
    12. Statista March 2015
    13. Ipsos “Millennial Social Influence Study” 2014
    14. Barkley, SMG, BCG “American Millennials: Deciphering the Enigma Generation” August 2011
    15. Forbes Magazine, June 2014
    16. Safaricom Financial Reports 2015
    17. Fidelity International “Investing in Digital Disruption” January 2015
    18. Fidelity International “Investing in the Internet of Things” December 2013
    19. Goldman Sachs Equity Research “What we learned at our Innovation Symposium” March 2015
    20. Pew Research “Mobile Access Shifts Social Media Use & Other Online Activities” April 2015
    21. Sparks and Honey “Meet Generation Z” June 2014
    22. Deutsche Bank Markets Research, Mobile & Consumer Internet Industry Update March 2015
    23. JWT “Gen Z: Digital in their DNA” April 2012
    24. Bosch ConnectedWorld Blog “For Generation C, energy is social” May 2012
    25. Nielsen Digital Consumer February 2014
    26. University of Bergen, Department of Psychosocial Science “Use of private social media affects work performance” November 2014

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