The U.S. retail industry is entering a new era of transformation, and two forces are emerging as the primary architects of change: Generation Z and artificial intelligence (AI). Insights from the National Retail Federation’s recent “State of Retail and the Consumer” webinar underscores the industry’s modern reality — today’s consumer is actively reshaping how products are discovered, evaluated and, ultimately, purchased.
While the oldest of Gen Z consumers are on the cusp of turning 30, the youngest are transitioning into high school.
“They’re not kids anymore — they’re teenagers, college students and young adults, and it shows in their spending habits and their sentiment,” said Katherine Cullen, vice president of industry and consumer insights at NRF, during the webinar. “We see them increasingly influencing holiday traditions, differentiating themselves and how they manage costs, as well as leading the adoption of AI tools and platforms.”
Even with feelings of uncertainty on both the broader macroeconomic and individual levels, Gen Z consumers are still choosing to spend money in moments of joy and looking for ways to “treat themselves.”
In the past five years, average apartment rental rates in the United States have risen 25 to 30 percent higher than pre-pandemic levels in 2019. Now, the average monthly rent in the United States in 2026 is $1,698, up 2.9 percent year-over-year, according to research compiled by iPropertyManagement.com.
Meanwhile, the annual rent per square foot in 2026 is estimated at $28.48, up 51.6 percent from 2020 ($18.79 per square foot). And although rent continues to rise, wages have failed to keep pace.
In addition to rising rental rates, the Bureau of Labor Statistics reported that the annual average of the U.S. Consumer Price Index (CPI) climbed from 258.8 in 2020 to approximately 327 in 2026, representing a roughly 26 percent total increase in consumer prices throughout this period.
Rachel Hardy, director of consumer product marketing at Pinterest, explained that the idea of a five-year plan no longer exists for Gen Z, so their timeline focuses more on what’s happening now, rather than the future.
“They’re really seeking comfort, nostalgia and indulgences in those small moments,” said Hardy.
MaryLeigh Bliss, chief content officer at YPulse, a business-to-business market research and intelligence firm specializing in youth culture, supported Hardy’s statement when describing that this age group is more likely to report that the biggest financial priority in their lives right now is buying the things they want.
“‘Treat culture’ is absolutely a huge part of their retail behaviors. Think about the trinket trend — they’re looking for accessible, unexpected, unique little pieces of joy, and they’re getting that through small products a lot of the time,” said Bliss. “It’s not necessarily that huge splurge, but the more consistent purchases where they can have that dopamine hit to get through the weeks.”
Across the map, Gen Z shoppers are also looking to make more impactful and intentional purchases, searching for stores and brands that resonate with their identity and values, according to the webinar panelists.
Reinventing the Shopping Experience
It’s safe to say that AI has infiltrated the retail scene, and while approximately 60 percent of Gen Z are excited to use AI or are already using it, according to the NRF, they’re also skeptical of the technology.
“AI can feel like it’s making a decision for you — and really quickly — with the instant results that you get,” said Hardy. “But that also leads to impulse purchasing that Gen Z doesn’t really feel good about.”
According to YPulse findings, Gen Z is heavily utilizing AI-driven tools like Google Lens, ChatGPT and Gemini to compare products and prices. Hardy shared that Pinterest has found that 70 percent of Gen Z consumers who are shopping online feel a sense of buyer’s remorse and regret immediately after.
“AI is wonderful because it helps people make decisions and get to information faster, but it’s really important to preserve their autonomy and taste, and to help them make decisions that fit into their life,” said Hardy.
Bliss contributed another statistic from YPulse’s survey findings where 77 percent [of Gen Z consumers] feel that AI has a more positive impact on the world than negative, but their No. 1 concern is misinformation.
“What we’re really seeing is that they’re becoming AI detectives, so when they see something online, their instant question is, ‘Is this AI?’” said Bliss. “They’re questioning everything they see at this point, so the takeaway for brands is that they’re really looking for badges of authenticity.”
Bliss further emphasized that when it comes to retail specifically, Gen Z consumers want to use AI to compare products and prices, and to find new ones; therefore, the best way that brands can lean into AI is to create convenient shopping experiences so that consumers instantly see what’s already out there, along with things that they might not have found on their own.
For example, Sephora’s makeup assistant (Sephora’s Color IQ) scans faces to recommend personalized foundation and concealer shades, while Uniqlo’s UMood Experience kiosks analyze customer reactions to styles and colors, suggesting products based on their responses.
Aesthetics Matter
Born between the years of 1981 and 1996, Millennials often sought a sense of belonging by blending in, but Bliss says the next generation is redefining identity by doing the exact opposite — embracing individuality and standing out.
“It’s important for brands to understand that for Gen Z, aesthetics is a connection to a community, and a lot of that connection is happening online,” said Bliss. “It’s a signal they belong to something bigger.”
Hardy noted that a lot of people use Pinterest to establish their aesthetics through mood boards and curation — whether it’s building their dream home or just searching for their Friday night look.
“Because people are coming [to Pinterest] to plan, we get a sense of trends ahead of time, but those trends are constantly shifting because Gen Z is remixing them to make them their own,” said Hardy. “For brands, the best thing to do is to make sure that your customer can see themselves in that trend and feel as though they’re going to build their own life.”
Hardy also pointed out that trends move “4.4 times faster than they did seven years ago,” so it’s pertinent to look ahead as a retailer or brand to anticipate what’s coming next.
“Gen Z is a broad group of people who have different interests, so there are a lot of micro-communities and identities within Gen Z. You have to be careful not to assume that you know what the trend is, because it’s already moved on,” said Hardy.
In addition, Bliss described that social media often highlights misinformation about Gen Z with buzzwords that “sound great in a headline,” but are not necessarily representative of their actual behaviors or point of views.
“You need to talk to them to understand what’s actually going on, because you can’t go off the vibes of a TikTok and declare something about an entire generation,” she said.
Despite the limited levels of economic optimism for Gen Z, Bliss simultaneously contested that “it doesn’t mean they’re not buying.”
Cullen concurred, adding that, “You might think, ‘this is a generation that’s very skeptical,’ but at the same time, they’re happy about their romantic life and there’s a focus on spirituality and religion in a way that they [previous generation] didn’t have 10 years ago. Some are searching for a deeper meaning that gives them joy and community in other areas, so it’s much more complex.”
— Abby Cox