Gen Z is treating itself

The same cohort we have to thank for Labubu mania has minted a new trend: The “little treat” economy. And if recent data is any indicator, they’re treating themselves to extra carats.

A trio of retail earnings reports points to a rising trend: Despite a broader downturn in consumer confidence, the luxury jewelry business is popping. Executives from Kohl’s, Macy’s, and Costco all cited their fine jewelry segments as a boon. Kohl’s, for example, will be rolling out “elevated fashion-jewelry fixtures” to 320 stores in November.

Part of this dynamic is a classic result of the K-shaped economy: Even when the economy tanks, the wealthy can keep spending on diamond earrings, since they’re insulated from plebeian problems like rising inflation and a slowing job market. Other factors include the falling price of lab-grown diamonds, fashion trends that prioritize chunky styles, and the disappearance of a middle market for luxury jewelry.

Gen Z eyes shiny things

But there’s another facet of why luxury jewelry is en vogue: Gen Z is splurging like there’s no tomorrow, economic anxiety be damned.

“Gen Z have the lowest savings-to-spending ratio of any generation, yet spending growth has remained resilient,” wrote Bank of America analysts Taylor Bowley and Lynelle Huskey in a note last month. Data shows the cohort’s discretionary spending strengthening in categories like coffee, beauty, and bling—suggesting Gen Z is jumping on purchases that give them immediate gratification. In other words: little treats.

Jewelry spending per Gen Z household was up 11% year-over-year in June, according to Bank of America data. Shiny accessories weren’t the only beneficiaries: The age group is embracing fitness culture and wellness trends, while ditching alcohol-related spending, BofA noted.

Maybe instead of the K-shaped curve, we should start calling this phenomenon the Z-shaped curve.—LB