Cost pressures aren't stopping Gen Z from spending

Half of Gen Z and Millennials in Singapore are spending more than they were a year ago despite ongoing cost-of-living pressures. This is as retailers ramp up their investment in artificial intelligence (AI) to meet the expectations of increasingly digital-first shoppers, according to Adyen's "Index 2026 Singapore retail report".

The report found that 50% of Gen Z respondents and 51% of Millennials are spending more than they did a year ago, compared with 36% of Gen X and 29% of Baby Boomers.

Overall, 42% of Singaporeans said they are spending more than they were a year ago, while one in four (25%) reported cutting back. Among those spending more, 62% attributed the increase to rising living costs and changes in interest rates, while 36% pointed to shifting needs or priorities. A further 20% cited economic uncertainty as a factor.

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Younger consumers are also leading the growth of social commerce. Millennials spend an average of SG$106 per purchase through social shopping channels, closely followed by Gen Z at SG$104. This is significantly higher than Gen X (SG$80) and Baby Boomers (SG$62), highlighting the growing importance of social platforms as retail channels.

Lifestyle priorities are also shaping purchasing behaviour. More than a quarter (28%) of Gen Z respondents and 17% of Millennials said they are choosing to "enjoy life more", compared with just 6% of Baby Boomers, suggesting younger consumers remain more willing to spend on discretionary and lifestyle purchases despite economic uncertainty.

The shift in consumer behaviour comes as AI becomes increasingly embedded in the shopping journey.

More than seven in 10 Singaporeans (72%) said they have already used AI assistants to support shopping decisions, with adoption rising to 85% among Gen Z and 80% among Millennials.

Among AI users, 72% said the technology helps them cut through the overwhelming amount of information available online, while 68% said it enables them to find inspiration more quickly. Another 66% said AI helps them discover unique brands and shopping experiences they might not have found otherwise.

As AI adoption grows, so too do expectations of retailers. Nearly half (46%) of consumers said they want a seamless experience across online and physical stores, while 43% expect real-time product availability. Meanwhile, 38% want technology that makes shopping faster and more convenient.

Retailers are already moving to meet those expectations.

According to the report, 99% of surveyed enterprise retailers in Singapore are now using AI in some capacity. Customer service and support emerged as the most common use case (46%), followed by marketing and promotions (45%), customer experience (43%) and operational efficiency (42%).

However, scaling AI remains a challenge. While 95% of retailers said they face barriers to expanding AI adoption, the biggest obstacles include competing business priorities or limited resources (39%), integrating AI into existing systems (38%), and a lack of in-house AI expertise (35%).

Beyond AI, the report found that trust continues to play a pivotal role in the customer experience, particularly at checkout.

Nearly six in 10 consumers (59%) said a payment error negatively affects their perception of a brand. Almost a quarter (24%) said such an experience significantly reduces trust, while 20% would avoid buying from that retailer again and 15% said they would switch to a competitor.

Looking ahead, Adyen said Singapore retailers are preparing for the rise of "agentic commerce", where AI takes on a greater role in product discovery and purchasing. While consumers are becoming increasingly comfortable using AI to research products and recommendations, many remain hesitant to allow AI to complete purchases on their behalf, underscoring the continued importance of trust and payment security as AI-powered commerce evolves.

The findings echo broader regional research pointing to a growing role for AI in shopping, albeit with trust remaining a deciding factor. Earlier this month, a report by impact.com, developed in partnership with Cube and dentsu, found that while 24% of consumers across Southeast Asia already use generative AI tools such as ChatGPT, Gemini and Claude to support shopping decisions, recommendations from family and friends remain the most influential driver of purchases, ahead of online reviews and creators.

The study, based on 2,400 consumers across six Southeast Asian markets, also found that 67% had purchased a product after it was recommended by a creator.

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