Winning Gen Alpha takes more than AI

Parents remain the gatekeepers of children’s spending and personal data.

Asia-Pacific retailers are entering a consumer era when Generation Alpha begins influencing household spending, but analysts said brands would need more than artificial intelligence (AI)-powered personalisation to win long-term loyalty.

They said trust, responsible data practices, and real-world experiences would become increasingly important as parents continue to shape purchasing decisions.

“As AI-enabled personalisation becomes increasingly expected, trust is emerging as a critical differentiator for brands,” Anson Bailey, head of consumer and retail for the Asia-Pacific region at KPMG in China, told Retail Asia.

“Consumers are more likely to engage when personalisation is accompanied by transparent, secure, and responsible use of data,” he added.

Bailey said the opportunity is particularly significant in Asia, where lower birth rates and smaller family sizes are concentrating household spending on fewer children.

“Increasingly, parents are willing to invest in products and services that support their children's development, well-being, learning, and future opportunities,” he pointed out.

Gen Alpha — people born from around 2010 through the mid-2020s — is projected to hit 965 million consumers across the Asia-Pacific region by 2040, with combined spending expected to reach $3t, according to an April report by Euromonitor International Ltd.

Sales of children's products in the region are forecast to reach $142.7b by 2029, accounting for more than one-third of the global market.

Trust beyond tech

Kathy Lee, executive director and head of research and retail consultancy at Colliers HK, said brands should not rely solely on digital engagement to connect with younger consumers.

“The most successful brands will combine digital convenience with real-world experiences that foster creativity, learning, social interaction, and family participation,” Lee said.

She added that physical stores, events, and community-led activities remain important because they create emotional connections that digital platforms can’t easily replicate.

Lee also said parents continue to act as the primary decision-makers in children's purchases, making trust, transparency, and age-appropriate engagement essential.

Rakesh Mani, Asia-Pacific consumer market leader at PricewaterhouseCoopers (PwC) Asia-Pacific, said companies should establish that trust early by ensuring personalisation is built on first-party data collected with parental consent.

“Personalisation must be transparent and responsible, built on first-party, consented data with clear parental controls because overly intrusive targeting will backfire quickly with both children and Millennial parents,” Mani said.

David Zhang, Asia-Pacific regional market insight manager for service and channels at Euromonitor, said retailers should move beyond strategies focused solely on capturing digital attention.

“Whilst Gen Alpha is digital and AI native, lasting loyalty will not come from simply maximising screen time,” he said.

Instead, brands should invest in education, family participation, and “phygital” experiences that combine digital and physical interactions.

Shin Thant Aung, founder of Sagasia Consulting Ltd., said this approach is particularly important in developing Asian markets such as Indonesia, the Philippines, and India, where parents continue to rely on schools, community programmes, and healthcare professionals when making purchasing decisions for their kids.

“Children influence the purchase decision, but parents hold the payment method and give consent for data use,” he pointed out.

Vietnam is also emerging as an attractive market for brands targeting Gen Alpha, according to Valerie Van Tran, a partner at Delta West Group (Singapore) Pte. Ltd.

She said the country's falling fertility rate has increased spending per child, creating a “golden child” effect that makes each young consumer more valuable.

Working with Vietnamese footwear brand Biti's, Van Tran said companies have found that involving children in product development could be more effective than relying solely on behavioural data.

"Win Vietnam’s lucrative Gen Alpha market by choosing compliant parent and child participation over quiet data tracking," she said.

Emil Fazira, Asia-Pacific insight manager for food at Euromonitor, said companies should also ensure that personalisation remains responsible and age-appropriate.

She said marketing should avoid manipulative tactics that encourage excessive consumption and instead include safeguards that let parents and guardians manage children’s experiences.

“Companies should adopt strategies that involve parents and guardians as important gatekeepers and lean into a broader group of children segments such as school and learning occasions instead of capitalising on behavioural data,” Fazira said.

Rather than competing for more screen time, retailers that combine responsible AI, parental trust, and meaningful offline experiences are more likely to build lasting relationships with Gen Alpha as its spending power grows.