Gen Z and Retail

Bridging the generation gap

Industry Trends
June 18, 2019

Here’s a question: which demographic are you most focused on getting to set foot in your stores?

We’d understand if you said “Millennials.” That intensely scrutinized (and often maligned) cohort has been at the top of retailers’ minds for so long, it’s almost impossible not to stay fixated on them.

Times are changing, however, and Millennials are no longer the youngest or freshest demographic worth wooing. Forward-thinking retailers are shifting their focus beyond Millennials—most of whom are now spending in accord with the demands and responsibilities of adulthood—to the up-and-coming economic force of Gen Z.

Not just “Millennials on steroids”

Known by many names (including iGen, Centennials, and Homelanders), Gen Z represents those born from the mid-1990s through the early 2000s. Early predictors – like Lucie Greene, Worldwide Director of Innovation at J. Walter Thompson – thought they’d behave like “Millennials on steroids.”

According to that theory, Gen Z would follow Millennials’ lead in “killing” industries, splurging on whatever trend comes after avocado toast—and shunning brick-and-mortar retail for the convenience of online shopping.

But data from the research into the retail habits of Gen Z highlights some surprising departures from Millennial behavior. For example:

  • Research by the National Retail Foundation reveals that 67% of Gen Z shop in-store “most of the time.”
  • A global study by Euclid reports that 47% of Gen Z shoppers enjoy browsing in stores, 48% like getting products immediately (rather than waiting for delivery), and 66% like to see, hold, and try on products before they buy.
  • A mall-focused survey by Morning Consult found that 45% of shoppers in the 18-29 range (which includes Gen Z) say they shop at malls more than they did 5 years ago.

Given that brick-and-mortar shopping satisfies multiple “youthful” desires at once (e.g., socializing with friends, purchasing without credit cards, immediate possession rather than waiting for a delivery), getting Generation Z through the door is not the biggest challenge retailers face. The real trick is generating repeat business from individuals who are 16% more likely than older shoppers to be one-time customers.

Gen Z: a burgeoning consumer powerhouse

Numbers alone illustrate the importance of earning Gen Z’s loyalty now. They’re the largest generation ever, and are projected to represent 40% of all consumers by 2020.

The older segment of the generation, who were approaching adolescence when the iPhone launched in 2007, are now in (or entering) the workforce. The later-born members of Gen Z, although too young to be earning their own money, still exert enormous purchasing power. 67% of parents report getting their Gen Z child’s/children’s input before purchasing, and 59% wouldn’t purchase without their approval.

Brick-and-mortar retailers who want to win over this emerging, powerful group of shoppers should not neglect the importance of technology in achieving that goal. The release of the iPhone (mentioned above) is not a piece of cultural trivia picked at random. It is a signpost at the fork in the road of expectation—a clear marker of “before” and “after,” and a symbol of Gen Z’s status as the world’s first true digital natives.

Speaking the language of “now”

Online, mobile, and other digital shopping experiences are not novelties to this generation—they are lifelong realities. A seamless integration of digital strategies into the brick-and-mortar experience is table stakes for any retailer who is serious about staying (or becoming) relevant with Gen Z shoppers. Here are a few ways to do so:

Tighten your omnichannel brand experience. Prioritize a consistent customer experience across all channels: your stores, desktop and mobile shopping, social media presence, and anywhere else young shoppers will interact with your brand. Authenticity and transparency are paramount to Gen Z, and can quickly be undermined by inconsistencies in messaging, pricing, and product availability.  

Offer the best of both worlds. Options that provide both convenience and experiential opportunities are a great way to meet Gen Z shoppers’ expectations. The ability to Buy Online, Pick Up In Store (BOPIUS) is one way to blend the benefits of online and in-person shopping. Take care to offer same-day pickup, however, or risk losing the instant gratification factor that gives brick-and-mortar shopping its appeal.

Embrace the digital lifestyle. More than one-half of Gen Z shoppers report researching products, prices, and availability on their mobile devices, and more than one-third use them to pay for purchases. Supporting in-store mobile device use with amenities like free Wi-Fi and charging stations is a good start, but retailers with the means should consider how else they can leverage technology to increase convenience and differentiate themselves. That could look like anything from a checkout-free experience (think Amazon Go) to interactive screens (for easy customization) to on-site 3D printers (that create unique products or accessories).

Curating the Gen Z Experience

See how a brand popular with Generation Z, TOMS, streamlined 80% of their retail operations work by using Retail Zipline. Read our Case Study.