Smart retailers are banking on the purchasing power of Generation Z
Although the millennial star hasn’t burnt out yet, Generation Z’s is starting to shine a bit brighter. Made up of more than 60 million Americans, Gen Z is usually considered to consist of people born from 1996 to the early 2000s—encompassing teenagers and young adults who are currently in high school and college. By 2020, it’s estimated that 2.6 billion people will make up this age group globally, with $44 billion in buying power to back them up.
A crash course in Generation Z
Even though teenagers currently make up most of Generation Z, the impact they have on their parents’ spending habits tremendously boosts their overall purchasing power. And while this influence over a great deal of the market share creates a world of opportunity for savvy retailers and marketers, brands are also now tasked with finding strategies to reach both Gen Z and their parents.
Additionally, retailers should watch out for key differentiators between millennials and Gen Z, including the latter’s major lack of brand loyalty. While millennials are known to take much stock in staying loyal to the brands they love, Generation Z wants that dynamic to change. Not as concerned with brand loyalty as their predecessors, they prefer that retailers work to earn their patronage—and they’ll quickly jump ship to spend their money elsewhere if they feel unappreciated.
A new generation of shoppers brings new priorities for retail
For retailers to win Generation Z over is no easy feat—they’ll see through most marketing campaigns aimed at them; and nearly 70% of Gen Zers try to physically avoid ads, compared to the global average of 50%. They don’t want to be coddled with false promises from brands—instead, the next generation of shoppers wants to see brands take a stand by promoting messages that align with their own values.
Gen Zers want to know they’re supporting responsible retailers. That is, retailers who care about the common good. In fact, 85% of teens said they’d “likely” purchase from a brand that supports social issues versus one that does not, given a choice between the two. Already, brands like Patagonia and Lego are leading the charge with campaigns focused on doing social good—and if other retailers want to appeal to Gen Z, the onus is on them to follow suit. To really reach this socially-conscious generation, retailers should consider the importance of transparency across their organizations—especially in the supply chain—and how it can positively affect their consumer base, and their profits.
To Gen Z, experience matters even more
Although brand image remains important to Generation Z, its members are also inclined to shop with retailers who are as tech savvy as they are. They want seamless shopping experiences, both in-store and online, and they’re not nearly as forgiving to glitches as millennials are. Personalization is also key for Generation Z. They’ll shop with retailers who use cutting-edge technology to stay a step ahead of them by anticipating their shopping preferences. Retailers like Findmine, which uses AI to build outfits through item recommendations based on what’s already in a customer’s shopping cart, are already figuring out how to appeal this age group through the modern omni-channel shopping experiences they desire.
While early adopters are winning with Gen Z, unfortunately, fewer than 20% of retailers can actually provide these personalized shopping experiences today. Suffice it to say, retail and fashion brands will have to work harder to optimize their supply chain operations and expand their personalization efforts if they want to attract Gen Z’s $44 billion in spending power. They’re a fickle demographic, but an important one—and with the right tech solutions in place, retailers can keep Generation Z engaged—along with the millennials, Gen Xers, and baby boomers who came before them.
Tagged: assortment planning, CX, omni-channel