Gen Z: What retailers need to know
16 Jan 2017
Last week, a new study released by IBM & the National Retail Federation found that almost all of Generation Z prefer shopping in bricks-and-mortar stores – despite assumptions the first “digitally native” generation would prefer shopping online. The study found that 67% of Gen Z shop in-store most of the time, with another 31 percent shopping in-store sometimes, revealing a huge 98% of Gen Z still shop in physical retail stores.
However, that doesn’t mean retailers can sit back and relax. This generation has high standards of what they expect from a retail experience. IBM’s General Manager, Steve Laughlin explains: “Generation Z expects technology to be intuitive, relevant and engaging — their last great experience is their new expectation. This presents a significant challenge for retailers and brands to create a personalized, interactive experience with the latest digital advances or risk falling behind.”
Why is Gen Z so important to retailers? Already they have access to $44 billion in buying power and 75% admit they spend more than half of the money available to them each month. More importantly, their global population is set to reach 2.6 billion by 2020, “Just as Millennials overtook Gen X, there’s another big buying group retailers need to plan for, and it’s even larger: Generation Z,” NRF President and CEO Matthew Shay warns.
So, how can brands connect better with them? While Gen Z shoppers are pretty fickle: 52% would transfer brand loyalty to another brand if they don’t perceive the quality up to standard. In fact, 66% said product quality and availability are the most important factors when choosing one brand over another. The success of stores like Zara and H&M, which constantly switch around their store formats and styles, shows how retailers adapt to this. Similarly brands which are transparent about their manufacturing and costs, like Everlane and Warby Parker, will resonate with this generation
Retailers also need to look at how they engage Gen Z online. This digitally connected generation wants more interaction with brands online and the ability to customize their own experiences. However, they have little patience for slow or complicated technology: 62% will not use apps or websites that are difficult to navigate or that are slow to load. If retailers are prepared to invest in great experiences online and offline, they’ll find themselves with a new generation of brand champions, who are happy to share their ideas with them.