Gen Z and Retail: A Recipe for Change
GEN Z WILL NOT BE DEFINED AS “MILLENNIALS 2.0,” THAT’S FOR SURE.
Understanding the Gen Z Equation
This generation - fiercely independent, curious thinkers, and savvy savers - will do more than change how retailers and brands sell their products; they’ll change society as we know it.
Generation Z, comprised of those born roughly between 1998 to 2015, possess close to $300 billion dollars in direct purchasing power. Though they are young, they are intelligent, skeptical, and determined to engage with people, products, and companies that genuinely help them carve out their unique paths in this world.
Many factors go into the making of a generation, but a Gen Zer would tell you: “Don’t you dare try to over-generalize me.” So, for the sake of this piece, we won’t. But we will explore some societal, economic, and social factors that give context to who they are, how they think, and what they want.
SOCIETAL:
Think back to what it was like to be 15. What was important to you? What did you stand for? What was your outlook on the world? Who did you want to become? Now, think about today’s 15-year-olds. What do you think are their answers to these questions?
Likely, they’re much of the same. Adolescence is a time for identity construction - for testing limits and pushing boundaries, finding freedom and learning consequences. It’s part of what makes youth culture so alive - the energy, the excitement, the possibility - it’s contagious.
But today, the stakes are higher. With populations booming, prices ballooning, wages stagnating, and global climate crisis looming, this Generation is inundated with stress - a type of existential stress that other generations may not have had to consider so early in life. It’s a lot. It’s enough to affect their psychological development and impact their outlook on what it means to be safe, successful, and purposeful.
Naturally, this affects their behaviors. In general, Gen Z is less trusting than their Millennial counterparts, especially those coming of age right now. It’s harder to sway them - to convince them - that there is only one way to be, act, do, or say.
They’ve witnessed many promises made only to see them broken. They’ve watched their parents and older peers struggle to deal with the harsh realities of those promises, such as going to college, buying a house, digital fraud, corporate irresponsibility, workplace safety and equality, and so on. They’ve learned what happens when you are not prepared; they’ve learned what is possible when you blindly buy into a lie. And if they’re too young to logically conceive of these things, they’re growing up in a society where that energy is palpable.
Seem a bit dramatic? Perhaps. But this premise is partially responsible for why Gen Z is known to reject conformity, opting instead to pledge their allegiances to the people, places, and things that perpetuate their idealisms (or at least stand in unanimity against the forces they’ve come to believe are detrimental to themselves and their future).
Cue the “OK, Boomer” conversation of Fall 2019.
Gen Z is allergic to inauthentic attempts to relate, and can sniff out the “trying too hard” mentality from a million miles away. They believe in themselves...mainly because they know that they are the only ones they can count on. Bottom line? Gen Z is sick of the B.S. They want it given to them straight, and if that can’t happen, they’ll swiftly move on. They certainly have enough choices.
FACT: GEN Z IS LESS TRUSTING THAN OTHER GENERATIONS. CONSIDERATIONS FOR BRANDS AND RETAILERS:
Increase trust through authenticity
Don’t say it if you don’t mean it.
Don’t claim it if you don’t live it.
Don’t offer it if it doesn’t make sense.
Connect to something bigger than your brand
A majority of Gen Zers report a way to build real trust with them is through social responsibility.
Commit to an issue, not because it’s trendy, but because it provides a way to build up and empower the next generation.
“If brands aren't authentic about the causes they support, that's arguably worse than not supporting them at all.” - Retail Dive
Reduce purchasing barriers through reducing the amount of steps and personal information required:
If it’s not quick, easy, and secure to make a purchase, most Gen Zers won’t think twice before purchasing from somewhere else - in-store or online.
If it doesn't make sense to give you their information, they won't. Information exchanged should be rooted in direct value add.
Find your micro-market
The days are done. You cannot be everything to everybody. And if you try to be, you’ll lose this audience.
Don’t be afraid to go against the grain - Gen Z moves in niche cohorts, pairing up with people and things that allow them to feel expressed, seen, heard, and secure.
Hone in on the odd and unusual; capture the eccentricities - the essence that connects a particular type of customer to your exact brand or product.
Build stories that represent your micro (niche) submarkets.
2. ECONOMIC:
Study after study has returned the following data: Gen Zers are not keen on spending their money frivolously.
In many ways, this is the opposite of Millennials. While Millennials spent most of their childhoods amidst an economic boom, Gen Zers have not. It’s estimated that the median net worth of Gen Z’s parents fell 45 percent during the Great Recession (2007-2009) - the results of which we are still dealing with at time of this writing (2019).
As a consequence, many surveyed in this group have come to believe that in order to be successful, they will have to work harder than previous generations. This is not the generation that believes, nor expects, that everyone should get a trophy just for participating. They do not expect things to be handed to them. Gen Z believes there are winners and there are losers. They are competitive, and as a cohort, are known for their grit, determination, and desire to win (Carnegie Dartlet).
The cost-conscious, well-informed, and independent mindset characteristic of this generation has led to notable changes in brand interactions and shopping behaviors. Since this group is hyper-concerned with saving money, they tend to prioritize different things in the shopping experience. Where Millennials are more concerned with experience, convenience, and overall brand name, Gen Z is more concerned with value, quality, and confidence.
FACT: GEN Z SEEKS VALUE, QUALITY, AND CONFIDENCE THROUGHOUT THE SHOPPING EXPERIENCE. CONSIDERATIONS FOR BRANDS AND RETAILERS:
“Value” does not mean cheap.
It means retail marketers must provide highlighted ways for Gen Zers to understand how their purchase stretches and maximizes their dollar.
Value-add must be honed in on. Special deals, discounts, offers, bundles, memberships, and other perks are just as important as the product itself.
Note: value is not just monetary; don’t forget to assess the social currency of a product or brand as well.
Confidence
Gen Z needs certainty their choices will hold-up and be worth it. Being as pragmatic as they are, Gen Z tends to look for the ROI in everything (Carnegie Dartlet).
Generation Z is more likely to shop in-stores than Millennials (Salesforce). Using their physical senses to engage with a product builds their trust and alleviates worry related to frivolous spending.
As a group constantly searching for authentic connection with their peers, Gen Z is also more willing than other generations to engage in community-building aspects in-stores.
Consider educational, social, and content-worthy pop-ups, classes, brand partnerships, and events to further build relationships, trust, and confidence with this group and the micro-markets they’re a part of.
Provide low-barrier, risk free ways to engage with products in their own environments and lifestyles. Ensure the online to in-store experience is flawless, enabling shoppers to pick-up, return, and exchange with ease.
Try before you buy options MUST be seamless and natural - whether in-store, online, or a combination of both.
Quality
Gen Z tends to be slightly less consumeristic than Millennials.
Though fast fashion still holds appeal (it has to - their highly documented lifestyles demand a certain level of relevance & freshness), Gen Z is willing to make less frequent, but more expensive, purchases on things built to last. Don’t underestimate their willingness (and ability) to spend big on purchases they’ve deemed justifiable.
Most Gen Zers do not equate “brand name” with quality. They are relatively brand agnostic. Millennials did not grow up this way (remember the Abercrombie/Hollister craze)? With the Gen Z audience, brands cannot rely on their name, or even their legacy, to connect with this group. These digital natives grew up in the Age of Innovation, and they’ve come to expect it on all fronts. They are not above brand-hopping - even to lesser known indie brands - if those companies are doing a better job at meeting their expectations. A marker for quality is adaptive thinking and constant improvement on all fronts.
Like Millennials, Gen Z uses technology to assist their shopping journeys, but they use it in different ways. Gen Z uses tech to inform what constitutes as “quality.” It’s not just the price. It’s not just the sustainability commitment or the durability of materials. In a Gen Zer’s eyes, those things are a GIVEN - a low-bar standard in today’s day and age.
When communicating quality, retailers and brands that use influencer marketing in a way that promotes a natural and seemingly obvious friendship with their Gen Z shoppers will have a leg up. A firsthand account (not just a product review, but an actual live footage documentation that is personable and non-gimmicky) from someone they trust, reminds them of themselves, or what they aspire to be, speaks infinitely more than tech specs.
3. SOCIAL:
Finally, there are some social characteristics we can examine that may impact the attitudes and expectations of Gen Z shoppers. You know that saying, the apple doesn’t fall far from the tree? Whether you prescribe to it or not, it’s something to consider when looking at who Gen Z’s parents typically are: Gen X.
A quick Google search will tell you Gen Xers (born from the mid-late 1960s to the early 1980s) tend to be “independent, resourceful, and self-sufficient...valuing freedom and responsibility...with a casual disdain for authority and structure.” They tend to be busier, less trusting, and more self-directed than the Baby Boomers - the generation who typically raised today’s Millennials.
Being the children of Gen Xers, Gen Z has somewhat duplicated the attitudes of their parents - pragmatic, competitive, independent, hardworking, mistrusting, and tired of the B.S. Why does this matter? Because history is repeating itself, even if it’s in a different context.
It would do us all a bit of good to pay more attention to how Gen Z parents, representing nearly 66 million people, are spending their money, saving their money, educating their children, and influencing every generation around them. Because it matters...and it’s different than how Baby Boomers raised Millennials. It helps to explain how and why Generation Z and Millennials are different at their very cores. (Read more on tips to reach Gen X via this Forbes article).
Another social aspect to consider is Gen Z’s general disinterest in the “keeping up with the Jones” mentality.
With a push for minimalism, ethical awareness, and an embracement of personal authenticity, Gen Z is less concerned with becoming “the ideal” and more concerned with being real.
We see these effects across industry, not just retail.
For example, 75% of Gen Zers in a Sparks & Honey report believe there are other ways of getting a good education than going to college.
We’re seeing a resurgence of the trades.
We’re watching Millennials quit their corporate jobs to live in vans and blog for a living.
Even with the persona/parody of the VSCO girl popular with Gen Z teenagers, an example is being set: being an individual is better than being duped by social standards that are unobtainable and unrealistic. It’s not about having the best house, car, job, or education for Gen Zer. It’s about strategically obtaining the best (read: most valuable) resources that match the type of lives they wish to live out for themselves.
And this does include shopping. It was recently in the news that Ulta Beauty and Estée Lauder faced stock downgrades due to a weak cosmetics market (Retail Dive). A contributing culprit? Gen Z teenagers spending less money on makeup than Millennial teenagers did. For the Gen Z audience, makeup is less of a right of passage than it used to be - it’s less of a “status” marker than in previous years. Another example of this social shift playing out is in Victoria’s Secret struggle to stay relevant, as compared to one of it’s competitors Aerie, a more body-positive, inclusive brand.
What Can Brands and Retailers Do Now to Stay Relevant to Gen Z Shoppers?
Read. Ask questions. Get curious. Think before acting. Divorce yourself from stereotypes (including entire age-based generational groupings such as discussed in this article!)
Find retail partners who will help you safely and smartly rethink what’s worked in the past. Test new concepts in controlled settings. Gather data. Shift. Pivot. But most importantly, don’t wait. These kids will soon be dictating much more than how we shop.
