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How Gen Z will redefine retail


How Gen Z will redefine retail


Do you finally understand Millennial shoppers? Well, it’s time to move on. Kellie Simpson tells Marketing how Gen Z is accelerating digital, social and mobile retail trends.

This article originally appeared in The Generation Issue, our June/July issue of Marketing magazine.


MK0617 cover generationBased on new results from Accenture’s ‘Global Consumer Shopping Survey 2017’, Gen Z – individuals under the age of 20 – are a new generation of consumers who take Millennials’ love and loyalty for all things relating to video, social and mobile to their logical conclusions.

Accenture surveyed nearly 10,000 respondents in 13 countries, including Australia, the US, the UK and Japan, and equally weighted groups of Gen Zs (18-20 years), Millennials (21-27) and older Millennials (28-37).

Far more than just a platform for sharing personal details, events and building communities, two-thirds of Gen Z consumers are interested in making purchases directly via social. Furthermore, 44% cite social media as a popular source for product inspiration and 37% have increased their use of social media for purchase decision- making in the last year.

When it comes to shopping, they express a desire for loyalty programs and benefits, and demonstrate a willingness to try new methods, such as the 38% who are willing to try voice-activated ordering. Speedy delivery is something they also expect and appreciate, with 58% saying they would pay more than five dollars for one-hour deliveries. Almost three-quarters are interested in subscription-type offerings for fashion, and 71% are interested in automatic replenishment programs.

In contrast to their desire to try loyalty programs, they do not exhibit – or at least have not yet developed – any strong brand loyalty. Only 16% shop at a single store for clothing and fashion (even less in the US, with 5%) compared to the global average among older Millennials of 26%. Just 19% shop at a single store for health and beauty items (older Millennials 26%) and 38% shop at a single place for groceries (older Millennial: 55%).

Diehard reviewers, 70% say they have written product reviews and 40% do so often. YouTube, Instagram and Snapchat are their favourites. YouTube is the most regularly used among the group, and 66% use Instagram, compared to 40% of Millennials. They are twice as likely as Millennials to use Snapchat.

So despite favouring social and online video even more than Millennials, how different are they, really? They’re impulsive, sure, but that was – and still is, mind you – said of Millennial consumers when they were at that age. What are their expectations, habits and choices? Should you drop everything and begin focusing on adjusting to fit these consumers, or – given their young age and current low-income bracket – would it be too soon? Should each generation’s growing interest in online and mobile shopping ring alarm bells for bricks- and-mortar stores? Or will smart integration of new technologies in physical retail spaces be enough to engage a new era of shoppers?

Marketing speaks with Kellie Simpson, who leads Accenture’s retail practice in Australia and New Zealand, about Gen Z consumers, the research results, and what it all means for marketers and retailers.


Marketing: Who are the Gen Zs?

Kellie Simpson copyKellie Simpson: Gen Zs are categorised as consumers younger than 20. They’re the most digital generation yet and they are one of the biggest consumer challenges facing retailers today. Their aptitude for new and rising forms of social media and their shorter attention spans mean that retailers have their work cut out for them. They’re impulsive, excited by new technology and open to new concepts.

Overall, their behaviour is not just a challenge for retailers, but a huge opportunity to experiment with new and innovative marketing and sales concepts.


How do they differ from Millennials?

Millennials, people who reached adulthood in the early 21st century, were the first digitally-native generation that retailers needed to adjust to. Although Millennials required retailers and marketers to expand their digital efforts, Gen Z customers are pushing them even further.

Importantly, they are much more impulsive than their Millennial peers, even though they are currently less affluent. Our research found that, compared to Millennials, they are almost 60% more likely to make a purchase just because they want to buy something or because they have seen a random ad for an item they like.

What is perhaps the biggest opportunity for retailers is that Gen Z shoppers are far more experimental and open to new ideas than Millennials. Things like voice activated ordering, automatic replenishment programs, and other innovative offerings are all of greater interest to Gen Zs.


What are their expectations, influencer circles and behaviours?

Gen Z shoppers typically consider three main factors when purchasing an item: receiving the lowest price, seeing products in stores, and reading reviews.

However, they are overall a more socially-influenced generation than Millennials. They place a far greater emphasis on their friends’ and families’ opinions, and inspiration they receive from the people they follow on social media and blogs.


What about social media?

Social media has a much greater impact on Gen Z purchasing decisions than it does for Millennials – with the younger shoppers more likely to buy products and services via social. They are also far hungrier for video-rich content and more responsive to marketing offers on YouTube.

According to our research, significantly more Gen Z shoppers use Instagram compared to Millennials. Twitter and Snapchat are also more frequently used by Gen Z shoppers than Millennials. They are also far more likely to consider the number of likes a brand or service has before they make a purchase.


What tips do you have for retailers for targeting Gen Z audiences?

Though Gen Z shoppers are more digitally savvy and use more social media platforms for their purchasing process, it’s important not to abandon the storefront. The majority of Gen Zs still prefer to shop in stores, and they enjoy any multimedia aspects the store has to offer.

Retailers need to enhance their storefront experiences with digitally connected experiences and give the shoppers new and exciting ways to participate. Walgreens in the US is piloting Google’s Project Tango 3D augmented reality technology to let shoppers locate a particular product, get directions to the correct aisle and earn rewards while in the store, for instance.

As Gen Z is a generation that places far more emphasis on social media, brands and retailers need to boost their video and picture social media content and be ready to transition to upcoming social media channels, for which Gen Z shoppers are usually one step ahead.

Retailers should also be building experiences that their customers will want to share. It will be valuable to engage in a wider ecosystem and collaborate with third-party companies to enhance customer experiences.

For instance, UK grocer Morrisons expanded its platform outreach with internet grocer Ocado and subsequently partnered with Amazon Pantry to deliver groceries to customers. There are hundreds of nimble digital technology start-ups vying to offer product, service and experience innovations to consumers. It is vital for retailers to pay attention to this marketplace in an effort to predict how and where disruption may happen. In many cases, it will come from start-ups selling products as a service, subscription models and advanced personalisation.

Finally, retailers and brands should take advantage of Gen Z’s emphasis on feedback and collect shopper product testimonial videos. These will add credibility to the brands and build trust among their shoppers.


The lines between the two generations are blurred. They are not too different in age, and their habits follow similar patterns. Should brands create separate marketing strategies for each demographic? Can brands create campaigns that should cater successfully to both?

It is important for brands to cater to the needs of both generations with marketing campaigns that focus on each demographic. This is especially the case as the buying power of Gen Z will continue to grow as that generation ages.


Millennial shoppers are still a demographic that retailers are grappling to fully understand, and they represent a large source of income. Is there a risk of neglecting Millennials by shifting focus to Gen Zs too early?

In this day and age the most successful retailers are those that create a highly personalised experience for all of their customers. They identify the customer and tailor an experience that uniquely resonates with the needs of not only that customer’s generation, but also their other demographics, preferences and needs.


How do all three generations (X, Y and Z) differ if we look at all of them in the time when they were under 20? Are they really that different, or just products of their surroundings – impulsive youths after instant gratification, perhaps slightly materialistic and impulsive when it comes to purchase decisions? Are the people different or are the technology and changes in media the only real changes?

The environment in which each of the generations lived when they were 20 was considerably different. These differences have shaped different 20-year-olds across the generations. They have different attitudes, behaviours and needs.

Gen X did not grow up with the types of technology that were available when the latter generations were growing up. While both Gen Y and Gen Z grew up with technology, the types of technology available now to Gen Z is more sophisticated and pervasive across day-to-day lives.

Each of these differences drive different expectations across the generations in terms of the shopping experience they look to retailers and brands to provide.


How can retailers plan for and adapt to these changes? Is the need for stores going to evaporate? Is a mobile/online first retail experience something to prioritise?

Retailers need to devise new and personalised experiences for their in-store shoppers. They can equip customers with intelligent automation to compare and purchase products. For instance, Best Buy is implementing a robotic vending machine dubbed ‘Chloe’ that helps shoppers to access games, movies and other products 24/7.

South Korean megastore Emart directs shoppers to promotion hotspots using its in-store app navigation system, which is made easier to use with smartphone docks affixed to carts. Physical stores will not go away anytime soon. They will just be constantly evolving as retailers discover new ways to enhance their customers’ experiences.



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Image copyright: rido / 123RF Stock Photo


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