The way people shop has evolved over the years as retail and technology has advanced. Each generation has experienced new concepts, formats and ways of engaging with brands and, according to Alex McCulloch, associate partner at data specialist CACI, Gen Z is shaping online and offline retail concepts like no other.
“They are coming of age now – we define them as those aged 20 and under. This is the first generation to be born into a fully digital world,” he says. “In many ways, Gen Z are like all young people: they value authenticity and experience. But they also demand quality, great consistency, personalisation and relevance. And they expect all this to be met across multiple channels in an instant – before they walk across the threshold. Streamlined and personalised experiences aren’t cutting edge; they’re the cost of entry.”
Retailers are embracing this need for personalised and relevant content – of the hashtags most used by top companies, 70% now contain a brand name – but alongside a strong social game retailers need to deliver an ‘experience’ in their bricks-and-mortar locations. Physical stores are the face of the brand. In an increasingly digital world, physical stores offer the opportunity to provide an experience, an experience that can’t be replicated online.
In short, stores need to be ‘inspiration centres’ that enable Gen Z to learn about what the brands stand for and to determine how the brand resonates with them, says McCulloch.
As for their shopping habits, members of Gen Z are the most likely of any generation to engage solely with catering during a shopping trip, reflecting their desire for experience. And, although they are very frequent shoppers, their retail spend per trip is lower than it is for other age categories.
However, over a year they are worth only 16% less by retail spend than an average consumer and CACI predicts that by 2035 they will account for 21% of all retail spend, second only to millennials.
“Gen Z individuals are becoming increasingly fluid and almost indifferent about their channel of purchase,” McCulloch explains. “We found that 56% of those in Gen Z will ‘showroom’ before buying.
"But it works the other way around too – nearly half of Gen Z researched an item online and then purchased it in a physical store and 98% of Gen Z still use physical stores. The idea that this generation is turning away from the high street is a myth.”
There is, however, notable geographical variation. For example, 69% of Gen Z living in London will ‘showroom’ before buying an item compared with 44% in Scotland. So there is no one-size-fits-all solution.
“Gen Z are a fascinating group who will shape retail for years to come but we should never forget that even among the youngest generations, geography, demographics and affluence have as big an influence on behaviour as age,” says McCulloch. “You need to understand the customer as an individual to engage them.”