Now that Millennials have reached maturity as consumers, there’s a new generation on the block. Born after 1997, and with digital in their blood, Gen Z is coming of age with bigger, bolder expectations.
Research from Accenture, which surveyed almost 10,000 consumers worldwide (including 750 from the U.S.), indicates that Gen Z has a unique set of behaviors and quirks. Our findings show now is the time for retailers to redesign around these behaviors, as Gen Z grows in influence.
The starting point is for retailers to define a clear purpose: What is the role they will play in the lives of Gen Zs, both practically and emotionally? In a world in which they can get any item in any way in any geography, a retailer’s purpose can no longer merely be to get products to customers. Instead, they must grapple with their own unique reason for being.
The good news is that technology provides retailers with unprecedented information about their customers. Data analytics and AI help them become more consumer-centric than ever before--more understanding, more responsive, more anticipatory. Yet brands are also aware that younger generations do not stay still. They are increasingly well-informed and less brand-loyal.
Beyond defining the exact role they will play in the lives of Gen Z, we believe there are seven ways for retailers to attract their attention and loyalties.
1. Go all-out on social media: Social media is more important to the Gen Z shopper than Millennial shoppers. More than seven in 10 in the U.S. are interested in purchasing directly from social media. The implication is clear: Building a strong brand presence and carrying out regular creative campaigns on Instagram, Snapchat, and YouTube will pay dividends.
Leading brands are already prioritizing their visual impact on social media, with videos and pictures becoming more important than text for younger shoppers. It is also vital to understand where to find these consumers. Almost twice as many Gen Z shoppers than Millennials turn to YouTube before making a purchase, and these younger consumers are also more likely to be regular users of Instagram and Snapchat.
2. Innovate with new ways to shop: Three-quarters of Gen Z shoppers in the U.S. (77%) are interested in curated subscription-type offers for fashion, while significant numbers would shift more than half of their purchases to retailers that can offer automatic replenishment. Another innovation that appeals to those under 20 is voice-activated ordering; 45% are willing to try this. These consumers value convenience and speed and are comfortable with change, so it pays to be bold, think big, and be unafraid to take the lead on pushing boundaries.
3. Embrace feedback and influencers: More than any previous generation, Gen Z consumers consult the views of others before buying. They make their purchases on the basis of recommendations from friends, celebrities, and other social media users. This is why many retailers are making the most of younger consumers’ desire to consult their peers--for example, by collecting product testimonial videos to post on YouTube or forming online communities of influencers. They are also developing sophisticated social listening tools that tell them what potential influencers are saying about brands.
4. Enable spontaneity: Gen Z consumers are impulsive. They are more likely than Millennials to make a purchase simply because they feel like buying something or because they spotted something they liked. And when they see something they want, they want it fast. This generation wants speedy fulfillment and is prepared to pay for it, with 68% willing to pay more than $5 for one-hour deliveries. This impulsiveness represents an opportunity for retailers to add value by investing in their fulfillment services.
5. Reboot the physical store: The potential of digital is seductive, but retailers should not write off their brick-and-mortar stores; 77% of Gen Z shoppers prefer to make purchases in store. Leading retailers recognize that digital and physical shopping play complementary roles, so they are reimagining their stores to focus on experiences that extend their brands. They might be providing a more interactive, personalized experience or giving sales staff new digital tools to enhance customer participation.
6. Show you mean business: The vast majority of Gen Z are unattached to particular brands. In the U.S., just 5% visit a single store for fashion, and only 26% frequent one particular health and beauty retailer--significantly lower than the figures for Millennials. But as the younger consumers mature, they are likely to form allegiances and will lean toward those brands that “get” them.
7. Adapt to different markets: Leading retailers recognize that no generation is exactly the same the world over, so they vary their approaches according to local attitudes and preferences. In Sweden, shoppers are almost twice as likely to buy direct from social media as the global average, while in Germany the figure is less than half the global average. In Australia, they are very interested in renting clothes, while shoppers in Canada are less enthusiastic. In China, shoppers are more likely than elsewhere to shop online and use social media. As with all retail, a nuanced approach is necessary.
Retailers have spent a good deal of time getting to grips with the behaviors and expectations of Millennials, but a new generation is here and is making its preferences felt. For retailers that can build on their understanding of the way digitally minded consumers operate, the Gen Z opportunity is ripe for the taking.