If retailers thought millennials were a tech-driven, hard-to-understand generation, they might be in for a surprise with their kids. Generation Z already numbers 2.5 billion across the globe with 60 million in the United States alone. And while many aren’t old enough to drive, these young consumers have access to $44 billion in buying power with a high ratio of discretionary spending.
Born into the world of connectivity as “digital natives,” Gen Z already has the highest digital expectations. Superior customer service is a bare minimum, many expect same-day shipping, and any retailer that doesn’t offer an exceptional mobile experience is seen as irrelevant. Despite their digital preferences, members of Gen Z are also more traditional shoppers, embracing the in-store experience as a form of not only education but entertainment.
To be successful in coming years, retailers must start appealing to this generation now by refining the in-store experience, optimizing mobile and social media strategies and creating a digitally connected personalized experience across all channels. Here are six ways in which Gen Z can be radically different than consumers from other generations.
They were born into the digital world
Gen Z — those born in 1995 or later — is the first generation of “digital natives” to grow up in the world of the internet, digital media and devices. Most don’t understand what the pre-internet era was like, says Lauren Aponte, editorial coordinator at youth marketing agency Ypulse Inc. Technology and connectivity have always shaped their attitudes, expectations and experiences in everything from how they learn and develop to how they consume media and shop.
“For millennials [and other generations], these things came up later in life, but Gen Z grew up only knowing technology, the internet and social media, so they had different upbringings,” Aponte says.
Empowered by information, product reviews and high expectations for customer service, most have become very smart consumers at a young age, Aponte says. According to the NRF report “Uniquely Gen Z,” the generation has such high expectations for technology that 60 percent wouldn’t even use an app or website that is slow to load or hard to navigate. And while millennials demand next-day delivery, Gen Z has moved that expectation to same-day delivery. A report by Accenture found nearly 60 percent of Gen Z respondents said they’d pay $5 extra for one-hour deliveries.
“I don’t know if it’s higher expectations. They just have different expectations because for them, it has always been fast,” says Jason Dorsey, millennial expert and president of the Center for Generational Kinetics. “They don’t understand anything else.”
Not surprisingly, Gen Z is driving tech further and is far more likely to experiment with new services that make shopping easier and faster. Accenture found that 73 percent are ready to try voice-activated ordering, while 71 percent are interested in automatic replenishment programs. Many already express a high rate of interest in things like Amazon’s Alexa.
They enjoy the bricks-and-mortar experience
Although Gen Z prefers to do most things digitally, they still enjoy the in-store experience, even more so than other generations. According to NRF, more than 98 percent still prefer to make purchases in bricks-and-mortar stores. That could partly be influenced by the fact that many don’t have as much access to their own credit cards and online shopping, Aponte says.
But unlike other generations that may quickly visit a store for instant fulfillment or to better learn about products, Gen Z actively pursues the store experience, Aponte says. According to the 2017 Generation Z Shopper Report by Euclid Analytics, 28 percent visit the store to engage store associates, the highest number of any generation.
In some ways they are “more traditional shoppers than millennials,” says Katherine Cullen, director of retail and consumer insights for NRF. Yet their love and embracement of leading technologies have also made them natural-born omnichannel consumers.
“They are killing the idea that online and offline are separate,” Cullen says. “They’re really intertwining the digital and physical worlds and balancing digital experience with what they expect in the physical environment.”
While Generation Z prefers paying in cash, analysts believe their strong connection to mobile devices and digital upbringing will make them the generation that finally breaks ground on mobile pay.
Despite the perception that kids are no longer interested in malls, they’re just as relevant as they were for teens in previous generations. A survey by PwC found 60 percent of Gen Z prefers shopping in malls as opposed to outlets or downtown stores. One interesting note is that Gen Z visit malls more often with their parents and less at their own will; many are driving at a later age than previous generations as many states have moved the unrestricted licensing age to 17 or 18.
“They’re relying on their parents or other forms of transportation at a later age, and that can have an impact on shopping trends and when and where they shop,” Dorsey says.
Mobile is everything
If there’s one stereotype that Gen Z lives up to, it’s that they’re glued to their mobile devices. While millennials might have not have had their first phone until their 20s, the average age of owning a first smartphone in 2016 was age 10, according to Tech Crunch. Most of this generation spent their formative years learning about the world, interacting with it and socializing through mobile devices. Nearly three-quarters of Gen Z in the NRF survey said their favorite free-time pursuit is to spend time online. Of those, 75 percent said mobile was their primary device, one on which they spend an average of five hours per day.
Despite their digital preferences, members of Generation Z are also more traditional shoppers, embracing the in-store experience as a form of not only education but entertainment.
Unlike millennials, who may have grown up learning about toys in catalogs and through television commercials, Gen Z’s entire perception of and interaction with retail has been primarily through a mobile device. “They’ve never known anything other than going [on their phone]to see what the trends are and using various links to go ahead and buy,” Dorsey says.
Gen Z is also drastically different in the media they consume on their phones and how they learn about brands. They’re less likely to be swayed by traditional advertising or celebrity endorsements and more by bloggers and their own peers, Aponte says. Instead of searching the web or taking the lead from traditional media, most are likely to start their search on style and products at YouTube. A report by FullScreen found 55 percent of the 18-24 demographic is more likely to trust influencers, compared with only 36 percent of the 25-34 demographic.
“Gen Z is growing up with the social media influencers and they actually see these people as their friends,” Aponte says. “They see them as someone they can relate to and trust.”
Through their compulsive use of mobile, Gen Z is also “always on” in an environment that has little difference between online and offline channels as other generations might. Most expect to move seamlessly between the digital and physical world with mobile devices constantly supplementing and augmenting the physical experience. “I believe Gen Z is going to be the new normal of retail and frankly commerce eventually, but right now we’re just starting to see the inklings of how different they are,” Dorsey says.
Because Gen Z came of age in the wake of the great recession, most were groomed by their parents with a sense of economic caution about the future, Dorsey says. It’s driving many of them to be more conservative about debt and more pragmatic in their spending.
Generation Z is driving tech further and are far more likely to experiment with new services that make shopping easier and faster.
While they’ll occasionally put out money for premiums brands, it’s when those brands offer durability and longevity, not because it’s cool. “Gen Z is intentionally choosing not to buy brands with logos and pay premium prices for everyday items. Some would rather get things that were not name brand, or even from thrift stores and get more utility and value for their money,” Dorsey says.
With tapered expectations about their future and earning potential in traditional jobs, Gen Z has also grown up with entrepreneurial ideals and aspirations. Even at a young age, many are starting their own YouTube channels to generate income or starting their own online companies. A study by the Center for Generational Kinetics found that 77 percent of those ages 14-21 are already earning their own money, many through entrepreneurial activities.
“They are very entrepreneurial and have grown up with the idea that you can start your own business,” Cullen says. “They’re very resourceful.”
They’ll likely tip the scale on mobile payment adoption
While Gen Z currently prefers paying in cash, analysts believe their strong connection to mobile devices and digital upbringing will make them the generation that finally breaks ground on mobile payment. It might already be starting to happen as more Gen Zers get bank accounts and start spending their own money.
“I think they will be the first generation where digital payment is truly not only normal, but expected,” Dorsey says.
An Accenture study found that nearly 70 percent of Gen Z is interesting in making payments via social media. Mobile payments are not only being driven by convenience but by the fact that their mobile devices are their primary connection to the world. A report by Juniper Research found the number of people expected to use mobile wallets for payments or money transfers is expected to grow by 30 percent by next year.
They want to be part of the personalization
Nearly all generations now expect a level of personalization in retail, but unlike millennials who want brands to make them feel special, Gen Z wants to be a part of creating that special connection, Cullen says. Many enjoy “co-creating” with brands by uploading their own reviews and being a part of the review process through social media.
“They want to participate in marketing campaigns and have insight into products you’re developing,” Cullen says. “They want to be a part of the process, rather than just seeing it at the end.”
Euclid found that 26 percent of Gen Z shoppers expect a more personalized experience based on their shopping habits and preferences, the most of any generation. And while older generations may have used apps and retailer websites for reviews, Gen Z is far more immersed in social media to supplement their shopping experience: 44 percent of Gen Z shoppers use Snapchat while shopping the store, compared with only 16 percent of millennials and 5 percent of Gen X; 45 percent rely on Instagram to find cool new products, while 40 percent rely on Facebook.
“Retailers should reach out to Generation Z at this early stage to introduce their brands and forge enduring relationships,” says Brent Franson, CEO of Euclid Analytics.
Craig Guillot is based in New Orleans and writes about retail, real estate, business and personal finance. Read more of his work at www.craigdguillot.com.