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What: Generation Z shoppers are not easy to win over and have a long list of demands for retailers and brands.

Why it is important: Gen Zers are the influencers that can impact the buying decisions of the generations before them. Retailers need to constantly understand and adapt to the needs of younger generations to stay relevant.

Introduction: Generation Z shoppers are a completely new beast for the retail industry to market and capture. They are digital natives that have little patience for errors and value their personal brand above all else. Although they can be tough to appeal to, they are easily won over through loyalty programs and perks. Taking the right steps to impress these young shoppers will be vital for brands and retailers to stay relevant.

Meet Generation Z

Move over Millennials, retailers and brands are setting their sights towards a new buyer persona: Gen Z shoppers. People labeled as Gen Z were born from 1996 and after. While these shoppers are still young, they are known as the “influencers” which means they have an impact on what Millennials and Gen Xers buy. This does not mean that Millennials are irrelevant, but rather Gen Z can be leveraged as trend setters. Before the pandemic, Forbes reported that Generation Z had a purchasing power of USD 143 billion.

IBM and NRF conducted a survey of 15,600 Gen Zers from 16 countries examining their shopping habits and values. Some trends that Gen Zers expect from retailers are accurate inventory information, value for their money, a wide assortment of choices, innovation and technology that enhance encounters, and individualized shopping experiences.

As seen in Figure 1 below, choice, availability, convenience and value have major impacts on where Gen Zers shop. While GenZ does not practice brand loyalty just yet, research suggests that as they get older they will start to become more loyal, so brands need to try and make a lasting impression while they are in this discovery stage.

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Surprisingly, Gen Zers prefer to shop in the physical store compared to online. This does not mean that they don’t also use digital shopping channels, but they expect unique and personalized experiences online and in stores through the perfect marriage of digital and physical channels. TX Youth Energy Centre in Shanghai creates the ultimate experience by combining fashion, street culture, and clubbing under a single roof to “become a cultural landmark for youth.”

Reaching Gen Z on social platforms

Connecting with Gen Z on social media allows brands to interact directly with these young consumers while also capturing key data points about their preferences. These data points can then be leveraged to suggest personalized and unique product suggestions to Gen Z shoppers, which they also see as an important service that brands should offer.

According to the GlobalWebIndex, people from the ages of 16 to 24 spend an average of seven hours per day online with three hours dedicated exclusively to social media channels. Classic social media platforms like Twitter, Snapchat, and Facebook have seen reduced traffic as more popular platforms like TikTok or online gaming platforms like Fortnite grow in popularity. This is another reason brands will need to constantly evolve to stay current with what is important and trending with these younger shoppers.

Gen Z has completely reinvented social media marketing and brands need to adapt and reconsider the platforms that are being used to reach younger audiences. Falabella has launched Falabella Play, a new multiplatform channel with interviews, music, and live broadcasts. The channel is transmitted on YouTube, TikTok, Instagram, Facebook, and Twitch to be able to reach their younger community of shoppers. Falabella Play has featured interviews with influencers and music artists, unboxings of products, and offers fashion trend videos.

Social media has become a place where e-commerce, entertainment, and social are fusing into one thanks to Gen Zers. Poshmark recently teamed up with Snapchat to offer Poshmark Mini, a social shopping experience in the app where shoppers can browse curated products without leaving the app, in hopes to introduce the resale platform to the Gen Z audience. This is a great example of a retailer meeting Gen Z shoppers in the formats they are using on a daily basis.

A Gen Z approved strategy

Gen Zers could be the secret to keeping physical stores relevant in this growing digital and omnichannel age. According to a survey conducted by A.T. Kearney, Gen Z considers shopping in stores as “retail therapy.” But in order to give this generation with high expectations and short attention spans what they expect, department stores need to consider communication methods, service offerings, and rewards carefully.

Communication needs to be authentic, concise, and include up-to-date lingo that Gen Zers respond well to. Social media and digital platforms should be a key area to target this consumer group to meet them on the channels that they actively use daily, with options to shop directly through these channels. Being transparent as possible around sustainability and other initiatives will also help Gen Zers feel more comfortable supporting a brand. For example, H&M has completely revamped their inclusion and diversity statements and promises “ to share [their] progress and achievements, as well as the challenges ahead.”

Service offerings like free shipping go a long way with Gen Zers as they search for value. Retailers need to harness the power of data collected through various channels to be able to propose unique and personalized products to Gen Z shoppers. Any technology that is adopted needs to be intentional and must enhance the shopping experience, otherwise Gen Zers will have no patience for it. Many retailers like Macy’s, Gap, and Neiman Marcus are offering flexibility through Buy Now, Pay Later payment services which attract younger customers. While technology is a place to pique Gen Z’s interests, physical stores should be prioritized as a place where they can enjoy picture worthy experiences.

Rewards are very important to Gen Z shoppers. As they value individuality, loyalty programs that offer curated freebies, make suggestions based on past purchases and searches, and remember their birthdays are sure to keep these shoppers coming back for more. H&M’s Membership Program offers customers points for each dollar spent, a welcome gift for signing up, exclusive discounts, free online returns, insider shopping events, and birthday offers. This loyalty program is a perfect blend of transactional benefits (coupons) and community-driven experiences.

Tactics to capture and retain Gen Z buyers

Generation Z grew up in an age of rapid improvement. They are digital natives that have a growing knowledge about data and how algorithms work on targeted campaigns, making them an even harder target to catch. Retailers and brands must take the right approach when coming after these shoppers to ensure that messaging is clear and authentic while also creating a personalized and unique experience across all channels. Understanding this generation’s influence on the consumer market and implementing a marketing strategy with them in mind is vital to survival in this digital and omnichannel age.

As Generation Z continues shuffling through trends, brands and retailers should keep a few things in mind. It is important to stay in touch with the younger generation and understand how to be able to reach them whether that be pertaining to channels they use or issues they care about. Agility and understanding is key to ensure marketing efforts are not lost. But just as Gen Zers value authenticity, it is important for brands to remain true to their missions and values and not sacrifice these things for the sake of relevance. As Generation Z starts to enter the workforce, their spending power will only increase with time, but understanding how your brand can uniquely capture some of their wallet share is important before investing in new tactics and channels.

Credits: IADS (Mary Jane Shea)