How Gen Z is Changing the Retail Industry

Mar 4, 2022 | Blog

The youngest Gen Zers are just approaching their teen years, but the oldest are in their mid 20s. Together, their “direct and indirect spending power reached up to $143 billion” before the pandemic, reports Forbes. It adds that, while many entry-level positions that Gen Zers would have filled have been eliminated during the pandemic, the generation’s spending power is bound to increase, as more of them reach adulthood.

Meanwhile, they are taking on a central role in retail, and shaping the industry’s foreseeable future.

Gen Zs are Less loyal, Require More to Keep Buying from the Same Retailers

Raised to be critical thinkers and action takers, many Gen Zers aren’t loyal to a single brand. “Only 16% shop at a single store for clothing,” for example, reports Accenture. To stick around, they need great experiences, great pricing, product availability, fast shipping, and for the brand to align with their values. But more on values in a bit.

Meanwhile, brands must understand that checking all the boxes now might get them an initial purchase, yet no longer guarantees long time loyalty. Gen Zers are coming of age in the most affluent time, with so many alternatives and new trends showing up on their feeds 24/7, a click of a button away.

They’re also coming of age during “cancel culture,” where making mistakes is public and, sometimes, exposes brands to the unforgiving nature of going viral.

The upside of this is that there’s always an opportunity to expand a brand’s customer base. But to retain these customers, brands must continue innovating – their products, the shopping experience they provide their customers, and the difference they make in the world.

Do Your Values Match Theirs?

One of the biggest consistencies in Gen Z studies over the past several year has been their passion for making the world a better place. They want their jobs to make a difference, they volunteer and drive change in their own families, and they understand the financial impact of who they spend their money with.

Brands can’t just talk the talk to earn that money. In the age of social media transparency and easy access to information, brands must make authentic, consistent steps toward reducing their footprints and increasing diversity, equity and inclusion in both their corporations and the representations they create in their marketing efforts.

Gen Zers Want Higher Quality Goods, But Also Shop Second Hand

Gen Zers know that, in today’s abundant retail world, there’s a brand out there that offers a high quality version of the product they want – and over one in five is willing to pay extra for it, according to Vogue Business. However, interestingly, Vogue Business also points out that over one in four is actually likelier to shop second hand.

Some Gen Zers are financially savvy and looking to save, and others are just entering adulthood and can’t yet afford their preferred high quality goods and shopping habits. That said, it looks like many of their decisions to shop second hand are driven by a greater awareness of the global climate crisis than previous generations, as well as a greater belief that they can do something about it. Brands can, of course, tap into this strong need for sustainability in many aspects of product creation, packaging and shipping.

Gen Zers Like Shopping In-Store, But Only if it Means Getting an Omnichannel, Digital Experience

This might be the biggest surprise about Gen Z. The digital natives, who were born into a mobile, omnichannel environment, where information and satisfaction is merely a few instant clicks away… like to go into brick and mortar stores to do at least some of their shopping.

Yet unlike other generations, going into a brick and mortar store just to pick out an outfit doesn’t make them happy. They’re willing to do it only to be immersed in interactive experiences that are tailored to their specific needs.

They expect digital, technologically advanced experiences, even in stores. They want sales associates who recognize them, who offer the products that matter to them, including those that would emphasize their uniqueness most, and the ability to continue building the bond with the brand even when they leave the store.

Gen Zers Prefer Influencer Marketing for Product Recommendations

Generations Zs spend a lot of time on social media. They’re there for several hours every day, discovering brands and trends, and following everyday folks turning into influencers. They’re critical thinkers, and some don’t trust influencers at all, but if an influencer does win their trust, they don’t necessarily scroll away when she or he shares a sponsored post. When the trust is there, the sponsored post can feel customized and authentic, not a generic, polished ad like other generations had to settle for. More importantly, they assume that the influencer has done her or his research, and will tell them the truth. Thus becoming their trusted source for product recommendations.

That’s because influencers, while sometimes showcasing perfectly-looking highlight reels of their lives on social media, often share their raw emotions, challenges and failures as well. It feels like there’s a personal relationship between the influencer and the audience member, like the viewer knows the influencer on a deeper level than they might know people in their real lives.

Therefore, they are likely to purchase products from sponsored posts and videos, even though they know they’re basically watching an ad.

Consistently Win Gen Zers’ Hearts to Create Retail Magic

As Gen Zers’ buying power keeps growing, retailers must grow with it. This isn’t the generation to wow once and enjoy the ROI forever. This is a generation that’s looking for constant innovation and customization, be it in your stores or in your marketing.

It’s a generation that’s looking to make smart purchase decisions. They want to save money, but are simultaneously willing to pay extra for high quality products… especially when their purchase makes a bigger difference – as in, when it puts money in the hands of brands that act on Gen Zers’ values, and use that money to drive positive change in the world.

They won’t keep buying from you just because they bought from you before, but when you consistently show up to serve their needs and delight them, they’ll consciously choose your brand over and over again.

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