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The next big global generational shift welcomes digital natives into the marketplace. Demographers predict that sometime in 2019, members of Generation Z will outnumber Millennials. We’ve been discussing the impact of Millennials on retail for some time. But as the trailing generation of Gen Z consumers begins to turn 21, retailers are quickly adapting to the values of this emerging group in ways that will influence how we all shop.
Gen Z consumers differ from their predecessors across a number of traits. They grew up exposed to social media. This younger generation has never known a world without mobile devices. They represent the most ethnically and racially diverse cohort in American history. Research also shows they take a brand’s commitment to social good into consideration when making purchasing decisions.
That commitment to values is one factor that is causing brands to take a hard look at how they market to Gen Z consumers. Consider that teenagers spend more on beauty than apparel, according to a Piper Jaffray survey of more than 6,000 U.S. teens. Their go-to social platform is Snapchat. When considering influencers on social media, they want brands to showcase authentic connections with relatable causes, as opposed to celebrity partnerships based solely on a famous face.
But that doesn’t mean they don’t follow the lead of influencers. To the contrary, social media influencers do what print magazines have done in the past. One example of that digital influence is Walmart’s sponsorship of Ryan’s Toys Reviews. The six-year-old sensation reviews toys on his YouTube channel, racking up billions of views. Ryan’s reviews have drawn 15 million subscribers and soon, he’ll roll out a toy line at the retailer to include slime, stuffed animals, and other popular toys.
Though YouTube is a decidedly digital operation, Gen Z shoppers are strong supporters of brick-and-mortar stores. In a recent ICSC survey, 95 percent of Gen Z consumers had visited a mall in the previous three months. Respondents on average had visited a shopping mall on nearly nine occasions during that period. And the most common categories purchased in physical stores was health and personal care products, followed by apparel and footwear.
The beauty category is one where retailers are making big changes in response to Gen Z preferences. Recently, CVS Pharmacy announced a store-within-a-store concept called BeautyIRL at limited locations. Department stores are also responding to the trend by turning beauty counters into destinations where customers can get recommendations and influencer information on products.
Gen Z shoppers seek individuality and want the opportunity to create highly personalized products. This uniqueness permeates every facet of their life and they expect that personalization to happen both in stores and online.
Gen Z will represent 40 percent of all consumers by 2020. Currently many are brand-averse and frugal. As retailers are evolving to adapt technology and experience they will also have to be mindful that Gen Z may want even more from their shopping experience than any prior generation has ever demanded.