Generation Z, born between 1997 and 2015 is the demographic cohort succeeding Millennials and preceding Generation Alpha. Today, Gen Z is more racially and ethnically diverse than any previous generation, and they are on track to be the most well educated generation yet. In a keynote delivered by our Managing Partner, Vince Guzzi, at our 2019 Watt Vision event hosted in Mexico City, he noted that Gen Z are more self-aware, persistent, realistic, innovative, self-reliant, and less frugal. With a spending power of over $140 billion, their sheer size will exert an enormous influence on how brands go to market and how they engage, speak to, and retail to them.
Being true digital natives, the Gen Z consumer will no longer distinguish between online and off-line, putting pressure on brands to respond by seamlessly delivering a series of connected engagements and experiences across multiple touch-points. Watt’s proprietary Pleasure Index shows a meaningful growth in the importance of pleasure drivers as part of a shopper’s decision process with greater emphasis being placed on dynamic & unique experiences that drive destination, and a redefinition of service to cater to the unique needs of this segment. In fact, 65% of Gen Z consumers prefer brick & mortar to online but want unique store experiences.
Data-driven solutions that deliver more personalized experiences and augmented reality (AR) will lead the charge in blurring the lines between the online and offline worlds.
Classified as the “throwback” generation and the future of a global economy, Gen Z consumers are optimistic and driven by personal ambitions. They are smarter with money than Millennials – their practical and fiscally conservative behaviour, and their keenness to earn their own money is making them contributors to the economy at a very young age. As many as 77% of Gen Z consumers are actively engaged in some form of work (part-time, freelance, or earned allowance) to earn their own spending money. Interestingly, they think and act more like Boomers than Millennials.
Amplified by the recent pandemic, a rise in good corporate citizenship will be required to align with Gen Z’s mission to fix problems and make the world a better place, and bring a level of simplicity and wholesomeness back into the world they live in. A key trend noted is Gen Z consumers’ rising interest in thrifting and shopping at secondhand stores –
The Nike Refurbished store is a great example of a brand that is bringing to market a concept that will resonate strongly with this consumer cohort. These stores will feature Like New shoes (worn once or twice), Gently Worn (worn longer, but in great condition), and Cosmetically Flawed (something that might have knicks or snags). Returned items that don’t make the cut are donated through Nike Grind.
In addition, retailers will also need to adapt their product mix to better reflect key consumer trends that will shape the new retailing environment, including the rising interest in locally made, environmentally sustainable and socially conscious products. Socially conscious products, and brands that exhibit socially responsible behaviour during the pandemic, like Burger King encouraging customers to support other quick service restaurants, and fashion brands making and donating masks, will be rewarded.
In order to effectively engage and build loyalty with the Gen Z consumer, retailers and brands need to intuitively understand and deliver on their ever-evolving needs, make them part of the solution, and demonstrate respect and commitment before asking for it. Gen Z will challenge the traditional paradigms of service – they want to be more serviced, less served and it has to be on their terms. In building future brick & mortar stores, retailers will need to understand the architecture of digital to design an ideal shop experience as the Gen Z shopper journey starts online – this is their frame of reference.