Gen Z are set to becoming one of the biggest disruptive forces in retail over the next 5 years, and by 2020 will be the largest group of consumers worldwide. As digital natives their demands and expectations for what a store and brand should be are very different from any of their generational predecessors. For this revolutionary set, it is time to throw out the rulebook. In this report we discuss what they demand from brands/store experiences and how retailers can use these insights to future proof their business models.
1. Instant gratification is the new norm
The Millennial generation set the tone with their need for ever-increasing speed, accessibility and more convenient formats of delivery. Gen Z is taking this trend of instant gratification to a new level, demanding that every stage of the buying process fits around their lifestyles, not the other way around.
Brands and retailers are already adapting their operations and offer to accommodate this new norm. Amazon in particular has reinvented the meaning of delivery with their delivery service Prime Now. Available for Amazon Prime members only, the service guarantees the delivery of your product within 2 hours of purchase. Whilst currently only available in selected cities, Amazon is looking to roll the concept out worldwide, and is experimenting with other technologies such as the use of Drones and self driving delivery vehicles.
For brands it is important to realise that whilst Generation Z can be more demanding in what they expect from brands, they will more than make up for in brand loyalty.
2. Communities vs stores
For this new generation identity, beliefs/ values and the way the world perceives them are all key drivers in the way they interact with brands. Gen Z customers love to grow allegiances with certain brands and stores that they feel reflect their values and identity.
One way we are seeing brands attempt to get Gen Z’ers to ‘pledge their allegiance’ to them is through transforming the brands physical presence from stores into community spaces. One brand that has done this incredibly well is Supreme, Gen Z favourite/ cult skate brand from New York has built an almost cult like following, generated through its online platform and stores. The brand has created such a community around it, the company has a devoted community website, as well as a Reddit feed where you can learn everything about the brand, interact with other fans from around the world, and find out when the latest drops and restocks at their local stores. The stores are used just as much as hangout spaces for local skaters and fans of the brand as they are for selling products. The LA store has its own skate bowl, which is so exclusive that only pro skaters and VIP’s/ friends and family of the brand can use it. Supreme has built desire for its brand around its air of extreme exclusivity, close ties to skate culture and anti-establishmentarianism. This renegade, highly exclusive club has deemed irresistible for many Gen Z customers and has propelled the brand to success over the past few years.
3. Transformation and Self-Transcendence
For many Gen Z customers, perceptions of value are shifting. What Millennials, Gen X and Baby Boomers consider to be the most fundamental elements of value are now being replaced. For this up and coming set, self-transcendence, self-actualisation and affiliation/ belonging are key metrics of value. For Gen Z brands nowadays need to provide more than just functional and emotional value, they need to provide social value that will help them to become better.
4. Seamless customer service through personalised user experience
As well as growing up in a world where technology is the norm, Gen Z also grew up in a world of data. The concept of Big Data originates back in 1926, but went mainstream in 1999 after the concept was explored in a publication entitled ‘Visually Exploring Gigabyte Datasets in Real Time’ by the Association for Computing Machinery (2 years after the launch of Google Search.) The proliferation of Big Data and increasingly sophisticated consumer targeting methods has meant Gen Z have grown up in a world where being targeted and having customer experiences tailored to their needs and profile are the norm. The majority of Gen Z will not engage with generic messaging and communications, and as such it is up to brands to tailor their communications and messaging using technology.
US premium fashion brand Revolve have embraced the use of technology in driving their customer experience, launching their first showroom in LA that is fully customised to each VIP consumers’ needs thanks to insights from their own big data. The 3,500sq ft space is invitation only, ranging from the retailors top customers, fashion stylists and social media influencers. Each VIP gets a 3-4 hour appointment, in which the space is merchandised based off data that takes into consideration insights from purchase histories and other behaviours.)
5. Shaking up the customer journey
The buying process of Gen Z is very different to that of previous generations. The customer buying journey is elongated, for a Gen Z to buy something it has undergone a rigourous process. Starting off with the initial idea – researching inspiration through discovery – then gaining validation for purchase– through to justifying completion of purchase – then actively sharing ownership.
To adapt to this change in buying patterns, brands now have to be very open and honest about their supply chain, who they are and why buying from them will generate better customer value than their competitors. Any hint of a bad supply chain or unethical manufacturing methods will get picked up by the Gen Z research- buying process. Everlane are a clothing brand from San Francisco that centre their brand around ‘Radical Transparency.’ Their core values are “Know your factories. Know your costs. Always ask why.” This approach to business appeals to Gen Z as it aligns to their consumer savvy nature, need for transparency and ethically minded brands and breaking the status quo.
6. They are fans of bricks and mortar
Bricks and mortar is making a comeback with Gen Z. A study released this earlier this year by IBM and the National Retail Federation finds that nearly 98% of gen Z respondents prefer to shop in-store rather than online. The organisations surveyed more than 15,000 consumers aged 13-21 from 16 countries.
Brands that use Bricks and mortar to express their brand values, engage with their community and provide its customers with ways in which to better themselves will find success with Gen Z. What we see as stores now are being changed by the needs and aspirations of Gen Z, to the point where in 5 years time, brands may not even use stores as a channel for selling product. Many brands such as Apple, Google and Missguided are converting their retail stores into brand-centric spaces that are as much about selling the brand as they are selling product. This feeds back into the Gen Z buying process, where a lot more emphasis is placed on brand discovery and sharing, rather than purchasing.
These are just a few key areas in which this new generation will alter the face of retail and brand over the next decade.To stay the same is to go backwards, and Gen Z only recognise and connect with brands who are interested in progress, both for themselves and the world around them. As brands and businesses it is up to us to listen to this vocal, value-orientated set and evolve our concepts and business models to align with their functional, emotional and social needs.
If you are looking to throw out that retail rulebook, send us an email or give us a call and we’d be glad to help future-proof your business.