Understanding modern retail through the Gen Z filter
Over the past decade, retailers faced the challenge of managing their own digital transformation while simultaneously scrambling to serve the needs of a younger and increasingly online-savvy audience, generally accepted as being digitally native.
Today, brands are additionally tested to plan and accommodate for the increasing buying power of the emerging 11-24 age group of shoppers, colloquially known as ‘Gen Z' or ‘Zoomers'.
Perhaps a more fitting nickname for Gen Z or Zoomers would be ‘Generation Omnichannel', as this is the first genuinely omnichannel generation to both physical and online stores and social media platforms in equal measure.
This group is prepared to shop wherever suits them best and in a more impulsive and immediate way. According to a recent article in Vogue, Zoomers are 56% more likely to have shopped for fashion in-store over the last three months and 38% more likely to have shopped online in the same timeframe.
They are willing to shop across all channels and have an appetite for higher-quality items in an effort to stay on trend with cultural developments. This awareness of cultural trends is also leading to some key generational spending indicators - not to mention that Gen Z consumers are more conscious about the planet and the future. They believe that the generations before them represented overconsumption, capitalism, and materialism, meaning they are more likely to associate themselves (and their wallets) with brands that match their own core values, such as sustainability, environmentalism, and equality.
At the same time, Gen Z has been called the most critical consumer group of all, with a fundamentally different view of shopping and consumption to previous generations. They are the latest to enter the workforce and will have strong purchasing power over the next decade, meaning brands have to earn their loyalty before they become loyal shoppers.
Furthermore, Zoomers' frequency of shopping for new items is being disrupted by the second-hand, preloved, vintage market – a market that Zoomers are 27% more likely to shop in. In Australia, preloved and vintage platforms, such as Depop - Vinted, are arguably slowing the cycle of new purchases and redefining the concept of the customer journey and what it really means to be ‘new'.
Embracing new and all forms of payments
According to PayPal, 22% of Zoomers have used buy-now, pay-later (BNPL) solutions such as Klarna and Afterpay since the start of the pandemic to buy more expensive, higher-quality products. In the same period, 123% more Zoomers have used BNPL than previously, representing the most substantial uptake of any generation – and during April 2021, 33% of Gen Z respondents said they were likely to use BNPL solutions in the future too.
Furthermore, Gen Z has continued to embrace mobile payment options such as mobile apps and e-wallets, including Apple and Android Pay, faster than any other consumer spending group. This expectation of being able to pay now or later, with a device or platform is something that permeates Gen Z spending habits enormously, meaning traditional payment and Point-of-Sale (POS) technologies need to be modernised to offer these different payment options.
A window to the future
The pandemic and the associated rise in online activity grew usage and acceptance of eCommerce amongst consumers, regardless of generational status. If we glance into the future, beyond the Gen Z age group, Generation Alpha and subsequent cohorts will likely prove to be even more digitally savvy. Thus, the cycle of retail reinvention will likely have to start anew in another 20 years or so.
The key to success for brands confronted by this continual sequence of progressiveness is to be agile and nimble enough to introduce different digital and in-store commerce options and also have the capabilities to support these with the native omnichannel capabilities needed to deliver against the demanding expectations of these new generational groups. Gen Z is the emerging cultural and economic powerhouse in today's retail landscape, and the group will continue to drive cultural change and retail spending habits on so many levels over the next two decades.
While the full force of their dollars may not have hit retailers just yet, the race to meet the future expectations of Gen Z consumers is very much underway. The success of brands over the next two decades will not only be established by understanding what, how and from who Zoomers are likely to buy but also on a retailer's abilities to execute frictionless omnichannel experiences.