A shared love for the popular TV show Friends and an obsession with technology may seem to unite Gen Z and Millennials; however, the differences between these generational neighbors outweigh the similarities. For instance, while Gen Z jams to Olivia Rodrigo and resonates with Greta Thunberg’s, climate activism, Millennials prefer Justin Bieber’s albums and make personality traits out of Hogwarts houses. Another aspect that sets this hypercognitive generation apart is their buying and spending habits. Although Gen Z may have just entered the global workforce, they are already influencing the future of the shopping and retail industry. With a primary focus on expressing themselves through their retail choices, this generation doesn’t just binge-watch TV shows and buy products prudently; they buy a story!
Members of Gen Z display some unique consumer behaviors resulting from their early exposure to the internet, social networks, and mobile systems. This exposure to technology has produced a generation comfortable with collecting and cross-referencing data sources and integrating virtual and offline experiences.
Gen Z members are born between the late 1990s and mid-2010s, and they make up over 25 percent of the US population. The cohort comes with a staggering 360 billion in disposable income, which is more than double an estimate from 2019. As an increasing number of Americans in their early 20s are working full-time jobs or making money with side hustles, there is no argument that their buying potential will increase significantly over time. However, the challenge is to win over this thrifty generation and get them to buy the products. As the cohort continues to save a lot of their earnings because of the economic uncertainty brought by the pandemic, figuring out ways to court this group is extremely challenging. In this scenario, retailers and brands should focus on innovative methods to understand the buying behaviors of this tech-savvy generation and stay ahead of the competition.
Individuality Over Everything
In the recent past, many industry giants have crumbled under rapidly changing customer habits and expectations. With consumer demographics and technologies changing quickly, some big companies now face increasing pressure to revamp their business operations. In fact, a new PwC survey finds that changing customer behaviors is disrupting the businesses of all sizes across industries. Many companies get themselves flat-footed when successfully delivering their Gen Z consumers’ expectations. They fail to understand the significance of brand authenticity and consumer influence in creating long-term loyalty relationships with Gen Z.
Although the attention spans of Gen Z consumers are short, they are efficient thinkers with higher expectations with regards to the shopping experience. For instance, many Gen Z consumers are willing to pay 10 percent more for sustainable products. These consumers are most likely to make purchase decisions based on values and principles—personal, social, and environmental. Gen Z consumers also look beyond tangible products to find a deeper sense of fulfillment in their purchasing behavior. To achieve this, these consumers try to understand the position of brands on issues such as sustainability, civil rights, animal rights, and more. More importantly, as Gen Z consumers are more technologically savvy than the previous generations, they can easily identify an insincere advertisement campaign. This calls for proactive action plans that help retailers to adapt their strategies to appeal to this growing consumer group.
Technology Roadmap for Retailers
Although Gen Z consumers spend more time on mobile devices, Gen Z craves in-store experiences and uses their phones as part of the research process. Indubitably, for this young generation, a unique merchandise experience is one of the most important reasons to visit the physical store. These customers leverage technology to make such experiences as memorable as possible by documenting them on their digital channels.
A vast majority of Gen Z consumers prefer to shop without the help of an associate. For that reason, retailers must allow them to view realtime inventory, wish lists, purchase history, and promotions right on their phones. However, should the need arise, the retailer should be able to provide the service of an associate to help them visualize and find the right products. Upon making the purchase decision, Gen Z customers expect a fast check-out experience. Retailers can set up various customer loyalty programs to facilitate fast check-out. Setting up point-of-sale devices is the easiest and fastest way to credit the amount—a new solution that accepts the latest payment methods can process queues faster and avoid unnecessary delays.
Retailers can also create additional sales opportunities while Gen Z consumers visit the store. As Gen Z wants to save on shipping costs by picking up online orders in the store, retailers can upsell their products to potential customers. A POS solution can be a lifesaver in these situations as this technology can support omnichannel scenarios such as BOPIS (Buy Online Pick up In-Store). By leveraging technology, retailers can allow customers to schedule deliveries from the warehouse, the supplier, or store-to-store, allowing Gen Z consumers to receive their purchases when and where they want.
Although e-commerce giants, including Amazon, will continue to lead innovation in personalization, smaller retailers can also set new standards. Small and medium-sized retailers can use their company’s digital channels to encourage customers to book in-store services. Companies can leverage mobile applications to present an “in-store companion” feature that enables users to find a store, check the stock, and do more. When customers visit the mobile application, they receive a log-in for the app so that the retailer can input each product that matches the customer’s personal profile.
Retail analytics also play a crucial role in the retail sector, especially in areas such as inventory, supply chain movement, sales, consumer demand, and more. Analytics enable retailers to make critical marketing and procurement decisions. Business owners can use analytics on demand and supply data to maintain the desired procurement level and make mission-critical marketing decisions. More importantly, retail analytics provide companies with detailed customer insights required to run efficient marketing campaigns.
A key question business leaders should consider while revamping their business is: How can AI and voice assistants help them win Gen Z customers? Voice shopping has huge potential when it comes to courting Gen Z customers who wish to perform a business transaction rapidly. Retailers can shape a strategy that matches or exceeds Gen Z customer expectations using AI and voice assistants in the days to come.
Welcoming the Change
There is no argument that marketing and work ethics are converging for consumers around the globe. In this scenario, companies must identify the topics on which they will take clear positions while ensuring that everyone throughout the value chain aligns with the same. For the same reason, companies should give extra care while choosing their marketing agents who represent their brands.
The influence of Gen Z on the economy is becoming more evident, and the search for truth lies at the center of their characteristic behavior and consumption patterns. Technology has provided the new generation of consumers with unprecedented connectivity to influence and make informed decisions. For businesses, this shift will present both challenges and massive opportunities, and the first step in capturing this opportunity is to keep your doors open to welcome the change!
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