With each new generation comes an onslaught of commentary on why the newbies are lazier, more tech-obsessed and ego-centric than the previous. Even though the oldest Millennials turn 36-years-old this year, analysts and journalists are still dissecting the Millennial employee, the Millennial parent and the Millennial consumer. However, an even larger generation, Gen Z, is on the heels of Millennials, introducing a host of new quirks and buying habits for brands and retailers to woo and accommodate.
The U.S. Census Bureau reports that Gen Z, or 6-to-21-year-olds born between 1996 and 2010, make up 25 percent of the U.S. population, more than any other living generation. The global Gen Z population is set to reach 2.6 billion by 2020.
Gen Z, also known as the Zeds, Bubble Wrap Kids and the New Millennials, has never “dialed up” to go online or used a hand-held map to navigate. They likely never rented a VHS from Blockbuster or spoke over a pay phone. More importantly to retail, Gen Z was born into a new frugal consumer mindset that took shape in the aftermath of the Great Recession, where experiences and connections—in-person and digitally—are more valuable than buying stuff.
The nice generation
Raised by Gen X and Millennial parents, which were arguably the most affected by the low wages and job loss as the result of the 2007 recession, Gen Z is naturally conservative with their spending. “It’s a kind of behavior that you’re raised with and sticks with you, unless they become very wealthy,” said Nancy Nessel, a Gen Z marketing consultant.
With this in mind, Gen Z is sensitive about who can and cannot afford something within their friend group. Therefore, they prefer to buy items later with their parents in an effort to avoid making purchases in front of friends, according to HRC Retail Advisory President Farla Efros. On average, Gen Z’s online checkout cart for footwear is $74.10, or 12.2% less than older generations’ checkout carts, according to analytics company Content Square.
Gen Z’s frugalness doesn’t bode well for retail and it places pressure on brands and retailers to stand out by tapping into their interests and by sharing a positive message. “Gen Z is even more socially conscious than Millennials. They are all-inclusive and they really don’t have any boundaries—their theme is no boundaries,” Nessel added.
There’s little doubt that the generation’s philanthropic interests influence their purchases. New York City-based marketing firm Inflexion Interactive said Gen Z is more likely to award brands with loyalty if the company is “transparent and shows it cares as much about their passions and issues as they do.” A study by cloud-based customer intelligence platform, Vision Critical, found that 70 percent of Gen Z said it is important for products to align with their beliefs. Meanwhile, NRF data shows that 45 percent of Gen Zers agrees that they choose brands that are eco-friendly and socially responsible.
“This generation wants you to realize that cause-marketing has become so prolific that they just assume that when they buy anything, it’s associated with moving the needle on something,” said David Stillman, author of Gen Z @ Work.
Stillman urges brands to make a conscientious effort to build goodness into their brand. “Just doing ‘something’ doesn’t wow them anymore,” he said. A donation or temporary initiatives no longer cuts it. After all, Gen Z can sniff out a half-hearted marketing gimmick faster than anyone. Gen Z were some of the most vocal critics in the 2017 Pepsi advertisement fiasco featuring Kendall Jenner—a celebrity Gen Z follows closely across social media.
Stillman praised Minnetonka for developing an authentic give-back program. The footwear brand launched Mocs with Meaning in 2015, a collection of footwear made in partnership with Me to We, a foundation dedicated to teaching women in Kenya hand beading techniques. Minnetonka works with the foundation to help local economies by employing women to hand bead shoes. “[Consumers] know when they buy a pair of shoes they are really helping to employ a woman in Kenya. That resonates with them,” Stillman said.
Online shopping continues to increase. According to a 2015 study conducted by Pew Research Center, roughly 1 in 10 Americans are online shoppers, with 15 percent buying online on a weekly basis. However, NRF says 98 percent of Gen Z shop in-store, with 67 percent of Gen Z shoppers saying they do most of the spending in traditional channels.
“Gen Z typically still prefer the brick-and-mortar experience versus shopping online because they value the personal search for products,” said Hallie Spradlin, Fashion Snoops accessories editor. “They like for their shopping experiences to be an event that they can share with friends, and tend to shop at fast fashion stores like H&M and Urban Outfitters that have wide product offerings that feel new and on trend.”
Despite their fondness for fast fashion, the generation also values quality. According to NRF, 52 percent of Gen Z consumers will transfer loyalty from one brand to another if the brand’s quality is not up to par. “Gen Z is smart, and pays attention to detail,” said Sari Ratsula, BC Footwear president.
BC Footwear keys into the Gen Z market with their Halo collection that retails for $70-$80. “We put a lot of effort into each one of our shoes. [Each] has something that makes it special, from an extra layer of padding, or making sure it’s just the right shade of color,” Ratsula said.
Gen Z’s fondness for shopping in traditional stores will likely change as more of the population gain access to credit cards. And while the generation might prefer showing face at retail stores, Gen Z remains one of the most technologically immersed generations. The NRF found that 74 percent of Gen Zers spend their free time online, with 25 percent online five hours or more each day.
According to Efros, wifi remains a factor in drawing Gen Z to malls and stores. The generation craves social approval, and oftentimes asks friends and followers alike to give them the green light prior to purchasing an item. According to an HRC Retail Advisory study, more than 90 percent of Gen Z surveyed emphasized the importance of a strong wifi signal during a shopping experience.
“I think this is a generation that lives in a digital world. This is a generation where the lines between physical and digital have been eliminated. [Gen Z] likes experiences that incorporate both,” Stillman said, adding, “Logging onto your store or walking into your store should feel the same.”
On the go
Gen Z consumers have abandoned traditional desktop computers in favor of smartphones. Data from shopper insight experts, Shoppercentric, reveals that 96 percent of Gen Z own a smartphone. The surge of smartphone ownership is reflected in e-commerce sales. The U.S. Census Bureau reported that e-commerce sales increased 4.1% to $105.7 billion in the first quarter of 2017.
“It’s no surprise that we continue to see mobile use on the rise. We believe our younger consumers, particularly Gen Z, are influencing this trend,” said Keds President Gillian Meek. “Gen Z has been raised in the era of smartphones and they are used to having the world at their fingertips.”
Social media is a contributor to Gen Z’s preference for mobile and represents an opportunity for brands to draw in a younger clientele. Keds uses social media to drive Gen Z consumers to its e-commerce website. The brand features a scrolling photo feed on its site with images of real consumers wearing the brand. Meanwhile, each image links to the shoe’s e-commerce page.
As social platforms integrate shopping through organic and paid features like Instagram product tags and Facebook Collection ads, Meek says consumers are being trained to interact with shopping cues. “As leaders in content consumption, it is no surprise that Gen Z is contributing to this trend in a big way and driving purchase conversion through social media,” she said.
Gen Z thrives on content, but a brand’s messages need to be short and direct to be effective. A Content Square study revealed that if a brand can’t reach Generation Z in less than five seconds, it can’t reach them at all, while a HRC Retail Advisory study showed that Gen Z’s attention span is a measly seven seconds.
More than half of Keds’ social media audience is Gen Z. To retain their attention, Meeks says the company is focused on creating micro content which is optimized for Gen Z’s short attention span. “Content such as GIFs are easily digestible but still have the ability to story tell,” she said.
Having it all
Gen Z knows what they want, and now it’s up to retailers to rise to the occasion. “They’re curators,” Nessel said, adding, that Gen Z won’t settle for anything less than quality product from a brand that shares their values, from a retailer that creates unique experience.
From their conservative spending to proclivity for face-to-face communication, Gen Z sets retailers up for a long, tenuous relationship that can be sweet if brands make sure to hit all the generation’s qualifications.
When asked how retailers and brands can attract Gen Z, Nessel said “by representing all the values that Gen Z embraces like having no boundaries, being all inclusive.” She added, “I think brands and stores are going to have to deliver though, and that’s going to be a challenge.”