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Gen Z Has $829B in Buying Power and Retailers Aren’t Ready for Them

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Sure, many companies may have done the requisite Gen Z training, read the whitepaper on what they want, but many are still missing the mark.

Gen Z, the group of incoming consumers currently between the ages of 13 and 21, is the connected generation. They are spending more than five hours on their phones every day and $829 billion is already being spent on this generation in the U.S. alone.

What’s more, two billion of them will become consumers very quickly, according to Chris Wong, VP of strategy and ecosystem for IBM Global Consumer Industry.

As Wong explained during a session at the NRF Big Show Monday, many brands still haven’t started to think about what’s different with this generation and what they’ll need to start doing differently in order to target them.

IBM surveyed 15,600 Gen Z consumers in 16 countries in an effort to get a little closer to an answer for the question that is currently Gen Z.

“The one takeaway we really found out of talking with companies as we prepared for this study is that they’re really not ready for this generation,” Wong said.

And there won’t be time for brands to sit around figuring it out.

“Gen Z is very low tolerance for things that don’t work,” Wong said. “They will drop you in a heartbeat.”

Some brands—those for whom Gen Z is already their key target—are starting to crack the Gen Z code.

For one, as Abercrombie and Fitch SVO of marketing, e-commerce and corporate development Billy May said, “Gen Z has the attention span of a goldfish…I think the big component is recognition and reaction.”

Brands have to be quick on their toes when it comes to everything—responding to what their young consumer wants, making sure there are no issues or pesky glitches on websites and that the shopper can get what they want whenever and however they want it.

But dismissing Gen Z’s lack of interest in your product as simply owed to their equally lacking attention span, may be a disservice to brands.

“People talk a lot about this generation having a short attention span. That’s exactly what grown-ups say when they don’t understand something,” Mimi Turner, marketing director at The Lad Bible, told Marketing Week in a report last year. “This audience are extreme navigators of superior efficiency. They are machines at knowing what they want. They are highly sophisticated decision makers. They are efficient and marketers and brands need to catch up with that.”

Patrick Duncan, SVP of marketing, e-commerce and distribution for Helzberg Diamonds, which is putting its money behind pulling younger consumers, said Gen Z isn’t wildly different from the Millennial generation (though the problem there is that brands don’t seem to have the Millennial equation solved either).

“A lot of what we see is more of the same from Millennials,” Duncan said. “If they go into one of our stores or online, they don’t really care where it’s coming from, [thinking] ‘I expect to have it the next day and I don’t really care how it happens. You guys figure it out.’”

Relationships with the Gen Z consumer can’t simply be a transaction, Wong explained, because there’s little a brand can learn from them only factoring a transactional relationship.

“It’s like an arms race,” Wong said. “We’re all learning how to personalize and how to be engaged. With this generation, I think it’s potentially more about relationship than it is about transaction and data.”

So what can brands do?

Part of nailing a relationship that will be successful is first figuring out where and how best to reach the Gen Z consumer—apart from on their mobile phones.

According to IBM’s research, 98 percent of the time, the Gen Z consumer still wants to shop in a store and 67 percent of what they ultimately purchase will be in a store.

They are also not watching TV much. Only 44 percent of Gen Z watches TV anymore, so brands investing in ads and branding on that platform may want to rethink their spend.

Abercrombie started tapping Snapchat for its Hollister brand, having the social media platform create a special Hollister California geolens filter that allows users to add a filter to their face with a colorful California backdrop, sunglasses and the Hollister logo bird flying back and forth.

“Instead of drawing the consumer to our site or our app, it’s ‘where are they spending their time and how do we communicate with them?’,” May said.

When Gen Z loves a brand, they will be keen to co-create products and participate more deeply with that brand.

“When they want to engage with a brand, they’re actually very engaging,” Wong said.

Customization has been a hot topic for Helzberg, which has seen the customers’ need for it. The company is investing “heavily” in technology that allows for customization of the product, and shoppers have the ability to personalize certain jewelry pieces online or in store with an associate.

“We are a brand that people want to show off what they bought,” Duncan said. And if Helzberg does it right, that shopper will take to social media and start spreading the brand’s message.

The key, really is to understand how different Gen Z really is. They want transparency, they want brands that are true to their word, their aspirations are different than buying a house and a car like their parents might have wanted to.

Most companies are sitting on scores of data for their target consumers and still doing the status quo, but now’s the time to decipher Gen Z before all the dollars being spent on them are in their own hands.

“Before, it was ‘I’m going to collect as much data on you as I can and in some ways use it against you,’ now it’s ‘how can I use that data to help you?’,” May said.

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