The Next 10 Years: How Can Retailers Secure Gen Z’s Loyalty?

Article by Alyssa Jackson

Instagram influencers. Artificial intelligence. Gender fluidity. The #MeToo movement. Generation Z was born between 1995-2004 and currently represents the largest demographic in the world – the oldest are entering the workforce, while the youngest are completing primary school. Between the ages of 16 – 22, they are highly educated digital natives that compose 33% of the global population, with 2.5 billion members worldwide (Gartner, 2018). Together, they represent $44 billion in direct buying power, and will compose 40% of the global consumer market by 2020 (Adweek, 2017). This diverse, self-aware, and ambitious generation values personalisation and individualisation in its search for purpose and deeper meaning. Within the retail sector, it is drawn to immersive and unique experiences. However, accustomed to immediate gratification, Gen Z will walk away if stores don’t meet their demanding expectations. How can retailers attract and retain the loyalty of this critical consumer group? 

            More than anything, Gen Z values accessibility and convenience. Growing up in a Google saturated world where the answer to any question is available in 0.3 seconds, they expect the majority of their needs to be met according to this immediate gratification framework. As a result, they have little patience for delays due to a lack of innovation and technology integration. Last year, IBM conducted a global survey of 15,600 Generation Z members between the ages of 13-21 from six different continents. Their results revealed that 49% valued the ability to find what they needed quickly, 41% valued access to the best deals, 36% valued speedy shopping and checkout, and only 28% valued high-quality customer service. In essence, Gen Z is looking for an efficient retail experience that allows them to complete their shopping as quickly as possible.

Along with the expectations of an accessible, cohesive retail experience, they also value sustainability initiatives, diversity and inclusion, and immersive experiences. Gen Z is characterized by cultural sensitivity and political correctness. They have grown up in a time where an African American president is the norm, LGBTQ communities are common, and the glass ceiling is continually shattered. While millennials simply looked for the cheapest deal, Gen Z’s are often willing to pay extra to support sustainability, increase awareness, and support human rights causes.

Similarly, retailers cannot ignore Gen Z’s propensity for social media – a currently untapped area in the market. 73% of IBM’s survey use their phones for social media, with 39% claiming that it was important or very important that brands connect with them on these digital platforms. Growing up with smartphones is one of the reasons that Gen Z’s are enormous multi-taskers – constantly plugged in by hopping between apps, they expect stores to accept contactless payment and provide a seamless transition between their websites and bricks-and-mortar locations. In other words, if a Gen Z has a pair of jeans in their digital shopping cart, they expect to find the same pair easily in a store.

How can retailers meet these needs? Many brands such as Primark and Topshop are currently incorporating beauty bars and coffee shops into their stores to provide a unique ‘one-stop-shop’ day out. Pop-ups are also popular for their immersive, innovative designs and limited time novelty that appeals to Gen Z’s love for trends and fast fashion. Ted Baker recently launched a pop-up for the “Color by Numbers” collection in Shoreditch. It included ChromaYoga sessions (a style of yoga that integrates light and color therapy), a nail bar, and interactive events with fashion bloggers and stylists – offering a memorable, one-of-a-kind retail experience. 

Regarding technological integration, retailers should consider arming their staff with mobile devices that allow for checkout anywhere on the floor, providing a more accessible and convenient point of sale. Apple and GAP Inc. currently do this, preventing long queue lines and allowing customers to check out in the fitting room. Considering that mobile phones have become a necessity akin to a wallet or pocketbook, stores should also consider offering charging stations and wifi hotspots. The modern version of loyalty programs can be found in mobile apps that accumulate points, provide digital purchases, and advertise new products. As artificial intelligence (AI) continues to evolve, we can expect it to take over many administrative retail tasks, such as spotting gaps on shelves, updating shelf labels, and searching the warehouse for customer requests. Incorporating this new AI technology will free sales associates to spend more time engaging with customers, understanding their needs, and providing greater value.

Finally, in order to reach and retain this younger generation, stores must establish vibrant social media presences. Gen Z is more likely to read their daily news on Snapchat than any mainstream news outlet, and they spend an average of three hours on social media every day (Global Web Index). Instagram recently provided an update that allows consumers to purchase from brands like Nike, H&M, and Michael Kors without leaving the app. To keep a finger on Gen Z’s pulse, retailers must immerse themselves in this social media saturated society, learning the language of memes and young adult jargon. Many online retailers are recruiting Gen Z members as “brand ambassadors” – paying them to promote products on their social media platforms, which generates enormous exposure and drives sales. Established retailers can continue using celebrity ambassadors, but should also consider incorporating social media “influencers” into their marketing strategies.

Generation Z is full of vocal, innovative, and efficient youth that are constantly looking to create unique experiences and make the world a better place. They have higher expectations and less patience for retail, making it extremely difficult to retail their brand loyalty. To avoid irrelevancy, retailers must increase convenience and accessibility in stores and online by incorporating new technology and embracing the digital marketing world. Adopting the speed and innovation that characterizes this rising generation is the only way for retailers to establish and maintain their legacies.