How Gen Z impacts retail
By 2020, young consumers known as Gen Z (born between 1995 to 2012) will represent 40 per cent of all consumers. Already, they’re influencing businesses in ways never seen before. While it’s easy to assume that they are simply a younger offshoot of millennials, their technology nativity and worldly view have expedited the demand for retail innovation.
The latest Temando report on this influential shopper demographic, ‘The Truth About Youth’, outlines three things you need to know:
Affordability is key
To appeal to Gen Z, retailers need to carefully consider pricing of both their merchandise and services. Despite having $200 billion of spending power in the United States alone, Gen Z shoppers are conscientiously frugal, having been raised in the aftermath of the Great Recession and the instability of terrorism played out on mass media.
- Over half of Gen Z consumers shopped online mainly due to its affordability, with 41 per cent abandoning their carts to compare the best prices and deals.
- Delivery costs is a point of contention for Gen Z; 54 per cent abandoned their shopping carts due to the high cost of shipping.
- The perception of ‘free shipping’ holds its allure: 64 per cent will increase their cart size for free hyperlocal shipping, and 70 per cent will do the same for free express shipping.
Household spend influencer
Gen Z is a significant influencer in household spending, compared to previous generations. 15 per cent of parents tend to spend more when they shop with their Gen Z child. These Gen Z children, who feel that 13 is the appropriate age to own a smartphone, are also educating their families on new ways to shop, such as making mobile payments and shopping via social media platforms.
- 45 per cent of Gen Z still live with their parents, and rely on a $44 billion yearly allowance.
- 47 per cent believe that there is a better selection online, and would influence their families to do more of their household spend online. They would also encourage webrooming, to compare products and prices online before making a decision to purchase.
With the rise of technology, consumers of all ages are conditioned for instant gratification. Add to that the market disrupting model of retail leaders such as Amazon. Fulfillment and shipping is completed on the very day an order is placed – elevating the customer experience to heights never seen before. These conditions create a ripe environment for Gen Z shoppers, who have the shortest attention span of eight seconds.
- 61 per cent of Gen Z shoppers are willing to pay a premium for same day delivery – 17.5 per cent more than the average shopper.
- Gen Z are adventurous shoppers who have a higher tendency for cross-border purchases: they are 8 per cent less likely than the average shopper to buy from local sites.
- Gen Z feel that they are in charge of their online shopping experience: 44 per cent didn’t hesitate to return items they believed were misrepresented online, and 61 per cent did the same for incorrect sizes.
With 4.6 million Gen Z Australians making up 12 per cent of the national workforce within the decade, cementing their purchasing power even further, they will inevitably change the retail landscape – just as their predecessors have.
As technology continues to increase and improve the accessibility of goods and services, these change-makers reflect the desires of all shoppers – regardless if they’re Millennials, Gen X or Baby Boomers. How well retailers are listening to consumer trends today will pay forward in their strategies for the inevitable future.
Download Temando’s online shopper report, The Truth About Youth, for more Gen Z insights.