Sherene Funk | Oct 10, 2019 | 0
It’s Not Millennials Your Business Should be Worried About!
At least 70% of the Gen Z group are responsible for influencing their family’s spending, indicates a 2017 report from IBM and the National Retail Federation. With that kind of impact and billions of dollars in spending power, businesses are clambering to understand their desires.
With Gen Z’s capacity to move that kind of capital, one might wonder how else this generation could impact markets and shape industries. Ad Age gives us some clues below:
Cash vs. Card
Research from the teen debit-card company, Current, shows that American teens are 4X less likely to use cash than the general public, accounting for only 6% of their transactions. Younger generations also prefer cashless and cardless options at restaurants, with the majority of people under 30 tending to use cards over cash—even for transactions $5 and under.
That being said, it’s not surprising that money-transferring apps like Google Pay, Apple Wallet, and Venmo, continue to see growth.
“This generation has grown up with a mobile device that is also a payment device. They are going to accelerate the adoption of the digital economy because digital payment is native to them.”
~ Stuart Sopp, CEO of Current.
Some retailers are making the move away from cash payments and countries such as Sweden, Denmark, Norway and Singapore have made efforts to shift over to a digital economy, pledging to eliminate the use of checks and cut cash withdrawals from ATMs.
“There’s many reasons why businesses want to see a shift away from cash. Now they finally have a demographic cohort that is ready for it to happen. They won’t resist it, they will push for it.”
~ Stuart Sopp, CEO of Current
Doing away with cash payments altogether, though, could become a challenge for those who don’t have bank accounts—which is the case with many teens. With this in mind, Amazon plans to make faux debit cards—Amazon Cash—to capitalize on Gen Z’s spending habits until they’re old enough to manage their own accounts.
“If successful,” says Ad Age, “Amazon could lock in lifelong, digital-centric customers.”
Malls vs. E-commerce
Given Gen Z’s preference for digital life, what’s the expected fate of brick-and-mortar retail? According to Ad Age, the nation’s malls are closing at a record pace, with more than 2/3 of them seeing a decrease in national retailers during 2018.
Retailers are struggling with the younger generation’s demand for more personalized, digitally enhanced shopping experiences. In fact, 93% of the Gen Z demographic prefer to shop without the assistance of sales associates. Sadly, IBM reveals that only 19% of retailers say they can provide the type of experiences Gen Zers are looking for.
The Retail Doctor is not surprised that younger consumers are flocking to e-commerce, saying that most Gen Zers have experienced terrible service throughout their lives because customer service levels in retail have been declining for decades.
Whether it’s the service, the products, or the technology, the apparel industry has been witnessing signs of decline for a while now. Whereas clothing made up 6.2% of American household spending in 1977, that number has plummeted to 3.1% today. Stores like H&M are seeing slower growth while they struggle to sell unwanted products in their stores.
Even brands that have historically advertised to teens are losing them to e-commerce. This has lead to retailers like Aeropostale, Pacific Sunwear, and American Apparel filing for bankruptcy in recent years.
Traditional Marketing vs. Digital
One of the most notable things about Gen Z, says Internet Retailer, is that it is the first generation whose entire existence has been during the digital age. This group has never known life without the Internet, apps, mobile, and social media. For Gen Zers, being offline is something that probably only occurs when they’re sleeping.
Gen Z lives on social media, with their usage of Snapchat and Instagram continuing to increase exponentially (55% and 56%, respectively, within the past year). These young Americans strongly value the opinions of their social tribe and seek their advice on most purchasing decisions. In fact, at least 68% of Gen Z internet users read three or more reviews before making a first-time purchase.
Their heavy usage of social media, coupled with their capacity for consuming content, suggests that working with their favorite influencers is a good idea for brands wanting to imprint on their hearts and minds. Marketers need to be wary, though, because this group is neither easily fooled nor long on attention!
Therefore, it’s imperative that retail marketers seek authenticity when partnering with influencers to ensure a good and lasting impression. Partners creating branded content on behalf of retailers must be natural extensions of their brand because Gen Zers won’t be duped by forced engagement.
While Millennials have been the “darlings” of marketing and media for years now, a new generation has taken root. Gen Z has more potential buying power than any generation before them.
Generation Z will account for 32% of the 7.7 global population—an estimated 2.5 billion strong. Gen Z is also 20% of the U.S. population and will grow to the largest generation, at 27% of the total, by 2025.
“This is a pivotal time for brands, says Internet Retailer. “Breaking through with Gen Z can be challenging, but the opportunity they represent makes it worth the effort.”
With the right customer service, in-store experiences, and marketing strategies in place, retailers can win Gen Z over and transform them into loyal customers.
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