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Retailers looking to capture share of wallet and brand loyalty from the next generation of consumers – Gen Z – will need to step up their focus on new ways of engagement.
This group is looking for enhanced digital tools such to ability to purchase directly via visual social platforms including YouTube, Facebook, Instagram and Snapchat, according to new global consumer research from Accenture.
The research, based on a survey of nearly 10 000 consumers across 13 countries, examines the attitudes and expectations of millennial and Gen Z consumers along the path to purchase. The survey revealed some distinct shopping habits and preferences among Gen Z consumers, which make it imperative for retailers to further rethink and redesign their digital shopping capabilities and methods.
Social media is set to become a major direct shopping channel for Gen Z with more than two-thirds (69%) of them interested in purchasing via social media directly. In addition, more than four in 10 Gen Z’s (44 %) cite social media as a popular source for product inspiration, and more than one-third (37 %) have increased their use of social media for purchase decision-making in the last year.
“Social media has emerged as a real disruptor in targeting Gen Z shoppers, who are true digital natives,” says Henlaw Louw, MD of Accenture’s Retail industry practice in South Africa. “To succeed in this increasingly digital world, retailers must understand Gen Z’s’ expectations, influencer circles and behaviors – especially their social-media habits and how they differ from those of millennials. If they are spending their time on social platforms, this is where they want to be buying their products.”
At the same time, however, the findings show that retailers cannot afford to neglect the physical store, since 60% of Gen Z shoppers still prefer to purchase in-store, and nearly half (46 %) will still check in store to get more information before making an online purchase. In the US, over three-quarters (77%) of Gen Z respondents said that brick-and-mortar stores is their preferred shopping channel.
The research also revealed that Gen Z shoppers are interested in new shopping methods. Nearly three-quarters (73%) of Gen Z shoppers are interested in curated subscription-type offering for fashion, and 71% are interested in automatic-replenishment programs, with an overwhelming majority willing to shift more than half their purchases to a retailer offering this service. Additionally, 38% of Gen Z’s are willing to try voice-activated ordering, while 25% of them said they can’t wait to use it and 10 percent of them said they are already using it.
“The ability to provide reliable and accurate product delivery and a great consumer experience requires retailers to enhance their capabilities in digitization, innovation and harnessing consumer data. Gleaning insights successfully can increase the lifetime value of each customer,” Louw says. “The fact that Gen Z shoppers are open to new shopping methods is a real opportunity for retailers to secure new consumer data and get closer to this generation.”
Other key findings regarding Gen Z shoppers include:
* They are all about visuals – videos and pictures. YouTube is the most-regularly used social media platform, cited by 84% of Gen Z respondents, while Facebook is still the most-popular social platform for both younger (21-27 years old) and older (28-37 years old) millennials. Two-thirds (66%) of Gen Z shoppers regularly use Instagram, compared with only 40% of millennials, and Gen Z shoppers are more than twice as likely as millennials to use Snapchat (54% versus 38% for younger and 22% for older millennials).
* They regularly turn to their ‘influencer’ circles. Gen Z consumers are more likely than both younger and older millennials to purchase an item due to: what their family thinks; recommendations from watching YouTube videos; what their friends think; and comments on social media. In addition, when shopping online Gen Z’s are usually more likely than both younger and older millennials to: chat with an online sales assistant; check in store for more information; ask friends’ opinions via social media, text or phone; and ask family members’ opinions via social media, text or phone.
* They haven’t formed strong brand loyalty. Only 16% of Gen Z’s shop at a single store for clothing/fashion (compared with 26% of older millennials); only 19% shop at a single store for health and beauty items (compared with 34% of older millennials); and fewer than 38 percent shop at a single place for groceries (compared with 55 percent of older millennials). In the US, brand loyalty among Gen Z is even weaker, with only five percent of US Gen Z’s shopping at a single place for clothing.
* They are impulsive buyers and willing to pay for speedy delivery. Gen Z shoppers are more likely than millennials to make a purchase because: they just wanted to buy something; they randomly saw something they liked; or it was recommended by a friend or family member. In addition, Gen Z’s crave speedy delivery more than millennials do and are willing to pay for it. In fact, more than half (58%) of Gen Z respondents said they would pay more than $5 for one-hour deliveries.
“Gen Z is the next big consumer market and purchasing powerhouse,” said Standish. “Retailers need to invest in the digital tools that will enable them to speak to Gen Z through visuals, collaborate with them across multiple channels and devices, and make them feel part of their brand. Offering services such as crowd-sourcing, customization and hyper-personalization are a must-have capability for reaching a generation that is shaping and commanding today’s digital retail landscape.”