Looking to 2020: Part 1
Ethical shopping, brand loyalty, individuality and global thinking - who are the next majority of shoppers?
Retailers are looking ahead to the future, and planning for changes in the retail environment that include technological advancements, Omni-channel business models, and embrace the continuously increasing globalised marketplace. One thing retailers need to be focused on is who their customer will be in the coming years. By the year 2020, one of the largest generations in history will be moving into their prime spending years. Millennials will be reaching their peak years of financial earnings, and also are the most likely to be shopping for themselves, their young kids and families in ways that will challenge retailers to re-examine how they operate business for decades to come. Retailers looking to advance their businesses from present day out to 2020 and beyond must determine how much of their business will be catering towards the Millennial and GenZ customers, and begin to make improvements that will stand out in an extremely competitive retail environment.
Who are Millennials and GenZ?
Millennials are typically viewed as those born between the years 1980-2000, while GenZ citizens tend be born between the late 1990s to present day. GenZ is comprised mostly of the children of GenX, although there are some whose parents will be Millennials. GenZ is viewed as the future, as they will become the largest group of consumers worldwide. Retail today is under-delivering, specifically for Millennials and the future consumers of GenZ. However, a lack of engagement with two generational groups as large as these is not an option for retailers. Instead, retailers and entrepreneurs should be embracing the fact that these two groups can make significant positive impacts in the retail sector if they learn and adapt to fill their needs.
Although these two groups are somewhat overlapping, they are still two different groups and should be treated as such. In order to shift your strategies and shape your retail business to best suit Millennials and GenZ consumers, there are four points of difference to focus on. Firstly, Millennials are more price sensitive than GenZ shoppers; they are always looking for bargains. Generation Z was born into a world utterly driven by technology and the advances that continued technological growth. For this reason, they expect more than Millennials from speed and advancements of technology, to benefits of brand loyalty and feeling appreciated by businesses. Thirdly, GenZ is big on individuality, meaning that as consumers they are seeking uniqueness from the brands they shop. This is hugely impactful when it comes to brands shoppers from Generation Z choose to do business with. Finally, and arguably most crucial, GenZ is even more global than Millennials. Although Millennials were considered the first truly "global" generation for retailers, GenZ is already surpassing that. By 2020, GenZ will be even more global in their thinking, interactions both social and non-social, and businesses around the world will be trying to relate and captivate the GenZ consumer.
Change like this is a huge opportunity for retailers
The purpose and function of stores as we traditionally know them are in flux. The stores of tomorrow are being shaped this very moment by new behaviours, trends, needs and demands of shoppers globally. Not only are these demands and behaviours changing the physical design of brick and mortar and online stores, but they are also shaping the future of brands. Retailers must be conscious that as Millennials and GenZ begin to take advantage of their spending power, branding of a business or particular product will drive a significant portion of purchasing decisions.
Millennials and GenZ consumers are the most "conscious" spenders we have seen. Growing up in an era where technology and information was so readily available for most, if not all, of their lives has allowed them to be more educated in their purchase decisions. This means these generations are conscious about price, quality, environmental impacts, health benefits, trends and much more. Millennials and GenZ consumers will also consider "good citizenship" a priority, which will be reflected in their shopping choices. Not only will this idea of "good citizenship" drive the products sold, but how they are presented. This will push retailers to explore how buying can be an act of good in ways we haven't seen yet.
Shoppers will want to know what retailers care about and support, which requires brands and retailers to take an interest in their communities and the greater good of society. Those brands who are viewed as "generous brands" will define the future for stores, especially as GenZ will use this perception as a deciding factor when purchasing. This means that stores should be focusing now on becoming integral parts of their communities and neighbourhoods. Retailers can achieve this by hiring local, incentivising employees to ride to work or car share, and give back to their local communities, to name a few. What's more, Millennials and GenZ shoppers are seeking out retailers who are transparent about what their business stands for, the good achieved for the community and retailers who demonstrate active social responsibility. The way retailers interact with shoppers is already changing in many ways, and transparency is one shift that has already started. Retailers are showing customers how their purchasing power can be an act of good when they are transparent about their "good citizenship" or can prove they are a "generous brand", resulting in Millennials and GenZ more likely to purchase.
What about the traditional retail store?
As mentioned at the start, retail stores are in a major period of flux. Stores will have to change parts of their business and operations in order to flourish. They must do so sooner rather than later, in order to maintain an engaged Millennial customer and bring in the new GenZ consumer.
I know you're anxious to know more about what this might look like, and how to achieve such a thing. Well, you'll just have to hang on tight until next week when we discuss the changing brick and mortar environment for retail out to 2020.
by Emily Duncan, Retail NZ Adviser
Published on the Retail NZ Blog, on the 19th January 2018.