The Influence of Gen Z on Retail Trends and Strategies

Written By: Gargi Sarma

A growing number of consumers in the retail sector are recognizing the impact of Generation Z, which comprises those born in the mid-1990s and early 2010s. Retailers must innovate and adapt to satisfy the expectations of Gen Z, whose distinct preferences and habits are transforming the retail scene. The impact of Generation Z on retail trends and tactics is examined in this article, along with the steps that firms must take to remain competitive.

Figure 1: What Factors Are Part of Gen Zs' Purchase Decisions (Top 7)?

Here are some key statistics that highlight their impact:

Market Size and Spending Power (Source: Omniaretail)

• Gen Z accounts for approximately 20% of the market in the US, with a spending power valued at $144 billion.
• Globally, teenagers influence their parents to spend more than $600 billion per year.

Online Shopping Behavior (Source: McKinsey & Company)

• Gen Z consumers make purchases on social media four times more often than older generations.
• In the US, the social commerce market is projected to grow to $145 billion by 2027, up from $67 billion today.

In-Store vs. Online Preferences (Source: Vogue Business)

• Despite their digital inclination, 74% of Gen Zs think in-person experiences are more important than digital ones.
• 73% of Gen Zs prefer making purchases in-store, compared to 27% who prefer social media shopping3.

Sustainability and Ethical Practices (Source: McKinsey & Company)

• While Gen Z values sustainability, recent trends show they are making trade-offs between their values and value, especially in advanced markets.

Personalization and Customization (Source: Statista)

• Gen Z expects personalized shopping experiences, with retailers increasingly using data analytics and AI to meet these expectations.

Omnichannel Experience (Source: Statista)

• Gen Z appreciates the seamless integration of online and offline shopping channels, driving retailers to enhance their omnichannel strategies.

Figure 2: How Does Gen Z Spend Their Dollars?

Digital Natives: The Tech-Savvy Shoppers

Generation Z is the first generation to have grown up with social media, cellphones, and rapid access to information. They anticipate flawless, tech-driven purchasing experiences and are skilled at navigating online places since they are digital natives. Retailers are reacting to this by:

• Improving Online Presence: Having a strong e-commerce platform and active social media presence are essential. Gen Z uses social media extensively to find products and get product suggestions.
• Using Influencers: Gen Z responds very well to influencer marketing. Working together with content producers and social media influencers may increase sales and brand recognition.
• Investing in Technology: To meet the expectations of Generation Z, it is imperative to include technology into the shopping experience, from chatbots and tailored AI suggestions to augmented reality (AR) fitting rooms.

Figure 3: Augmented Reality (AR) Fitting Rooms

Values-Driven Consumption:

Customers of Generation Z are very values-driven and place a high importance on sustainability, diversity, and moral behavior. Shops are adjusting by:

• Sustainable Practices: Using environmentally friendly methods, such as lowering carbon footprints and obtaining sustainable materials, speaks to Gen Z's concern for the environment.
• Transparency: Authenticity and transparency are important to Gen Z. Customers are more likely to remain loyal to brands that are transparent about their policies, manufacturing procedures, and corporate social responsibility (CSR) initiatives.
• Diversity and Inclusion: In order to connect with Gen Z customers, retailers need to show a dedication to diversity and inclusion in both their corporate culture and marketing initiatives.

Preference for Unique and Personalized Experiences

Gen Z is looking for experiences that are distinctive, tailored to them, and meet their specific needs. Among the retail tactics are:

• Personalization: By providing individualized fashion items or bespoke services, among other customizable goods and experiences, businesses may draw in Gen Z clients.
• Experiential Retail: You may improve engagement and increase foot traffic by designing immersive retail spaces, pop-up stores, and interactive in-store experiences.
• Data-Driven Personalization: Retailers may provide customized recommendations and personalized marketing messages by using data analytics to comprehend and anticipate consumer preferences.

Figure 4: Gen Z's Platforms of Choice For Following Brands

Emphasis on Social Commerce

Figure 5: Share of Gen Z Who Said They Have Purchased An Item Shown in And/Or Enjoy Watching the Following Types of Online Content

The rise of social commerce—in which social media platforms serve as direct avenues for shopping—is being driven by Generation Z. Retailers who want to profit from this trend include:

• Shoppable Posts: Including direct shopping links in social media articles, videos, and tales to make purchases simple and quick.
• Social Media Marketplaces: Reaching Gen Z customers where they spend the majority of their time by utilizing sites like Facebook Marketplace, Instagram Shop, and TikTok Shopping.
• Live Shopping Events: Organizing live-streamed shopping events that combine entertainment and commerce by having influencers present items and engage with viewers in real-time.

Examples of Retailers Adapting to Gen Z Preferences

Figure 6: Gen Zs in Growth Markets Are More Interested in Personalized Shopping Experiences

Nike

• Digital Integration: Nike has created a smooth buying experience by integrating their mobile app with their physical locations. Features that pander to Gen Z's digital-first mindset include in-app product reservations and customized fitness suggestions.
• Sustainability: To address the environmental concerns of Generation Z, Nike's Move to Zero campaign aims to create a zero-carbon and zero-waste future.

Glossier?

• Social Media Engagement: To create a vibrant community around its brand, Glossier uses influencer partnerships and user-generated content on Instagram and TikTok.
• Inclusivity: The company is renowned for its inclusive marketing initiatives and wide selection of products.

Patagonia

• Sustainability: Gen Z finds Patagonia's dedication to sustainable methods and environmental advocacy appealing. Through its Worn Wear program, the company encourages consumers to support a circular economy by purchasing old goods and fixing their equipment.
• Transparency: By being open and honest about its manufacturing and supply chain, Patagonia has gained the trust of Gen Z customers.

Urban Outfitters

• Experience Retail: By providing distinctive in-store experiences like pop-up stores and live music events, Urban Outfitters makes shopping more interesting for Generation Z.
• Customization: By offering product customization possibilities, the merchant enables Gen Z to showcase their personalities.

Adidas

• Digital and Mobile: Adidas has made investments in cutting-edge technologies like as the Confirmed app, which provides users with a smooth purchasing experience and access to exclusive product launches.
• Sustainability: Adidas' dedication to sustainability is demonstrated by its collaboration with Parley for the Oceans to produce goods made from recycled ocean plastic.

Sephora

Personalization: Sephora leverages artificial intelligence (AI) and data analytics to provide virtual try-on features and individualized product recommendations on its website and app.

Diversity & Inclusion: Sephora appeals to the inclusive principles of Generation Z with its marketing efforts and product lines that celebrate diversity.

Figure 7: H&M Beauty is launching a Gen Z skincare and bodycare range.

Figure 8: Gen Z’s Buying and Purchasing Patterns

Conclusion:

Gen Z has a significant and expanding impact on retail trends and strategy. Retailers need to adapt to this changing market by embracing digital innovation, matching the values of Gen Z, and offering individualized, fun shopping experiences. Businesses may not only win over this tech-savvy, values-driven generation's allegiance, but also foster long-term development and success by comprehending and catering to their preferences.

Read more on Social Commerce is Now Taking Over E-Commerce!

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