Z-Factor: How Generation Z's habits and preferences shape the future of retail

Generation Z, or Zoomers (born 1997-2012), is the first digitally native generation, raised with constant internet and mobile access at their fingertips. 'Zoomers' are particularly savvy, technologically adept, and socially conscious consumers who redefine leisure and shopping by integrating online and offline channels in unique ways for their purchasing decisions.

On one hand, Generation Z plays an important role in the functioning of physical stores, emphasizing the appeal of offline shopping. On the other hand, they are a powerful driving force behind the development of online retail. Companies that understand and cater to the unique preferences and values of Generation Z stand a much greater chance of success in an ever-growing competitive market. To capitalize on this powerful consumer segment, understanding Gen Z's motivations is key. What drives their shopping habits and values?

Generation Z stands apart from preceding generations by being raised in a realm where digital technologies transcend mere facets of daily existence, evolving into the very essence of communication, education, and recreation. Surveys reveal that upwards of 95% of Zoomers regard their smartphones as the quintessential conduit to the world. Consequently, it is crucial for businesses to have a presence in the digital space, utilizing social media, mobile apps, and other online platforms to capture the attention of this audience.

Social media and influencers as means of brand engagement

Gen Z's purchasing decisions are heavily swayed by social media, with 85% of respondents admitting its direct influence. Notably, Instagram and TikTok reign supreme, with at least half of Gen Z actively seeking or browsing products on them weekly. Furthermore, influencer endorsements hold significant weight, as half of Gen Z listens to prominent bloggers or considers product reviews and comments. According to Andrew Torre, Regional President for Central and Eastern Europe, Middle East and Africa at Visa, a staggering 58% of Zoomers rely on TikTok for financial information. These findings highlight promising avenues for fostering loyalty among Gen Z consumers.?

Despite spending over eight hours a day online, recent studies show Gen Z actively engages with brands both in-store and online. This highlights the importance of a comprehensive omnichannel marketing strategy to build loyalty among this audience.

What specifically motivates them to buy offline? The ability to obtain goods immediately, to see, touch, and try them before making a purchase. Some zoomers also value the opportunity not to pay for shipping. Meanwhile, for others, the value lies in spending time with friends or enjoying the aesthetics and unique design of brick-and-mortar stores. Convenience, promptness, and various payment options are undoubtedly essential. Convenience and payment options:? For Gen Z, unlike previous generations, Andrew Torre (Regional President for Central and Eastern Europe, Middle East and Africa at Visa) emphasizes their preference for fast and efficient payment systems. "Payment should be as simple as downloading an app to a smartphone," he stresses. Additionally, offering Buy Now Pay Later (BNPL) options caters to this generation entering credit-based purchases.

Gamification: selling emotions

Over half (nearly 60%) of Gen Z gamers indulge in video or mobile games at least weekly.? Capitalizing on this passion, brands can hook Gen Z through gamified loyalty programs. These programs, infused with popular gamification elements, not only boost engagement but also foster a sense of community among these tech-savvy customers. Remember, Gen Z craves immediate gratification and interactive experiences. So, loyalty programs should be intuitive, user-friendly, and constantly evolving to keep them hooked.

Personalized rewards and unique experiences as the Prize

While traditional loyalty models based on points for discounts or cashback may work for older generations, they are hardly enough to retain Generation Z. Similar to millennials, Gen Z prefers spending money on experiences and impressions rather than material things. This means that Gen Z customers find rewards that are not widely available, such as masterclasses, VIP access, or limited product options, more appealing than cashback and discounts. Additionally, research has shown that 70% of Gen-Z belong to paid loyalty programs (e.g., additional closed draws or special access to limited series of products), which demonstrates their willingness to pay for these additional and exclusive benefits.

Social consciousness and values orientation

Generation Z is characterized by a profound sense of social consciousness and a keen interest in issues concerning the environment, equality, and social justice. They aspire to be more than mere consumers of goods and services; they seek to be active participants in causes larger than themselves. Generation Z exhibits a notable affinity for companies that champion social and environmental causes, gravitating towards brands that demonstrate a genuine commitment to community and planetary well-being. Aligning with these values not only endears businesses to Zoomers but also fosters enduring connections with them.

This generation defies easy categorization. They've revitalized the brick-and-mortar experience, rediscovering the joys of in-person shopping and shared moments with loved ones. Yet, having witnessed the 2008 financial crisis and the pandemic, they're fiscally savvy and price-conscious. They're also willing to pay a premium for the speed and convenience of online shopping.? Socially responsible but value-driven, Gen Z is a complex consumer with a keen eye for quality and price. Understanding these nuances is crucial for brands seeking to win their long-term loyalty.