3 Gen Z Retail Truths
Representing 22 percent of the U.S. population, Gen Z — those born between 1995 to 2012 — are a game changer in the world of retail. They're already known to have a strong influence in how and where American households spend $600 billion, and have $44 billion of disposable income of their own by way of their annual allowance.
Gen Z is the most diverse demographic in the U.S., increasing the multiracial youth population by 50 percent since 2000. They're multitasking between five instead of the three screens that their predecessors, millennials, use daily. Despite these idiosyncrasies, one thing remains true across consumers from all generations — the need to be satisfied when shopping. Here are three things we outlined in our recently published report, The Truth About Youth, that shows how Gen Z is disrupting retail:
Right Here, Right Now
Gen Z has an attention span of just eight seconds — which is four seconds less than millennials — and incognito social media such as Snapchat, Secret and Whisper are embraced by 60 percent of American Gen Zers. This need for immediacy applies to how Gen Z views shopping. Same-day delivery is the top shipping option, with 61 percent of Gen Z shoppers willing to pay a premium for the service. Meanwhile, millennials are happy to do the same for express shipping, which takes one day to three days.
We also found that Gen Z is the first group of shoppers where click and collect has proved unpopular. This supports our hypothesis that Gen Z takes instant gratification to the next level. They want their online orders in their hands, with as little effort as possible — right here, right now.
Feel the Price Burn
Gen Z was raised in troubling times; many grew up in families who went through the hardship of the global recession, and they’re constantly exposed to the threat of terrorism and mass shootings. As a result, they view the economy with caution; their main concerns are to secure a stable job and manage the cost of their education.
This frugality impacts the way they shop. Fifty-one percent of Gen Z cited affordability as the main reason they shop online, and 54 percent have abandoned their carts due to the high cost of shipping. To manage Gen Z’s expectations and stay competitive, retailers need to authentically show value — both online and offline — and be in a position to pass savings on to shoppers without sacrificing profit margin.
Free for All
As true digital natives who were raised with technology being the norm, Gen Z has modified expectations on what services should be paid for. They come from a DIY culture, where crowdsourcing, Etsy and free open online courses from Ivy League institutions are viewed as great alternatives to the traditional rite of passage.
This laissez-faire approach extends to how they shop; 64 percent are willing to increase their cart size for free hyperlocal shipping, yet only 46 percent would be willing to pay for the service. This expectation that shipping should be free suggests that Gen Z doesn't discern between online or offline shopping — they expect shipping to complete their online shopping experience, as it’s merely an alternate version of a sales attendant handing their paid merchandise over the till at a physical store.
With Gen Z representing 40 percent of American consumers in the next four years, putting into place strategies to attract this important customer base will pay forward not only in attracting Gen Z shoppers, but also other generations. Market-leader Amazon.com is opening the door to a new way of retail. With its fulfillment and delivery prowess aimed at increasing customer satisfaction, shopper sentiment will dictate which retailers will succeed or fail in these changing tides.
Carl Hartmann is the co-founder and CEO of Temando, an intelligent shipping platform that helps retailers manage the fulfillment process from the shopping cart through to delivery.