Gen Z Drives Brick-and-Mortar Stores to Mobile

In the U.S. alone, as of September 2019, Gen Z influences an estimated $600 billion in spending each year. As the first digitally native population, Gen Z utilizes mobile more than any previous generation — after all, 98 percent of them own a smartphone. Even further, App Annie data shows that those in Gen Z (those aged 16-24) spend 40 percent more time in apps than older demos. As more of Gen Z enters the workforce, their buying power is only expected to grow exponentially. As such, companies without a mobile-first strategy in place to reach these shoppers will fall behind.

The effect of this generation’s impact on retail is no exception, and it's ripe with opportunity. Whether it be Alibaba's Singles Day, Black Friday, Amazon Prime Day or Cyber Monday, retail-focused holidays have shown staggering growth both in overall spend and in percentage of transactions completed on mobile devices. In 2019, Singles Day shattered records, surpassing $38.4 billion in sales in 24 hours, with the lion share fueled by mobile purchases. During the holiday shopping season in the U.S., 40 percent of all online sales from Nov. 1 — Dec. 2, 2019 were on mobile devices. Globally, mobile is set to comprise nearly 75 percent of total e-commerce transactions by 2021, and we can expect this to be an integral theme in predicting consumers' shopping habits throughout 2020. Additionally, as Gen Z gains more buying power, the $44 billion they spend annually will only continue to grow.

This begs the question: For legacy brands that don’t yet have a mobile element, how can they continue to grow? In short, they can’t. As Gen Z, the largest generation ever, grows into the buying generation, companies without a mobile strategy will fail.

A mobile-specific product and advertising strategy tailored to the unique demands of Gen Z consumers is vital to the future success of brands. Neglect to do this, and you risk ending up on the wrong side of the Netflix and Blockbuster rivalry. Across the board, digital-first retailers like Amazon.com and Wish continue leading the ranks across the Gen Z audience. Wish, in particular doubled down on its marketing, product portfolio and price point to attract this buying population, and those efforts have paid off in markets like the U.S., U.K., and Canada. Retailers need to adopt a similar go-to-market strategy as a benchmark for meeting Gen Z’s retail demands through mobile.

The average consumer spends three hours and 40 minutes daily on their smartphone device, making this a key consumer touchpoint. The 2019 holiday season alone saw a 40 percent increase in time spent on shopping apps year-over-year, which translated into an increase in mobile sales. It's vital that retailers focus efforts on preparing their mobile channels for this influx of activity to ensure the most seamless and personalized experiences for their shoppers, especially for the convenience-seeking, mobile-native shoppers that make up Gen Z.

What worked for previous generations won't work for engaging with Gen Z. Businesses need to adapt in order to effectively penetrate the market. In 2019, Gen Z spent 40 percent more time on average than older demographics among the top 25 non-gaming apps. Mobile is the key to reaching this generation, and a seamless mobile experience must be a central part of your product offering and marketing efforts.

Take Marshalls, for example. In 2019, after succeeding as a legacy brick-and-mortar store for over 60 years, the retailer finally introduced a mobile app and online store to help drive sales and foot traffic. Marshalls could no longer avoid it — without a mobile strategy, retailers are neglecting one of the strongest revenue streams in history, and failing to cater to the spending preferences of mobile-first generations. App Annie data showed that time spent in top shopping apps correlated strongly with overall retail sales in the U.S. in 2019 across both in-store and online, proving that mobile is key to driving omnichannel success.

Throughout 2020, brands and consumers will see continued growth both in time spent on retail apps as well as total spend. Without adopting an omnichannel approach, legacy brick-and-mortar retailers will continue to lose Gen Z momentum. And as Gen Z grows, retailers that fail to adapt will miss out on critical business.

Lexi Sydow is the senior market insights manager at App Annie, an app analytics and app market data firm.