From creating Instagrammable shopfronts to leveraging influencers to promote products, retailers are evolving marketing strategies to lure in the newest generation of shoppers — Gen Z. Born in the mid-1990s, they are estimated to be 2.5 billion strong, and their spending power is on the rise. Appealing to this new customer profile will be key for all retailers; understanding Gen Z's preferences and shopping habits is the first step.
Like any rising generation, Gen Z brings their own unique attitudes toward brands — and those attitudes shape the way they shop. For starters, Gen Z represents the first truly digital generation. And while the youngest members may not be shopping themselves, more than 70 percent influence family purchasing decisions. They're impatient and lack loyalty, but are highly sensitive to personalized messaging. They prefer subscription models and physical stores. And from growing up in the age of Amazon.com, they expect — and demand — nearly instantaneous service. They rely on influencers for reviews and never shy away from sharing feedback. They're Consumer 3.0.
So how can brands appeal to this new consumer?
Speak Their Language
Brands that have done well with Gen Z realize that despite their growing buying power, estimated at 40 percent by 2020, this generation is different than their parents — and prefer to connect with brands very differently than their parents did. They grew up in a world of digital on-demand more so than physical on-display, and virtual and social networks are their playgrounds. Furthermore, they expect brands to be loyal to them.
Gen Z shoppers crave personalized messages and prefer brands that cater to their needs. By adding a personal touch, brands will be able to create custom-tailored messages and recommendations, putting them a step ahead of the competition by striking a relationship with Gen Z shoppers. These consumers need to trust a brand before they begin engaging with it, and appreciate those that deliver on their promises. In fact, 80 percent of teens cite value as the most important factor for purchase. Understanding individual preferences and personalizing communications is the first step in building loyalty and gaining favor with Gen Z.
Optimove analyzed 2.9 million transactions across 950,000 Gen Z shoppers. The research revealed that while Gen Z tends to make more purchases — 26 percent more than older generations — they're not often repeat customers. On average, there are 16 percent more one-time customers among Gen Z shoppers than other age groups. These customers will give brands a chance, but are less likely to come back a second time and convert into a loyal repeat customer. Furthermore, although Gen Z customers shop more often, their average order amount is 12 percent lower than older generations, likely because the oldest Gen Zers are just starting to earn.
Marketers have two possible approaches to combat these challenges. One, because this group is price-sensitive, offering incentives to encourage larger orders, such as “packages” or deals, can increase the average order value and counteract the fact that they may not return. Second, offering incentives through loyalty programs — e.g., subscription models, gamification or loyalty perks — can persuade these shoppers to come back for more and encourage repeat purchases.
Use Brand Values and Personality to Your Advantage
In the world of Gen Z consumers, it’s OK to be true to yourself. In fact, it's encouraged! Gen Zers have a tendency to be more conscious of environmental and societal issues, and they tend to support brands that actively promote social change, as seen with the success of brands like TOMS and Warby Parker. Compared to adults, teens are more likely (49 percent vs. 57 percent) to pay more for brands that support causes important to them. Most recently, Nike’s campaign with Colin Kaepernick proved the value Gen Z sees in brands that aren't afraid to take a stand. Paying attention to values that are important to these shoppers can go a long way in appealing to their ethos.
Brands can successfully appeal to Gen Z shoppers by paying attention to their unique preferences and values.
Amit Bivas is the vice president of global marketing at Optimove, a relationship marketing hub that orchestrates hypertargeted customer communications at scale.
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