I grew up in the “mall rat” generation. The mall was a destination for hanging out, finding friends, escaping parents, and shopping — shopping that ended up with many purchases on a regular basis. The retailers at the mall didn’t have to woo me there with rewards programs, special sales or unique physical spaces. If you, like me, live with any teenagers, you know firsthand what the research supports. Yes, they are still shopping in physical stores. However, these consumers are much more varied. They shop very differently and when they do, they have vastly different expectations from past generations.
What’s in store for retailers? Three considerations are driving retail industry change that’s geared for consumers.
Automation of Shopping
The word “store” is derived from the word “storage,” a place where goods filled the shelves. Technology won’t eliminate brick-and-mortar retailers, but the automation of shopping does demand changes to business as usual. With a mind-set that anything can be purchased online, Gen Z grew up without ever having to go to a store. When they go now, they do so out of desire, not necessity, and they expect retailers to anticipate their desires in-store as they do in the virtual world. Retailers will have one chance to make their in-store experience relevant, providing shoppers something they can’t get anywhere else.
With bots taking over 80 percent of purchasing bandwidth, retailers will have 20 percent of the marketplace to differentiate through a reimagined model that caters to what future consumers love. This includes employees who serve as consultants, advising shoppers based on their knowledge and experience. It includes in-store experiences that create a sense of connection to people and community.
Future consumers are focused on sustainability. From the environmental impact of materials used to produce goods, package and ship them to the behaviors and ethics of those who represent the company, sustainability is increasingly front of mind. Through the sharing economy, Gen Z has become accustomed to having the use of assets without having to own them. The rise of “rental” services matches the mind-set of future consumers, sharing items that would have previously been purchased so more consumers will benefit from just one product — and the environment benefits too. How we define what it means to be a consumer will evolve. Retailers will increasingly become service providers, finding unique ways to allow consumers to use their products without owning them, as well as enabling the sale of their pre-owned goods while redefining sustainability.
Future consumers have an expectation to be known. They’re actually insulted by mass messages and offers that don’t demonstrate a unique understanding of them. Many of us from preceding generations are a bit freaked out when ads start appearing for items we’ve *only* been thinking about. However, Gen Z expects retailers to read their minds, and for anyone that covets their business, to know them deeply. My high-schooler is currently receiving a lot of marketing material from colleges. Her expectation is that if these schools are serious about her, they will go beyond a generic mention of accomplishments to note her specific interests in history and involvement in theater. This expectation carries through to interactions with all organizations, including retail.
Winning Retailers Will Take Stock of Both Big and Small Data
Retailers that want to survive and thrive in the future need to rethink their relationships with consumers and the experiences they provide them. Digitally native retailers have an advantage of perspective here. They’ve built their businesses in sync with Gen Z attitudes and practices, so as they move into physical stores, they’re in tune with these future consumers’ value expectations. Furthermore, they’re focused on fulfilling a gap in consumer experience the virtual universe didn’t provide.
Meanwhile, many physical retailers have gone digital. They have jumped on the big data bandwagon in response to the competition, rather than the consumer. Because of this they will be forever playing catchup. Disruptive technologies and new competition taking advantage of it are shifting human values, behaviors and expectations faster than ever before. The winners are leveraging big data along with an understanding of cultural shifts further evolving consumer shopping expectations, rather than becoming a victim and constantly playing catch up.
Marcie Merriman is the cultural insights and strategy leader at EY Americas.
Related story: Will We See a Renaissance of the Store in 2019?
Marcie Merriman is EY Americas' Cultural Insights and Strategy Leader. She is an internationally recognized leader in cultural anthropology and retail strategy, having her work frequently featured in publications, such as The New York Times, The Wall Street Journal and Forbes. Within EY, Marcie leads a practice focused on helping organizations understand the nuances of human behaviors and the organizational implications that can be addressed through improved experiences, including the deployment of digital technologies. Visit ey.com/futureconsumernow for more insight into the drivers creating the future consumer.