Another generation of young shoppers has come along and, once again, retailers will need to adjust to reach them, win their trust, and gain their business.
In recent years, many retailers have focused on adapting to the desires of Millennials, winning their business with tactics like loyalty programs and experiences. And many of them have had success doing so. But if retailers are looking to win over the next generation of shoppers, they’ll need to go back to the drawing board.
Currently 60 million strong in the United States, those born between 1995 and 2005 have never lived without the internet, don’t recall a world without wireless, and view social media and online shopping as commonplace. To reach this population segment—known as ‘Gen Z’— industries are having to adjust yet again. Retailers will need to do the same.
The brand loyalty challenge
Brand loyalty? Retailers have had it pretty easy with Millennials. Roughly half of Millennials claim to be either extremely loyal or quite loyal to their favorite brands. Gen Z, on the other hand, flips the script with many claiming little to no brand loyalty. In fact, more than 80 percent would ditch their favorite brand for a better price or higher quality. The reason? Familiarity with financial turmoil. The oldest of Gen Z were 11 when the Great Recession hit in 2008, and the response of their parents—many of whom had to live more frugally—helped to inform future Gen Z spending behavior.
With this in mind, it becomes clear that while brand loyalty may be hard to come by with Gen Z, it's not impossible. By prioritizing convenience and quality while staying transparent, retailers can have longer-term success with Gen Z shoppers.
A focus on social media
Unlike Millennials before them, members of Gen Z have never known a time without internet, mobile technology, or social media—all of which began impacting their lives at a young age. This comfort with connectivity is why 4 out of 5 Gen Z’ers say they allow social media to influence their purchase decisions.
Identifying social media as the most impactful way to connect with Gen Z shoppers, many retailers have already implemented digital advertising campaigns on social platforms as a critical part of their marketing strategy.
The importance of social responsibility
More socially conscious than their predecessors, 85 percent of Gen Z believes companies have an obligation to help solve the problems of the world we live in. Putting their money where their mouth is, the same percentage of Gen Z’ers are more likely to make a purchase from a company after they’ve learned the brand is socially responsible.
A variety of retail scandals—like Nike’s reported sweatshop production or Sketchers' false health benefit claims—have given members of Gen Z a nose for the nefarious and resulted in a scarcity of trust for corporations. Mindful of this, retailers have focused on connecting their message and target audience with socially responsible initiatives. For example, Patagonia targets customers who participate in outdoor activities and care about the environment. To appeal to their customers and show they’re environmentally conscious, Patagonia conducted an extensive ecological survey of their business functions to highlight the environmental safety of their products.
As Gen Z continues to gain influence, retail will need to continue to adapt. By focusing on price and product standards, social responsibility, and marketing through social channels, retailers can build healthy relationships with Gen Z shoppers.
For more tips that address rapid changes in the retail industry, check out our blog on how retailers can benefit from evolving technology.
Fortegra® is the marketing name for the warranty operations of Fortegra Financial Corporation and its subsidiaries.