Interviews, insight & analysis on Ecommerce

Understanding retail through the ‘Gen Z’ filter 

By Alex MacPherson, Director of Solution Consulting and Account Management at Manhattan Associates

For the past decade or so, many brands have been faced with the challenge of managing their own digital transformation, while simultaneously scrambling to serve the needs of an increasingly digital savvy, growing millennial audience – generally accepted as the first internet-fixated generation. 

After two decades, however, the millennial generation is beginning to slip into the annals of retail history, a thing of the past, replaced in terms of buying power just as the generation before it. Today’s brands are bracing themselves for the next wave of shopper-led disruption in the form of the 11-24 age group, colloquially known as ‘Gen Z’ or ‘Zoomers’. 

Generation Omnichannel

Perhaps a more fitting epithet for Gen Z, would be ‘Generation Omnichannel’, as this is the first truly omnichannel generation to hit high streets and social media platforms in equal measure. This group is prepared to shop wherever suits them best, in the moment and without preference as to the vehicle they use to find what they want.  

According to a recent article in Vogue, Gen Z are 56 percent more likely to have shopped for fashion in-store over the last three months and 38 percent more likely to have shopped online in the same timeframe. They are willing to shop across channels, have an appetite for higher-quality items and are eager to stay on trend with cultural developments. This awareness of cultural trends is leading to some key generational spending markers too; not least the fact that Zoomers are more conscious about the planet and the future. They believe that the generations before them represented overconsumption, capitalism and materialism, meaning they are more likely to associate themselves (and their wallets) with brands that match their own core values, such as sustainability, environmentalism and equality.  

At the same time, Generation Z has been called the most critical consumer group until now, with a fundamentally different view of shopping and consumption to previous generations. They are the latest to enter the workforce and will have strong purchasing power over the next decade, meaning brands have to earn their place in their wallets. 

Furthermore, Gen Z’s frequency of shopping for new items is being disrupted by the second-hand, preloved, vintage market – a market Zoomers are 27 per cent more likely to shop. Preloved and vintage platforms, such as Depop and Vinted, are arguably slowing the cycle of new purchases and redefining the concept of the customer journey and what it really means to be ‘new’. 

Embracing new forms of payment

According to PayPal, 22 percent of Zoomers have used buy-now, pay-later (BNPL) solutions like Klarna and Afterpay since the start of the pandemic to buy more expensive, higher-quality products.  

Since the beginning of the pandemic, 123 percent more Zoomers have used BNPL than previously, representing the strongest uptake of any generation and in April 2021, 33 percent of Gen Z respondents said they were likely to use BNPL solutions in the future too. Furthermore, Gen Z has continued to embrace mobile payment options such as mobile apps and e-wallets like Apple and Android Pay faster than any other consumer spending group too. 

This expectation to be able to pay how, when and with what device or platform is something that permeates Gen Z spending habits, meaning traditional payment and Point-of-Sale (POS) technologies need to keep up and be able to offer these different payment options. 

A window into the future

The pandemic has certainly cemented the position of ecommerce in the consumer psyche, regardless of generational status. If we glance into the future, beyond the Gen Z age group,  Generation Alpha and subsequent cohorts will likely prove to be even more digitally savvy, thus the cycle of retail reinvention will likely have to start anew in another 20 years or so. 

The key to success for brands confronted by this continual sequence of progress is to be agile and nimble enough to not only introduce different digital and in-store commerce options, but to have the capabilities to support these with the native omnichannel capabilities needed to deliver against the exacting expectations of these new groups. 

Gen Z is the emerging cultural and economic powerhouse in today’s retail landscape and it will continue to drive cultural change, retail spending habits and so much more, on so many levels over the next two decades. While the full force of their pounds and dollars may not have hit retailers just yet, the race to meet the future expectations of Gen Z consumers is very much underway.  

The success of brands over the next two decades will not only be predicated by understanding what, how and from who Zoomers are likely to buy, but also on a retailer’s abilities to execute frictionless omnichannel experiences with the right technology in their stores and supply chains.  

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