To Meet Gen Z , Retailers Must Join Their “Phygital” World

This post is part of a series focused on the retail industry highlighting emerging trends affecting consumer and retailer behavior.

Just as we’re getting over using “millennial” as a theme/punchline for everything from advertising to social research, here comes Gen Z with their categorically different perspective and behavior. To remain relevant to this emerging generation, retailers need to update their brand experience to one that is personalized, authentic, instantly accessible and consistent along the entire buyer journey.

To take a step back, I recently attended the Retail Innovation Conference in New York City, and the topic Gen Z was more popular than Snapchat and avocado toast, as was the presentation on them by consumer behaviorist Ken Hughes. In his keynote, Hughes outlined the factors that make Gen Z tick, but as important were two other considerations for their mindset: who their parents are and what exposure they’ve had to technology.

Maybe You Do Become Your Parents

For the most part, Millennials are children of Baby Boomers, who constructed their own family and working models that fit their core values and good economic times, including independence, optimism, personal gratification, consumerism, and equal opportunity. This combination of ambition and idealism was passed on to Millennials, who created a cohort that values diversity and tolerance, but also sociability, fun, competition, and personal attention.

Gen Z adopted many of the different traits of their Gen X parents, who are more fiercely independent than the Boomers, and more likely to be skeptical, nonconventional, and informal, but also entrepreneurial and consensus builders. While most Gen Zers have yet to enter the workforce, early insights point to a generation marked by insecurity and instability. According to the New York Times, “Generation Z, by contrast, has had its eyes open from the beginning, coming along in the aftermath of those cataclysms in the era of the war on terror and the Great Recession.” This pragmatism rather than optimism leads them to seek change and follow the entrepreneurial mindset of their Gen X parents.

The “Connected” Generation

While Millennials were the first adopters of emerging technology, Gen Z was the first raised by technology. As Time put it, “Gen-Z is also the most diverse in American history, and the first made up people who don’t know a world without the Internet or smartphones.” Take a second to think about that. While Millennials can just barely recall a time before universal connectivity, Gen Z has never known it and instead sees instant access and availability as a given like electricity and running water. Even their first device, the iPhone for Gen Z, versus the iPod for Millenials, has shaped their views and interaction style as well, with one providing instantaneous access to a world of information and the other a fun way to hear your music.

Is Retail Ready for Gen Z?

And that is where the challenge, but also potential opportunity emerges for retail – not of unreasonable expectations, but expectations consistent with how this latest generation has been raised, though they may seem unreasonable to your business right now. Granted, instant communications and content are a lot easier to supply than physical product, but to a group that has grown up with broadband speed gratification, playing second fiddle to the way you want to operate, just won’t work.

But rather than pack up shop, you can start preparing for the shift over the next few years – after all, the Gen Z cohort ranges from kindergarteners to college freshman. To put yourself in the mindset of this group, examine the structures and norms around which your business has grown, by asking 4 fundamental questions:

  • Are you even “Phygital”? This generation is living in a “phygital” world, meaning, they do not see or understand the need for barriers between the two. Likewise, not having the ability to go back and forth between these worlds will be frustrating and ultimately lead them elsewhere
  • Is your brand genuine? Again going back to their Gen X parents, these are “vote with your dollars” type consumers, who have less entitlement than Millennials, and are going to support the brands that they believe in. Whether you sell sneakers or sedans, the message of who your brand must be the experience these consumers feel in your locations, on your website, across your social channels, and during the shopping experience.
  • What do you mean you don’t have it? Are your locations a way to distribute products or something more? For a generation with speed on the mind, having the ability to supply them with products faster than 2-day shipping may be a major asset, but you need to drive them from their native digital realm to your locations, and do it better than the goliaths of eCommerce.
  • Buy it? But I just want to use it… This is another concept highlighted in the Retail Innovation Conference; will the generation who Uber before they drove want to buy a car? Or a house? Or anything for that matter? Does your retail experience lend itself to the sharing economy? Obviously, food service is off the hook here, but everything from consumer electronics to clothes to lodging to transportation is now “rentable”. Is this a shift your business could make, perhaps even in parallel as Gen Z purchasing power grows?

As they have before, retailers need to rethink how consumers engage with your brand to survive this next shift in behavior. Those who do not will fail to maintain relevance with this emerging group of buyers, and slowly fade as they are replaced with a better, more consumer-centric players.

So, despite all the hype and irrational fear, Gen Z is not the generation will end retail. But they may end retail as we know it. (And hey, maybe we’re overdue.)

Ciaran Doyle

Ciaran Doyle

Ciaran Doyle is a member of the Solution Marketing team at 8x8, focusing on trends and technology in the retail industry. Read More>

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