Gen Z will put retail disruption on steroids

The good news is that retailers have finally made progress in figuring out millennials. However, just as retailers are cracking the code, a new generation is emerging that will ensure a steady supply of disruption.

The first Gen Z consumers were born around the mid-1990s, and many of the oldest members are about to advance from college to the workforce (or just did, depending on how you define this group). These consumers are highly diverse and multicultural, and I’ve been tracking their story with great interest, partly because I’ve got a Gen Z daughter at home that I’m still trying to understand. But more importantly, it’s becoming clear to me that retailers — whether food, drug or mass — need to prepare for what’s about to hit them.

Dollar spending figures are putting Gen Z on the retail map. These young consumers already influence up to $600 billion in spending, according to a recent presentation by Lynne Gillis, principal, IRI.

Millennials were trailblazers for introducing a range of new shopping behaviors. With Gen Z, so many of these behaviors will be on steroids. Gen Z speeds everything up. Using a Z word, let’s call them the Zoom Generation (not to be confused with Nike Air Zoom Generation!). If their parents used one or two screens at a time, members of Gen Z use three or four. They are always moving faster.

For example, millennials like to experiment, but for Gen Z it’s just a way of life, as  IRI research on Gen Z points out. Variety is mandatory, whether it’s in food, beauty, tech devices, or anything else. That’s not great news for retailers trying to rationalize store SKUs, unless of course, they leverage endless aisles to extend shelves.

Speaking of virtual shelves, millennials helped to usher in the omnichannel era, but with Gen Z, it will likely be seamless. Omnichannel is assumed by this generation, and they “expect a level of fluidity that’s unparalleled,” asserted Gillis.

Not only that, I doubt omnichannel is still the right term for this group. These younger consumers don’t recognize channels. They just want everything to work together for total convenience. You better not inconvenience them.

Convenience will also be crucial in payments. There are already some forecasts that the decline of cash will speed up to suit this generation, which will probably just want to pay with mobile devices.

Meanwhile, a number of observers have pointed out that authenticity and transparency will be crucial to Gen Z. My first reaction is, haven’t we been through this before? How much more important can it be to Gen Z than to millennials? However, it seems Gen Z will raise this to a higher level. Remember the wrath that fell upon companies accused of “greenwashing” by making unsubstantiated environmental claims? Gen Z, which was born into the social media era, is ready to tar and feather organizations across social media for these kinds of violations.

It’s with technology that these younger consumers are truly ready to accelerate, noted a recent NPD report. They will be willing retail customers for augmented reality, artificial intelligence, and lots of other technologies. They will embrace personalized offers. They may not care that you have reams of data about their lives.

One thing members of Gen Z won’t be doing is reading this column. Most are too young to be focusing on business media. They probably don’t care how their retail experiences impact the industry.

However, retailers are reading, and hopefully starting to think about these challenges. They need to address the demands of Gen Z, including greater variety, a more seamless shopping experience across platforms, convenient payments, enhanced authenticity and transparency, and deeper technology experiences.

Solutions will vary by retailer and market. However, it will be crucial to gear up for this generation, because these consumers are about to zoom across the retail landscape.

David Orgel is an award-winning business journalist, industry expert and speaker who was the longtime chief editor and content leader of Supermarket News. He is currently the principal of David Orgel Consulting, delivering strategic content and counsel to the food, retail and CPG industries. To read last month’s column, click here.
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