These days, those unpredictable Millennials tend to receive the most marketing attention from retailers, but many are now realizing that the equally elusive Gen Z is proving to be a powerful economic force, perhaps even more so than previous generations. This poses a tremendous opportunity for retailers—and according to new research from American Express Canada, those who take action now have the greatest chance for success.
The company’s new survey, conducted by Nielsen, reveals discrepancies between retailers’ priorities and the unique needs of Gen Z. More specifically, while a majority of retailers (51 percent) claim a need to reach and understand this burgeoning generation, only 25 percent of those retailers currently market to Gen Z.
“While it is clear retailers’ marketing efforts will likely continue to shift focus to Gen Z, there is a gap to bridge between Gen Z’s unique needs and what retailers are doing,” said Kerri-Ann Santaguida, vice president and general manager of Global Merchant and Network Services at American Express Canada, in a news release. “There is an incredible opportunity for retailers who take action today, as the influence of this soon-to-be powerhouse generation continues to grow.”
How does Gen Z shop and save?
To better understand this age group, Nielsen surveyed Gen Zers aged 15 to 22 years. These findings suggest this group is grounded and financially savvy, with 72 percent currently saving money for future expenses/investments and one-third (33 percent) paying for 100 percent of their own expenses when shopping for personal items. Survey results suggest they are a generation who cares about quality and authenticity, with 63 percent choosing better quality products as the one of the top three factors that influences them to spend more on a brand and 45 percent saying they are influenced to spend more on a brand when friends or someone they know shops there.
While it’s no secret Gen Z are digital natives, an underlying insight throughout the survey illustrates their appreciation for in-store shopping experiences. In fact, 65 percent of Gen Zers prefer to shop at brick-and-mortar, which is more than double the number of those who prefer to shop online (32 percent). More specifically, 51 per cent of Gen Zers stated that their ability to see and try a product before purchasing may influence them to shop at a particular retailer.
What comes as a surprise is retailers’ understanding of Gen Z’s shopping preferences. According to the survey, an underwhelming number of retailers invest in marketing tactics that are sought out by this generation: only 15 percent invest in sampling and 23 percent offer unique in-store experiences, further demonstrating a discrepancy between what Gen Z expects from their shopping experiences and what retailers are doing.
Gen Z expects more when it comes to social
While there is still work to do, some Canadian retailers (33 percent) are making strides in delivering on Gen Z’s expectations by prioritizing social media as a sales tool. It’s no secret that Gen Z is active on social media, with almost 100 percent of Gen Zers saying they have a presence on at least one social media platform. That said, 75 percent of retailers are either only now considering an investment in strategic social media marketing that directly targets Gen Z (25 percent) or are not targeting Gen Z at all (50 percent). This represents a significant area of opportunity for retailers.
Investments in digital payments are growing
One area where retailers are right on track with addressing Gen Z’s expectations is digital payments. When it comes to making purchases in-store, 35 percent of Gen Zers expect the option to pay using mobile wallet/in-app or contactless (i.e. tap) payments solutions. Retailers’ current capabilities are right in line, with 32 percent currently accepting mobile or digital wallet payments. That number is likely to grow given 57 percent say they are investing in digital (wallet/in-app) payment solutions.
With Gen Z’s growing spending power and influence, it’s vital for retailers to understand the gaps in their capabilities and ensure they are getting ahead of this unique generation’s needs. By prioritizing the right shopping channels, implementing the right payment technologies and approaching marketing strategically, retailers can learn how to influence this important generation and remain relevant for years to come.