Analysis: Why teenage Generation Z shoppers are different

Today’s 14 to 19 year olds, known as Generation Z, are growing up in a very different world to anyone born before 1995.

Not only has the political and economic climate changed fundamentally, but in the past few years there has been an explosion in digital technology that few expect to see repeated.

As Alasdair Lennox, creative director at design agency Fitch, which has produced a report on Generation Z, says: “The past three to four years have been quite amazing in terms of technological breakthroughs. Will it have changed as dramatically in another 10 years? I struggle to believe that it will have the same level of intensity of innovation in coming years. It’s quite hard to keep this trajectory of technological innovation.”

That makes today’s teenagers the first generation of shoppers to naturally use technology many others need to adapt to.

There are other developments affecting this age group’s outlook. Obama’s tenure as America’s first black President means they are used to and respond well to images of diversity in marketing and media, according to Fitch. The global downturn, meanwhile, means they are suspicious of credit. Having grown up with the effects of elder generations’ credit splurges, they are keen savers and careful purchasers.

Fitch’s report on Generation Z says: “While instant gratification in shopping was the norm for Generations X and Y, Generation Z are credit cynics. These resourceful savers are careful not to waste their limited financial means.”

But every generation is affected by its own political climate, so it’s the digital changes that probably hold the most resonance for retailers. As Karen Stenzel, who leads the global consumer products marketing team at Red Bull, says:“This younger generation are early adaptors so what they like to do will be standard in the coming years.”

Fitch’s report says: “Gen Z are not a new species. In many ways they’re just like the teens of previous generations but with new tools to express their identities, discover new information and influence their peers.” In 2004, when the youngest of this group was aged nine, Facebook was launched. In 2005, YouTube followed and in 2006 Twitter was unveiled. The iPhone followed in 2007 and since then the pace of development in digital and web technologies has been rapid. To someone turning 15 in 2013, using such services and devices is second nature, and in another few years they will be entering the workplace and earning more disposable income.

Rebuilding retail

So what does this mean for retailers? The first and most important step, according to Fitch, is a large one - brands need to reshape their infrastructure in a bid to remove silos and operate more seamlessly. The report states: “Retail organisations need to change fundamentally. It is impossible to achieve seamless retail if you have separate, silos departments for store design, online operations, marketing and logistics. The highly structured corporate silos within large retail organisations need to become more fluid and collaborative, to build future-ready infrastructures.”

Rebuilding a retailer is no mean feat, and Lennox says the required change needs to come from the top of the organisation. He says: “If the chief executive puts his or her head in the sand and says ‘I don’t understand these kids’, this won’t happen. As ever, great retail businesses will be driven by great leaders. They need to have a sense of who their future audience is.”

Retailers may want to consider employing a chief experience officer (CXO) whose job it is to oversee these newly seamless operations. Fitch’s report says: “Gen Z want nothing more than to share their data and information, but most
organisations currently are unable to receive it. The CXOs will not only gather and utilise that valuable feedback, but use it to build advocacy and loyalty.”

In addition to the operational changes, brands will also need to think carefully about their message and how they communicate it. Generation Z shoppers respond well to brands whose message is authentic, but are quick to cotton on to those that aren’t. Fitch’s report says: “Stores will need to offer compelling, brand-led experiences that are more about aspirational browsing and less about a direct push for transactions.”

Generation Z’s approach to shopping is different as well. These shoppers like to ‘find’ things - discover them through online platforms such as Facebook or Pinterest or via magazines or TV shows - before browsing and researching the product.

They are keen on creating digital scrapbooks of images taken in stores on smartphones or found online, and will carefully track prices before making a final decision.

They are also keen on sites such as eBay for purchasing, and once they have a product in their hands they want to shout about it. This age group was the first to produce ‘haul videos’ - uploading videos of themselves showing off their purchases - and they are more likely to talk about products on social networks.

Many of these changes retailers are already aware of and are working to cater for, but it’s clear that this new type of shopper will need a strategy and infrastructure all of its own. Authentic brands, clever digital technology, well-designed stores and seamless infrastructure will all need to feature widely in Generation Z’s retail world.