‘Gen Z are a different breed, and retail has historically mischaracterised them’

It feels like yesterday that we were discussing baby names for Generation Z, the first truly digital native, 21st-century tribe. But while some of them are still navigating school exams and living off the bank of mum and dad, older Gen Zers are now closer to 30 than 20, economically active, and increasingly shaping the retail landscape.

Between now and 2030, Gen-Z will shift from representing about 8% to around 20% of UK retail spending, based on Mintel research. Beyond this, as they shift from independent young adults to young families, their contribution to the retail economy will grow even more.

While retail is focused on navigating near-term turbulence, it feels an important moment to reflect on what we have learnt about this group, and how they will shape the landscape.

Online is not their default channel

The logic was that being born into a digital world would lead Gen Z to use digital channels as their primary way to shop. We can categorically reject this view. They make heavy use of digital, particularly for selected missions, but they also place more importance on physical engagement and experience than any other generation. OC&C’s recent research shows share of spend online among Gen Z is no different to the Millennials.

They don’t live faster

While intolerant of slow or high-friction shopping experiences, Gen Z are not looking to get the job done as fast as possible – that’s the preserve of Millennials. Gen Z are a tribe who won’t compromise on making the right choices and are more prepared to research, explore and wait to secure the right product for them.

They have the means

Expectations of the global spending power of Gen Z have doubled over the last three years, according to Forbes. They will have the highest disposable income of any generation. More will rent rather than buy. They will have fewer children, creating far greater discretionary spending for retail.

They graze rather than bulk buy

Gen Z are the tapas generation, buying little and often. Last year in the UK, the average Gen Z consumer spent about 30% less than their Millennial counterparts, but across 10% more transactions. For retailers pushing cross-sell and basket attachment strategies, this will be increasingly jarring to the Gen Z shopper.

They’re more interested in looking and feeling good

They are a vainer bunch on average. While taken from a US report by Pureprofile, 45% of Gen Z monthly spend is on clothing, health and wellness (about 10% more than Millennials at their equivalent ages). While this will rebalance as they mature, it points to more growth tailwinds for lifestyle categories.

They’re more social

I’ve used the word ‘tribe’ liberally for good reason. Gen Z are a more active and connected community than any other. They share advice and products and are heavily guided by influencers and affiliation.

They plant shallower roots

This is more a reflection on how the retail industry harnesses Gen Z talent. Gen Z are more nomadic – they aren’t career planning the next 20 years and are less tolerant of working their way up from the bottom. How retailers deal with the implications this has on churn and create career paths that offer more interest and engagement from day one is a critical challenge in the war for talent, especially when they will represent about 35% of the workforce by 2030.

They’re riddled with contradictions

This isn’t a helpful observation for retailers looking to crack the code, but Gen-Z are internally inconsistent. They are the most socially and environmentally conscious group – 80% have purchased secondhand, 68% self-identify as ‘eco friendly’ shoppers – but they’re comfortable turning a blind eye to their carbon footprint when sourcing products from afar and over-buying with the expectation they will return unwanted goods.

We see these traits shaping where Gen Z shop. When asked in a recent survey why disruptive models like Shein have such strong appeal, it wasn’t price or speed that came out top, but more the excitement of not knowing quite what they were going to get, or when they were going to get it, and the expectation that purchases were the fuel to a routine of sharing and trading within their social circle.

So, Gen Z are a different breed, and the industry has historically mischaracterised them. Over the next few years, the retailers that they choose will major on experience, have clarity of purpose and create emotional connection. They will find a way of being advocated within Gen Z’s social networks and continuously regenerate their appeal to stave off accusations of boredom.

It will no doubt be a challenge, but the good news is that we have a decade of targeting this group before Generation Alpha follow hot on their heels and change the rules of the game all over again.