What Retailers Need To Know About Gen Z

While just a few years ago, it may have seemed silly for bedding retailers to remodel their selling strategy just to cater to Gen Z, times have definitely changed. As any parent can tell you: kids grow up faster than you think—and today, the oldest members of Gen Z are already hitting their 22nd birthdays. They are emerging into the workforce and real world, newly responsible for furnishing homes and apartments of their own. Born between 1997 and 2012, this generation makes up about 25% of the US population and already wields $44 billion in spending power. By next year, they are expected to account for almost 40% of all US consumers, making their influence on retail undeniable. As this burgeoning demo continues to grow, smart retailers are taking the time to really understand how they differ from previous generations—and making careful strides to better connect with them. And thankfully, engaging with Gen Z doesn’t mean you have to leave older customers out in the cold. In fact, according to a 2018 HRC consumer study, over 80% of parents surveyed said that their Gen Z kids influence their purchasing decisions on everything from clothing and accessories to furniture and household goods. In today’s volatile retail market, taking the time to really understand and engage with younger consumers can be the difference between future success—or inevitable obsolescence.

So what makes Gen Z so different?

Often mistakenly lumped together with the Millennials, this generation of young people has their own unique set of habits, influences and expectations when it comes to shopping. We explored four key Gen Z attributes that retailers should keep in mind as they plan for the future. 

HYPER-CONNECTED: Remember That Members Of Gen Z Are Natural Researchers

While millennials had been pegged as technology-obsessed, Gen Z is the first age group to really grow up online. Born after the emergence of the Internet, nearly all of their lives have been situated around instant information, social networks and mobile technology.

“That context has produced a hypercognitive generation very comfortable with collecting and cross-referencing many sources of information and with integrating virtual and offline experiences,” explained Tracy Francis and Fernanda Hoefel, partners at McKinsey & Company management consulting company, in a 2018 report on “Generation Z and its implications for companies.”

This hyper-connectedness has had a direct impact on their shopping habits—and lays the groundwork for what makes them distinct from older consumers: they are notably and uniquely informed. Members of Gen Z are not only completely comfortable researching products, it comes as second nature to them. According to The Center For Generational Kinetics’ “The State Of Gen Z 2018,” 68% of Gen Z surveyed said they read at least three reviews before buying something for the first time.

But it’s important to remember that these customers are not necessarily looking for guidance in the traditional spaces retailers have come to expect. First and foremost, much of their research is happening on their phones. Surveys have shown that Gen Z spends twice as much time on their mobile devices than any other age group—and use them twice as much as even the Millennials for shopping and buying.

It goes without saying that having a mobile-optimized website is essential to targeting Gen Z consumers, but that’s just one piece of the puzzle. In lieu of consumer review sites and even major celebrity endorsements, Gen Z is predominantly looking towards friends or peers for guidance. That could mean following the recommendations of “micro-influencers” on social media or YouTube—or even surveying their friends via Instagram Story.

When trying to connect with Gen Z, bedding retailers and manufacturers need to consider a wide range of digital assets. That includes SEO optimization, review site rankings, social ad reach and more. But even more so, these assets need to be reflected in real-life and in-store environments as well.

OMNI-CHANNEL: Bring The Online Ethos To The In-Store Experience

Many people worried that the growing popularity of online retail would mark the end of brick-and-mortar shopping as we know it. And while this may have been true for some of the older generations who appreciate the convenience-factor, it’s hardly the case for Gen Z. The truth of the matter still remains: teens love the mall. In fact, according to a survey from Oracle NetSuiteWakefield Research and The Retail Doctor, Gen Z and Millennials are more likely than Gen Xers or Baby Boomers to increase their in-store shopping this year.

Though younger consumers do appreciate the in-store shopping experience, their expectations are different than previous generations. Personalized product recommendations and easy comparison research may be novel concepts for older shoppers, but Gen Z has never known anything else. And that means they expect to find that same level of service in a brick-and-mortar environment.

First, they are looking to be engaged. A visually appealing shopping experience is valuable to this generation; having an eye-catching window display or creative backdrop is not only a major draw, but can even encourage them to share photos with their friends and followers.

But Gen Z is looking for more than aesthetics. They also want clear access to information, data-driven insights and a shopping experience that prioritizes ease-of-use. This extends to even the most basic features of a physical store: according to a 2018 HRC Advisory consumer survey, more than 90% of Gen Z indicated that a strong WiFi signal is an important aspect of their shopping experience—because, even when they’re standing in a store, they are still researching, cross-referencing and soliciting advice on their phones. While older consumers are often looking for more in-store interactions, the Wakefield Research study found that 42% of Gen Z surveyed “become annoyed by increased interaction with retail associates.”

“When it comes to Gen Z, retail associates need to find a way to get them to lower their guard,” explained Bob Phibbs, CEO of The Retail Doctor. “Sales associates need to be authentic and develop trust. The most important thing is to discover the individual shopper and find out what they’ve seen and researched but not expect them to know exactly what they want.”

AUTHENTIC & EMPOWERED: Take A Stand - And Really Mean It

It’s important to remember that Gen Z’s digital savvy is about more than just finding the best products or prices. Their hyper-connected culture also makes it easy to learn more than ever before about brands and corporations: how they treat their workers, where they source their materials, how much money the CEO has donated to certain political parties.

While the enduring popularity of fast fashion, Amazon and Chick-Fil-A may seem to indicate that these details have little influence if the price is right and the product is desirable—that view is shifting with the younger generation. The majority of Gen Z consumers see a brand’s commitment to social causes as a “driving factor” when they make purchases. Even more, they will actively promote a brand they see as standing up for something they believe in. (DigitalCommerce360) This can be anything from donating to certain charitable causes and community outreach to making sure their manufacturing process is environmentally sustainable to a general willingness to amplify socially conscious messages.

“In a transparent world, younger consumers don’t distinguish between the ethics of a brand, the company that owns it, and its network of partners and suppliers. A company’s actions must match its ideals, and those ideals must permeate the entire stakeholder system,” the McKinsey report explained. “Gen Z consumers are mostly well educated about brands and the realities behind them. When they are not, they know how to access information and develop a point of view quickly.”

This is evident when you look at the brands that are most popular among younger consumers. According to management firm Piper Jaffray’s semi-annual “Taking Stock With Teens” survey, the most popular clothing and footwear brand among Gen Z is Nike, by far. More than just an athletic brand, Nike has cemented its stronghold among young people by blending fashion-forward designs with a clear commitment to championing social causes through its advertising and sponsorships. And this mindset continues to extend across demographics as well.

According to McKinsey, “Seventy percent of our respondents say they try to purchase products from companies they consider ethical. Eighty percent say they remember at least one scandal or controversy involving a company. About 65 percent try to learn the origins of anything they buy—where it is made, what it is made from, and how it is made. About 80 percent refuse to buy goods from companies involved in scandals.”

For smaller retailers, this means taking even more careful consideration when stocking your showrooms—looking beyond monetary value to take ethics and ethos into account. If there’s a skeleton in a brand’s closet, Gen Z will likely find it and choose to shop elsewhere.

FINANCIALLY CAUTIOUS: Rethinking Consumption, Ownership & Value

Growing up when they did, Generation Z is both more cynical and realistic when it comes to finances than their predecessors: they are actively working to avoid making the same mistakes with their money. As such, many are wary of incurring debt, opting to rely on debit cards rather than multiple credit cards. In fact, according to a poll from Morning Consult, 40% of people aged 18 to 22 have no debt at all.

This sense of being financially cautious also goes hand-in-hand with their shifting set of values. Though Gen Z is being more careful about their futures, they do not view success through the lens of accumulating things. In fact, many big-ticket items that were once seen as essential “adulthood” purchases, like houses or cars, carry much less importance with these consumers.

This more cautious approach to spending would have a clear impact on mattress shopping. Messages about financing a higher-priced option may fall on dead ears, but flexible furniture rentals or subscription-based services are increasingly appealing. Not only do they give consumers a more cost-effective way to enjoy a high-quality item (for a limited amount of time), these plans are also better aligned with young people’s more transient lifestyles. For some consumers, furniture rental programs can even be seen as a more environmentally-friendly option than buying a brand new, low-cost item.

While the potential of a subscription-based mattress program would create some questions of logistics, it’s nevertheless a trend to keep an eye on as it becomes more popular across other home furnishings product categories.

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This article originally appeared in Sleep Retailer eNews on August 22, 2019.

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