How to get on Gen Z's wish list this season
While most of Gen Z isn't yet in the workforce, they — and their future spending power — have been on brands' minds for years. According to Hana Ben-Shabat, founder of Gen Z research firm Gen Z Planet, as a demographic, they possess close to $300 billion in direct purchasing power.
That includes allowances for the young Gen Zers, but most of the money comes, as one would expect, from the members of the group aged 16 and older. In fact, a lot of things about Gen Z are as one would expect. They shop in stores, like hanging out in malls (perhaps because that's one of the only places kids have to go) and use their phones in stores and outside of them.
Their top five favorite brands, according to Ben-Shabat, are Nike, American Eagle, Adidas, Levi's and Under Armour. In addition to apparel, they buy in categories with small-ticket items, like beauty and personal care, and they enjoy spending on entertainment and experiences.
Nora Kleinewillinghoefer, a principal at A.T. Kearney who co-wrote a report on Gen Z for the firm, noted that a quarter of respondents in the demographic said they had spent on beauty and personal care in the last six months. Overall, entertainment and experiences, and health and wellness were top spending categories for the consumers in the generation. Spending on electronics was lower, which Kleinewillinghoefer noted was probably because the expenses are higher (though 30% of Gen Z shoppers in her study bought something they couldn't afford).
Generically speaking, Gen Z is what one would expect, but it's dangerous for retailers and brands to think that way, Kleinewillinghoefer said.
"I think what everybody's discovering is that they're not really a one-size-fits-all group to begin with," she said in an interview. What's more — they have high expectations for what retailers should offer, and U.S. members of the generation are "extremely likely" to abandon a purchase if they have some kind of negative experience.
"There's a potential higher risk of losing them as consumers," Kleinewillinghoefer said. "They do have a lot of options and a lot of choice of where they can go and where they can make purchase decisions."
And a subpar experience isn't going to cut it.
Members of Gen Z might be young, but they've been around long enough to know what they should expect from retailers — and they're demanding retailers deliver that at a higher rate than other generations. Baby Boomers especially seem to have given up, to some extent, on having positive retail experiences. according to Kleinewillinghoefer
"They're so used to the retail experience deteriorating — that there have been budget cuts, that services get taken away — it's almost like the frog in the boiling pot," she said. "They've gotten so accustomed, they're like: 'Yeah, we know retail's gone downhill. It used to be better. It's budget cuts. I just expect this not to be a great experience.' Versus Gen Z's not willing to accept that as status quo."
Out-of-stocks, website crashes, poorly built-out mobile capabilities — whatever it is, Gen Zers are more likely to bolt if they notice it. These issues are not just limited to digital channels. Over half (57%) of Gen Z respondents prefer shopping in stores, according to Ben-Shabat's research, suggesting that the in-store experience is just as, if not more, important than digital.
"That's kind of the boring stuff, but you have to get all the basics right," Ben-Shabat said, "because if they go to the stores, they want to have it right there, right now, buy what they need and leave."
The generation's high expectations extend beyond basic functionality. As has become a standard guideline for retailers operating online and in physical stores, omnichannel should be about consistency. Lauren Bitar, head of retail consulting at RetailNext, noted that in addition to shopping in those two channels, many young shoppers are on their phones before, after and even during their shopping experience, making it key that the experiences mirror each other.
"When you give them money, they don't run to the corner store to buy candies."
Founder of Gen Z Planet
In addition to having marketing stories reflected in stores, retailers might consider mirroring their online navigation efforts as well.
"Often stores might be organized by category or something instead of by story, so making sure that if they're navigating somewhere online, it might be good to have the store echo a little bit to that where possible," Bitar said. "Being able to merchandise by story is important as well because it also really helps to emphasize what the vision of your brand is for that season."
Once a brand has found its holiday story, it's important to stick to it and reinforce that image in future marketing campaigns and in merchandising displays in stores, but retailers should be wary of setting up the whole season's campaigns at once and letting them run their course. It's easy to introduce potentially costly mistakes that way, Bitar said, like featuring a popular item in a marketing campaign without checking the inventory on it first.
Gen Zers have no qualms about abandoning a retailer that doesn't meet their expectations, since brand loyalty isn't as strong as some other generations. They can be "hot and cold" on brands, according to Kleinewillinghoefer, and are willing to ditch one brand and "jump on a bandwagon if the right influencer is supporting it."
At the same time that Gen Z shoppers can be fickle, they expect brands to be consistent in key areas, like sustainability. In Ben-Shabat's research, 60% of the demographic said brands being environmentally friendly was very important, while 49% said the same about social impact. On top of that, 67% said authenticity was very important.
Sustainability? Good. Fake sustainability? Very bad. In addition to the high value Gen Zers place on sustainable products, they also expect them to be reasonably priced, according to Kleinewillinghoefer.
"It's not that they don't value social or eco-conscious products, it's that they expect it," Kleinewillinghoefer said. "It's very much a perception of: 'Your product should just be sourced well. Your products should be sustainable. You should be using plastics to recycle them and create new products from it. But we're not willing to pay a premium for it.'"
While that means some brands have work to do in terms of making sustainability more affordable for shoppers, it's also an opportunity for those deeply involved in sustainability to highlight their messages during the holiday season, according to Ben-Shabat. REI, for example, doubled down on its environmental message this year through its popular #OptOutside campaign, which runs in connection with Black Friday, and others could also take advantage of the time to forge stronger relationships with Gen Z shoppers.
These preferences may seem disparate, but they all revolve around one thing: Gen Z's high expectations for what brands represent and what they should be delivering to shoppers.
"When you give them money, they don't run to the corner store to buy candies," Ben-Shabat said. "They really think thoroughly about how they use the money and they like to save. So when they spend money, they have to feel that they got good value for it."
Getting the basics right may be the same for all generations, even if some value it more than others, but Gen Zers want little else to be generic about how retailers approach them. According to Kleinewillinghoefer, consumption for Gen Z is less volume-based than millennials and more focused on "the quality or the uniqueness of the consumption."
In order to serve that need, retailers can do a number of different things. Curating discovery for the generation can be effective, as suggestions will (ideally) feel personalized to the shopper, and working on a faster turnover of assortment can help, too.
Kleinewillinghoefer highlighted that retailers are moving toward having new merchandise every two to four weeks as opposed to the more seasonal approach of the past, which should help them appeal to Gen Z shoppers. Even if that isn't possible for retailers yet, curating the assortment in a different way in stores can give shoppers a sense of newness.
"I think if you do a really good job at curating what's your best stuff to that audience, I think you're going to be most successful," she said, adding that extending into popular categories like health and beauty can be good if it fits in with the overall brand. "I think if you can tie it into a curated offering, it absolutely can make sense and be successful, but I think just being really smart and focused about the types of things you're offering is a better success strategy."
Ben-Shabat's research has found that, outside of price, Gen Zers value unique merchandise and customer service most from the in-store experience. To get to the uniqueness Gen Z is craving, brands can also offer the ability to personalize a gift for a loved one or highlight the unique qualities of a particular product.
"I think there is an opportunity, especially on the clothing side of the equation, to maybe show them: 'Here is a garment, but you can wear it in six ways,'" Ben-Shabat said.
Some retailers have already announced personalization initiatives around the holidays, including Etsy, which is running a holiday hotline on Tuesday to offer customers advice on unique gift ideas, and Macy's, which is offering a jewelry customization feature and advice on what gifts to buy via its "Gift Squad." Walmart and Target are both touting exclusive toy selections, in addition to personalized gift recommendations at the former and special rewards for Target Circle members at the latter.
The trap to avoid for most retailers is trying to be the retailer of choice for everyone on a shopper's gift list, according to Bitar. Shoppers won't want to go to the same store for everyone they're buying for — and that's OK. Sticking to a consistent holiday story and creating a seamless message for that story is more important.
They're looking for a more "artisan" feel, like in the past ages of retail, "where every store kind of had their specialty versus being a one-stop shop for everything," Bitar said. "Because they don't feel like [they] or the people in their lives are a one-stop shop."
In terms of marketing, retailers should also consider sending Gen Zers exclusive or more personalized offers. Kleinewillinghoefer's data found that the demographic liked sample giveaways, exclusive offers and contests almost as much as millennials.
"Often the Canadian consumer and the American consumer get treated very similarly by brands and historically, that's led to some poor retail decisions."
Principal at A.T. Kearney
Since the holidays are a time when retailers and brands might want to broaden their customer base, Bitar recommends targeted marketing for Gen Z consumers the brand knows well, but more generic emails to stay in the consideration of less active shoppers. Generally, that guidance tracks across scenarios, but Bitar also warns that shoppers in different countries should not be treated the same as U.S. shoppers.
"Other nations do not use the same generations, so it would be a mistake for a company that's in multiple countries to use that same marketing," she said.
Kleinewillinghoefer agrees, and in her research, found many metrics that American consumers and Canadian consumers differed on. Shoppers in the same age group in Canada didn't care as much about influencers, for example, and were less likely to abandon a purchase than their U.S. counterparts.
"Often the Canadian consumer and the American consumer get treated very similarly by brands and historically, that's led to some poor retail decisions and not as much impact when they've entered the Canadian market," she said.
Gen Z's relationship with technology is an interesting one. They grew up with it, which makes it a natural fit in some cases, and phones of course have grown to be an important piece of any retail strategy, but the relationship is not as linear as one would guess.
If it means having a clean, easy experience, they like it, Kleinewillinghoefer said. In her research, 83% of Gen Z respondents and 86% of millennials said they valued in-store technology like support tools, kiosks and maps. But they didn't like the endless aisle element of online shopping.
"They want tailored, customized options, not endless options," Kleinewillinghoefer said. And that includes not going too far the other direction and offering so many customizable elements that the shopper suffers from "paralysis by choice."
Some useful features to Gen Z shoppers might be in-store returns, an app that allows shoppers to check inventory in stores or the ability to reserve items online and pay once you get to the store. With more complex digital features, like checking if a product is available in stores or trying to reserve it, Bitar warns that it may not be worthwhile if it isn't fully built out.
"A disappointing customer experience in any channel now really has a halo effect on the rest of your channels because they're looking at your brand as one holistic thing that matters."
Head of Retail Consulting at RetailNext
If Gen Z shoppers try to use a mobile feature only to find that it isn't working or doesn't apply to the product they wanted to buy, that takes away from the brand experience.
"That's just disappointing," Bitar said, "and a disappointing customer experience in any channel now really has a halo effect on the rest of your channels because they're looking at your brand as one holistic thing that matters."
They're also looking at brands in all kinds of different channels — email may work best for some consumers, but for Gen Zers social media also has to be thrown into the mix, and it makes a difference which of those platforms a brand is using. Facebook was the original must-buy for social ad space, but since then have come Instagram, Snapchat and, something Ben-Shabat thinks will be important this season, TikTok.
"You've got to follow the attention," she said. "Where is the attention right now? And right now I think the attention is at Tik Tok — and Instagram and Snapchat. But really Tik Tok has just been a huge thing for this generation and I think that sometimes companies really underestimate what it is. … You have to be a little bit more flexible to just say, 'Things have changed.'"
And with how young Gen Z is, they're hardly done changing.
Article top image credit: Tamara Bellis on Unsplash