Margaret Sheils says she knows enough to know she needs a credit card, but the Gen Zer takes a cautious approach to using it.

"For me, that's just always been a fear, of spending money I don't have," said Sheils, 24, who lives in Chicago. She tried using the trendy buy now, pay later option for a purchase once, but "I'd rather only buy something if I know I can afford it right now."

That debt-wary attitude is one of a number factors behind Gen Z's much-hyped relationship with credit cards, but industry analysts say this generation is gravitating toward them as they mature. Gen Zers themselves say they're not afraid of or uninterested in credit cards – they're just mindful about how they use them.

About half of Gen Zers currently have a credit card, but a similar portion of that age group — born between 1997 and 2012 — can't qualify under traditional scoring methods because they lack sufficient income. Each generation's relationship to credit has been unique, and although the Credit Card Accountability Responsibility and Disclosure Act of 2009 has had some effect on Gen Z's relationship with credit, this group of young consumers is expected to turn to credit products more quickly than their millennial predecessors, who were delayed by the Great Recession.

Bankrate.com senior industry analyst Ted Rossman said many Gen Zers are realizing there's a need to establish credit, whether for an apartment lease, a mortgage or a car loan. "The real sort of catch-22 is that it takes credit to get credit," Rossman said.

Gen Zers are coming around to credit cards, but "it's a little bit of a different path than the older generations followed," Rossman said. 

Generational differences  

One influence on Gen Z's current relationship with credit cards is the Credit Card Accountability Responsibility and Disclosure Act of 2009, which introduced more hurdles for those under 21 trying to get a credit card, like a cosigner or income proof requirements.

It also barred card issuers from soliciting on college campuses, causing companies like Capital One and Citi that did heavy student marketing to pull back. "You have a different foundation there for a lot of students," said Brian Riley, director of Mercator Advisory Group's Credit Advisory Service.

Since that change, consumers under 21 have had a harder time developing credit. "That does create that two- to three-year lag for those consumers," said Paul Siegfried, the leader of TransUnion's credit card business.

Gen Z is defined as those born between 1997 and 2012, according to Pew Research Center, making older Gen Zers 18 to 25 years old. 

Rossman said 55% of Gen Zers have credit cards, compared to 66% of millennials, 77% of Gen X and 85% of baby boomers, indicating a "steady stair-step up." 

A number of factors influence those generational differences, from personal preference to access to credit. The CARD Act has had lasting effects even beyond age 21 for generations like millennials and Gen Z. 

Still, "there's every expectation that the set of all people who are Gen Zs will start getting credit cards, no doubt about that," said David Robertson, publisher of The Nilson Report.

Relationships to credit have varied by generation, Siegfried pointed out. Baby boomers got their first credit card – a novel idea – at a retailer, while Gen X was offered free T-shirts on college campuses for filling out credit card applications. 

When Siegfried's baby boomer parents got their first credit card, from Sears, "that was huge for them, to be able to get access to a credit card, this renewable credit deadline," he said.

By the time Siegfried came of age, "you're getting solicitations. It's not something weird; it comes to you in the mail and you just respond to it," he said. "This access to credit, generationally, has come a long way."

What sets Gen Z apart

Whereas many Gen Xers and some millennials got their first credit card in college, this milestone is occurring later for many Gen Zers, but so are other major life events, like buying a house, getting married or having children.

One reason for those delays: student loan debt, which weighs heavily on this generation. Robertson said it's "unquestionably" the biggest issue facing Gen Z, as these consumers enter what should be prime borrowing years.

That's exactly why Sheils said she's uninterested in burdening herself with more debt. "For a lot of us, I think student loan debt kind of informs the majority of our financial decision-making," Sheils said.

There's something to be said, too, for generations that came of age during the Great Recession or the COVID-19 pandemic and witnessed older siblings or parents struggling financially, Rossman said.

"A lot of Gen Zers in particular view credit cards as debt instruments," Rossman said. Where millennials have embraced the rewards and perks of credit cards, "to a lot of Gen Zers, it's like, whoa, I'm not even going to go there, and it just scares me."

Sheils said she's considered signing up for another credit card, "but I just think that maybe I'm not there yet mentally. The thought of having another stresses me out."

Before she goes out for drinks or a meal, Sheils checks her bank account balance and looks at menus to calculate what she'll spend on food and drink. She has one credit card and uses it for gas and purchases related to her dog, because those are two substantial expenses she has to be able to pay.

With her more cautious, practical attitude about spending, Sheils is far from alone among her peers. Sonya Lutter, director of research and education at consulting firm Herbers & Company who spent about two decades in higher education teaching financial therapy, said she sees Gen Z using credit cards "really responsibly."

It's a lot more nuanced than Gen Z liking or disliking credit cards. "They're really fine taking on a credit card, if they see some value to themselves. And if it's just the company that's saying they need it, that's not going to influence them," Lutter said.

Gen Zers are highly intuitive with technology, are values-oriented and prize diversity, and use peer-to-peer payment apps like Venmo or Cash App heavily, Lutter said. They also have more fluid attitudes, often lacking the brand loyalty older generations exhibit and following what their friends are drawn to, she said.

Money lending is a familiar concept, but the approach has to be a bit different with Gen Z. Salman Syed, general manager of North America for virtual card company Marqeta, said the way brands engage with Gen Zers — who'd rather text than talk by phone, for example — is crucial. "What's so core here is how you establish that relationship and how you speak to them," he said.

Coming around to credit 

Gen Z has no shortage of payment options, but those able to get credit cards appear to be turning to them in bigger numbers. Data indicate Gen Z is now leading the way in terms of growth rates, Siegfried said, and they seem "savvy," in terms of their access to and usage of credit.

Credit card originations in the third quarter of 2021 were up 63.5% year-over-year, reaching a record 20.1 million new accounts, according to TransUnion data. That rise came as card companies boosted marketing in the wake of the COVID-19 pandemic to reverse a decline in usage, with some particularly pleased about young consumers.

Gen Zers accounted for 3.1 million card originations in that quarter. Comparatively, in the third quarter of 2020, Gen Z logged 1.8 million originations, per TransUnion. To Siegfried, that growth indicates Gen Z continues to take part in the credit business. 

Growth in originations drove up the number of credit card holders to 196 million in the fourth quarter of 2021, according to TransUnion, and Siegfried expects Gen Z to lead the charge on growth for the next two decades. 

The Great Recession affected millennials' use of credit, Siegfried said, with the average millennial getting similar credit products 3 to 3.5 years later than their Gen X counterparts. Siegfried expects Gen Z will turn to credit products more quickly than millennials.

While card industry observers tend to expect young adults may delay adoption of credit cards, it's more a question of when they'll embrace them, as opposed to whether they'll do so. 

"That's definitely what we saw with older millennials," as they established their careers and families, and the perks of credit cards began to appeal to them, Rossman said. "Gen Zers will eventually climb on board in greater numbers as well."

Yusuf Aljabri, 20, who lives in Chicago, said he got his first credit card, a student card, this year and has started to use that for smaller purchases, like food or clothes, that can be paid off easily. "If I can just pay for it at the moment, then I just kind of do it, so I don't have to worry about the expense later on," he said. 

"Gen Z, I feel like, is becoming more financially aware and financially literate," Aljabri said. "I see a lot more people getting credit cards and using them responsibly as well."

About half of Gen Z currently can't qualify for a credit card under traditional scoring methods, Robertson noted. "They just don't have the kind of cash flow to make that happen," he said. Many are "thin-file" consumers, meaning they have little to no credit history, and there's been a recent push to bring more of those people into the credit pool.

However, if a large percentage of Gen Z remains plagued by out-of-control student loan debt, there's "a distinct possibility" that a decade from now, an outsized share of that generation will remain in the subprime borrower category, Robertson cautioned.
 

The draw of buy now, pay later

Gen Z doesn't yet possess significant purchasing power, but it's an age group that wields sizable influence over consumer thinking. In recent years, the consumer mindset has changed tremendously, "fueled a lot by Gen Z," said Chiro Aikat, Mastercard's executive vice president of North America products. 

Gen Z, a generation that demands seamless, digital experiences and expects the ability to check account balances as often as they'd like, is all about, "'I don't want to think about my payment. I don't want the way I pay, and how I pay, to drive what I want to buy. I want my buying to be top of mind, and then I want the other things to flow in,'" Aikat said.

That's only part of what's fueled the generation's interest in buy now, pay later options. Younger people also tend to be more willing to try something new than older generations. And the ability to spread a purchase across multiple pay periods is understandably attractive for a 24-year-old consumer who "doesn't have massive amounts of liquidity," Siegfried said.

Siegfried believes BNPL is being used more as a cash flow tool rather than a debt management tool. As to whether data show credit cards are being replaced by BNPL, Siegfried said "I haven't seen evidence that that has occurred."

Gen Z's current interest in BNPL or debit cards may just be a function of age. In another five to 10 years, as they establish careers, increase their credit-worthiness and have more desire for credit, experts said, it's likely their priorities will shift. 

Oftentimes, there is a link between BNPL and credit cards anyway, with consumers using a card to make their installment payments. Rossman said the vast majority of BNPL users have credit cards, too; "they just decide to use BNPL selectively." BNPL and debit cards are formidable competitors to credit cards, "but over time, it'll be more of an 'and' as opposed to 'or,'" Rossman said.

Gillian Manning, 21, of Coconut Creek, Florida, has used PayPal Credit and now has a credit card through a bank, which she uses mainly for groceries and smaller purchases she can pay off quickly. She said she deals with financial anxiety and while BNPL would have appealed to her in years past, "I'm hesitant to do that now, because I don't want to take on any more debt," she said. "I try to be as fiscally responsible as possible."

That kind of gradual development in payment preferences is what's likely to keep young people moving in the direction of cards, said Charlie Youakim, CEO of BNPL company Sezzle. BNPL is "the perfect training wheels for credit" because it helps younger consumers start to understand how to manage debt and pay it back, but he expects Gen Z will eventually adopt credit cards. "I just don't see how you can argue against credit cards," he said.

More competition for card companies 

The plethora of options facing Gen Z has spurred traditional card industry players to introduce new offerings to remain competitive with neobanks and fintechs.

Rossman pointed to American Express's recent addition of a debit card linked to a checking account, with part of the company's reasoning being "the young adult angle."

With 70% of new American Express cards acquired in the fourth quarter last year going to millennials and Gen Z, skepticism related to premium cardholder potential among those age groups "is over," Amex CEO Steve Squeri said during a company earnings call this year

The company would not share data solely on Gen Z, but a key part of Amex's growth strategy involves “enhancing and expanding our benefits and features, with a focus on appealing in particular to younger customers,” Amex Communications Director Azar Boehm said in an email. 

Discover CEO Roger Hochschild has also said BNPL isn't taking away from credit cards. "I totally reject the idea that younger consumers can't manage credit – it's a myth. We're seeing higher take-up rates for credit cards in the latest generation of students," Hochschild told American Banker.

Student cards, which are for those consumers who are at least 18 years old and might require proof of enrollment in school, continue to be a focus for the company, a Discover spokesperson said. He declined to say how many such cardholders there are.

Aikat said the vast majority of consumers don't see payments as card/non-cards; they just want to be able to pay when they want and how they want. For its part, Mastercard expects to roll out Mastercard Installments this spring to join the BNPL trend.

Mastercard's "entire strategy is about choice. It's becoming more about choice, than the rails on which that payment happens," Aikat said.

Visa, too, is introducing BNPL, with Visa Installments. It's moves like these, incorporating new trends, that card companies and marketers may need as they try to attract Gen Z. Adding cryptocurrency services is another way in which they're attempting to draw in younger generations, given their affinity for that rising digital alternative.

"Increasingly, young adults are kind of outside the traditional financial system, so they might be playing by somewhat different rules," Rossman said.

BNPL providers don't have the baggage other lenders might have accrued during the Great Recession, Syed noted, "but I also think they just know how to appeal to this generation a lot more." BNPL lenders stress the stark contrast between their products and credit cards' interest rates and fees.

Appealing to Gen Z is a top priority for card issuers, given the importance of customer acquisition and retention. Companies are eager to be the first to give young people credit cards because so many tend to stick with a card company for years to come, Robertson said, although Gen Z's notions of loyalty may differ from their parents. 

Not surprisingly, considering Gen Z's youth, it's an age group that's still sorting out what it's interested in and what it finds enticing about credit cards. Rossman said it's more of a mixed bag as to what credit card features draw in these young consumers. "There is a lot of diversity of ideas there," especially as they show interest in novel things like crypto rewards or cause-oriented perks, he said.

That diversity of ideas is just one reason Gen Z is likely to keep card companies and traditional banks on their toes in the years to come, Rossman said. These consumers have a plethora of payment choices, and that heightened level of competition means it's game on for card stalwarts as companies seek to attract those maturing customers.

"They definitely would like to get their hooks in you early and grow with you," Rossman said. The challenge facing established players right now: How do you foster these relationships and then grow with these consumers, while fending off newer fintechs? 

Those fintechs and BNPL providers have amassed young customers and are building out their offerings. As the new entrants strive to grow with their customers, they're angling to "show that credit is a really valuable offering" in these new forms, Syed said.

"It's an interesting time, because financial relationships may not be as steeped as they've historically been," Syed said. Traditional credit providers and new players alike will have to work harder to draw and keep their young clientele.

Walmart is working to shift perceptions of its business among Gen Z with the launch of two Roblox experiences ahead of the holidays. The interactive spaces mark the first time the world’s largest retailer has shown up virtually and are part of a series of experiments that leverage emergent digital channels to nudge young consumers closer to commerce.

“We're really manifesting the brand in a way that we think is going to excite the next generation of consumers and get them to think of Walmart differently,” said Justin Breton, director of Walmart’s brand experiences and strategic partnerships.

A two-pronged approach on Roblox represents a bid by Walmart to cater to varied product interests among the gaming platform’s 52 million daily active users. One of the spaces, Walmart’s Universe of Play, showcases the big-box store’s toy collection, seeking to inspire visitors to add items they encounter digitally to their holiday wish lists. The world lets people accrue rewards and play five mini-games tied to franchises like “Jurassic World” and “Paw Patrol.” A blimp flying overhead also regularly drops in new toys to keep the experience fresh.

The other offering going live today (Sept. 26) is Walmart Land, a floating island designed in the shape of Walmart’s spark logo. Each of the six sparks is an “isle” embodying a different store shopping aisle. The first, called House Of Style, carries beauty and cosmetics products. Brands on display include pop singer Halsey’s Af94 line, UOMA by Sharon C., ITK by Brooklyn & Bailey, Lottie London and Bubble.

Like Universe of Play, House of Style offers activities that are meant to hook consumers in a deeper fashion beyond browsing. Those include a virtual dressing room, strike-a-pose challenge and a category-themed obstacle course, called an “obby” in Roblox parlance.

“We're really showcasing these brands in a way that consumers have never been able to see or engage with, with the hopes of, in this particular instance, getting them to think of Walmart as a destination for premium Gen Z beauty products,” said Breton.

“We are certainly not the first brand, but we believe we are the first major retailer, to show up on Roblox and represent a true broad assortment of categorical experiences,” Breton added later.

Metaverse mania

Walmart worked closely with Roblox on audience insights, trying to cater the design of Walmart Land to the 17- to 24-year-olds who make up the gaming title’s fastest-growing segment and represent the target audience of the push. It also relied on the know-how of its merchant partners to gauge what brands would pop best in a gaming setting.

The company joins a long list of retail and apparel marketers that view Roblox as an important testing ground for the metaverse, a channel that promises to blend aspects of the real world with virtual ones but whose full potential remains years off from realization. Given the nascent state, most metaverse activations have not yet evolved into meaningful drivers of transactions. Breton’s team focuses on media strategy that “effectively shortens the distance between inspiration and commerce” and previously spearheaded Walmart’s efforts around livestream shopping on apps like TikTok.

Walmart is trying its hand a few concepts to track what piques consumer interest on Roblox, such as virtual merchandise, or “verch,” that players can outfit their Roblox avatars in, as well as tokens and badges that are won by competing in games and other activities.

“We obviously want to drive mass amounts of people into this experience, and of course, tell a good story,” said Breton. “But also, what does engagement look like? Because this is really about meaningful engagement.”

To keep players returning, Walmart Land will build out over time, with the next isle scheduled to release in November, others planned around the holidays and the rest slotted for early 2023. Excitement will be stoked through programming in the form of live events, along with more traditional media elements like YouTube pre-roll ads and spots running on in-store Walmart screens and radio channels. Walmart is not using a new immersive ad format Roblox is rolling out, Breton said, though it is trying its hand at other offerings.

An Electric Island section of the space is modeled on music festivals and acts as a destination for events like a Netflix trivia night hosted by “Stranger Things” star Noah Schnapp. On Oct. 6, the section will also put on an “Electric Fest” headlined by Madison Beer, Kane Brown and Yungblud. The concert makes use of a new Roblox motion-capture technology.

Virtual performances have become a popular way for marketers to partner with artists during the pandemic, and Walmart is looking to differentiate from the pack with sheer scale and variety.

“We're doing something different in the sense of most brands have brought in a single artist,” said Breton. “We're bringing together three, each of whom represents different types of music, different types of style.”

Sponsored content

By Shopkick

Though headlines often focus on the so called "retail apocalypse," malls continue to resonate and perform strongly with consumers of all ages. Over the last several decades, malls have drastically scaled to offer movie theatres, restaurants, co-working spaces, live events and more. As a result, malls have not only solidified themselves as a piece of classic Americana, but remain destinations for discovery and novel experiences. 

Shopkick recently surveyed over 20,000 US consumers to gain insights into mall shopping frequency and habits, and to see how these findings differ among generations.

There's no question that Gen Zers and millennials frequently make purchases online or via mobile for the speed, convenience, and variety. But even so, the in-store shopping experience continues to have importance amongst these younger generations. In fact, a whopping 81% of Gen Zers say they prefer to shop in stores than online. Shopkick's survey found younger generations will lead the revival of retail, with 69% of Gen Zers and 60% of millennials visiting the mall every month. 

In the survey, the following trends stood out amongst Gen Z and millennial shoppers: 

• Shopping Spree: 97% of Gen Zers and 92% of millennials visit shopping malls, and collectively, 55% of these younger generations visit a mall every week.  

• What's in Store: 51% of Gen Z and 69% of millennial shoppers visit two to four stores during their time at malls. An additional 44% of Gen Zers visit more than 5 stores per visit, compared to just 24% of Boomers. 

• Social Scene: While shopping was cited as the main reason for mall visits across all generations, socializing with friends and family was the second most popular for 14% of Gen Zers and 7% of millennials, compared to just 4% of Gen Xers and 3% of Boomers. 

• Pop-Ups Please: 60% of Gen Zers and 55% of millennials say that pop-ups and experiences (massages/makeovers, concerts, etc.) would motivate them to visit the mall more frequently, followed by gourmet dining (10% and 17%, respectively) and fitness centers (7% and 6%, respectively). 

With over $200 billion in combined spending power within the US, brands and retailers can't afford to ignore Gen Z and Millennial shoppers, and more importantly, can't afford to ignore their demands. Younger generations want greater personalization, exceptional service, convenience, and overall, want their shopping trips to be positive, immersive experiences. 62% of Gen Zers and 74% of millennials say that their standard for customer experience is higher now than ever before, making it crucial for brands and retailers to meet their needs. 

Is your brand meeting Gen Z and millennial demands for personalized, immersive shopping experiences? Shopkick can help you engage shoppers all along the customer journey⁠—whether they're at the mall, or browsing at home. To learn more, get in touch at [email protected]. 

Gen Z consumers spend twice as much time socially interacting in the metaverse than they do in real life, according to new research conducted by Vice Media Group and Publicis Groupe's Razorfish agency. The study draws a link between playing video games and the metaverse, a broad buzzword encompassing blended digital and real-world experiences. 

The age group carries bigger aspirations tied to these online spaces, with over half (52%) of Gen Z gamers reporting they would like to make money in the metaverse and one-third desiring to build a career there. Twenty percent plan to direct their "fun" budgets allocated for entertainment and leisure to in-game purchases over the next five years, representing an average annual spend of about $50. 

In turn, one-third of Gen Zers would like to see brands develop virtual stores, and 30% were receptive to brands selling skins and apparel to outfit digital avatars. Marketers must be mindful of remaining unintrusive, as 63% of respondents stated they were concerned about data privacy in video games and the metaverse. Still, those figures are lower than for millennials (66%) and Gen X (70%), underpinning a budding acceptance of branded virtual experiences among younger cohorts. 

Razorfish and Vice Media Group's new study, titled "The Metaverse: A View from Inside," emphasizes that Gen Z not only spends more time in metaverse-adjacent spaces than older demographics, but also is developing more meaningful connections to their online identities. More than half (57%) of survey respondents said they feel freer to express themselves in games than they do in real life, while 45% reported their in-game identity is a truer expression of who they really are. The findings suggest brands have an opportunity to help enable those forms of self-expression and generate deeper loyalty and connections with Gen Z, including through the sale of custom skins and apparel for digital avatars that are common in many games. 

The study notes that the researchers were not focused on defining the metaverse, which can encompass a wide range of experiences, from true virtual reality — which has not seen widespread adoption — to multiplayer games like Fortnite and Roblox. Razorfish and Vice Media Group largely seem preoccupied with the latter category, tying many of Gen Z's metaverse preferences to casual online gaming. Some critics have resisted equating modern gaming with the realization of a true metaverse, pointing out that multiplayer titles like Second Life have technically been offering connected virtual experiences meeting these parameters since the early aughts.  

Still, Gen Z's attachment to games is noteworthy compared to other digitally-savvy groups like millennials, as is their receptivity to concepts like microtransactions. Major marketers have started to recognize this trend. Nike last fall created an interactive venue on Roblox called Nikeland, where visitors can participate in activities and try on virtual iterations of the company's gear. Nearly 7 million people had dropped in as of March.   

While gaming opens fresh avenues to engage otherwise aloof Gen Zers, brands should take note of how they prefer to be reached. In terms of what Gen Zers want to see from brands in games, 46% cited free products and experiences, 23% said "branded digital worlds" and just 18% said advertising. Nineteen percent of respondents stated they "don't believe brands belong in games/other metaverse experiences."

Razorfish and Vice Media also positioned their findings around empowerment. The research pointed out that Black, Indigenous and people of color under the Gen Z banner are more likely to "be" themselves in-game than white peers. One of the study's key insights is that "gaming is good for mental health," with 77% of respondents claiming they play to relieve stress and anxiety. 

The cognitive benefits of gaming have produced "mixed research" in broader academic studies, as noted on the Harvard Health Blog. Meanwhile, the pandemic has underpinned the deleterious effects prolonged isolation from real-world contact and connection can have on young people.

Whether you walk into a brick-and-mortar store or visit a retailer’s website, you’re almost certain to find clothing split into two categories: men’s and women’s.

This gender binary is engrained heavily into the retail shopping experience, with physical stores often split down the middle between the two options.

That’s changed over the past few years, though.

Plenty of luxury brands have launched clothing collections that don’t adhere to the traditional binary, instead using terms such as gender neutral, gender free or unisex. All these terms — rooted in social movements intended to deconstruct gender traditions — are used by retailers to describe a product meant for a broader audience, regardless of how they identify.

From March 2020 to July 2021, 11 gender-neutral launches from major brands occurred in categories such as apparel, beauty, accessories and more, according to a report from Coresight Research.

Lifestyle brand Fred Segal launched its first in-house clothing collection this month, which is a gender-neutral set of T-shirts, sweatshirts, hoodies and sweatpants. Luxury retailer Stella McCartney’s website has a unisex section that features bottoms, shirts, hats, bags and shoes. 

Gucci’s gender-neutral selection has a dedicated page on its website as well, titled MX, stating that it is meant to “deconstruct preconceived binaries and question how these concepts relate to our bodies.” Prada also launched its Timecapsule NFT Collection in June, which features gender-neutral physical products and gifted non-fungible tokens. 

Here’s a look at the opportunity brands see in the gender-neutral category, and what considerations might be made.

'Make sexy tops and put them on men'

The shopping habits of consumers have evolved since the time many major brands were founded.

Around 1.2 million LGBTQ people in the U.S. identify as nonbinary, according to June 2021 data from UCLA’s Williams Institute. However, gender-neutral clothing isn’t just of interest for nonbinary shoppers, it also appeals to those who do identify within the binary.

Sixty-one percent of Gen Z thinks brands could be doing more to prove that “style should not have a gender,” according to The Gen Z Fashion Report by student affinity network Unidays. The survey of more than 4,000 Gen Z students across the U.K., U.S. and Australia conducted this year also found that 45% want brands to market gender-neutral clothing more explicitly. 

"If you're gonna create gender free fashion, make sexy tops and put them on men," Rob Smith, CEO and founder of gender-free company Phluid, said. "[D]econstruct things, because that's the way young people are starting to express themselves."

The growth opportunity for retailers isn’t just with younger consumers. With celebrities like Harry Syles and Brad Pitt wearing skirts on magazine covers and on the red carpet, the audience for clothing with no labels is expanding to an older age group.

“[M]y characterization is that there is definitely an opportunity for older consumers too,” Erin Schmidt, senior analyst at global advisery and research firm Coresight Research, told Retail Dive. “We're especially seeing that in the accessible luxury and luxury segments.”

Smith, whose company also includes apparel and accessories store The Phluid Project, would agree with that.

“Our age group is older than I thought it would be,” Smith told Retail Dive. “[O]ur average age is 30 years old.” 

Beyond oversized shirts

Launching a gender-neutral collection filled with one-size, oversized shirts and hoodies is an easy way to bypass more complex questions of size and fit within this category. Yet, putting thought into it can result in a more unique approach. 

“[W]e're seeing the big players enter this space and some of them are doing a good job at it, some are doing a horrible job at it because they're doing it the old-fashioned way, which is an oversized sweatshirt, sweatpants, sweat shorts,” said Smith. 

The U.K.-based brand Gender Free World has a sizing chart unlike most major retailers, where shoppers select both a body shape and size. There are four body shapes to choose from, which allow customers to say, for example, if they need more space for their hips or if their bust is larger than the rest of their body. There are also up to nine sizing options to choose from. This allows shoppers to have a more tailored, personalized shirt that isn’t based on the typical sizing chart mass retailers use. 

Gender-neutral fashion is related to the push toward inclusivity that the retail industry has grappled with for years. Inclusive sizing has only recently become more common as consumers have pressured companies to cater to more than one body type. In the same way, creating gender-neutral apparel has the power to create a more inclusive shopping experience for customers.

“It's about self-expression. It can mean … deconstructing the way we see gender and fashion,” Smith said. “It's a bold move when you start to put skirts and dresses into gender-free collections.”

'The entire system is binary'

While the trend has been spearheaded by small brands and luxury retailers, more accessible companies like Pacsun and Gap have also launched gender-neutral collections.

With some forethought and planning, Coresight’s Schmidt thinks gender-neutral options are not just a luxury trend, but an opportunity for all retailers.

“I think the gender-free category is definitely something that all retailers and categories should be thinking about and looking at as a consideration of whether it's a fit for them,” said Schmidt.

Executing on gender-neutral clothing in a non-performative way requires effort on multiple fronts, though. And some retailers may wonder if they are ready to enter the space.

For mass retailers, there are existing infrastructure and product development processes that might need to be rethought when launching a gender-neutral line.

Target carries some gender-neutral clothing. However, its website has dedicated pages for gender-neutral collections that are still titled with gendered terminology. For example, one page on its website is titled “Gender Neutral: Girls’ Clothing.” 

When asked why the categorization of its gender-neutral pages includes gendered terms, a Target spokesperson told Retail Dive this is because of the structure of its website and because many items are cross-tagged to other departments, like women’s and men’s. Target declined to say if it had plans to update the webpage titles.

Through his work consulting with companies via the education arm of his company, G.E.T Phluid, Smith knows that the work needed to launch gender-neutral products is difficult. In Smith’s perfect world, all retailers enter the gender-neutral space and do it right.

“Everything is very binary, the entire system is binary. So to deconstruct that takes so much work,” says Smith. “And it might take a little longer and a little more work. But it's better to do something and do it with authenticity than not do it at all … And that means working harder.”

Generation Z is proving to be a catalyst for new marketing tactics and media opportunities for grocers across the industry. Simply advertising products is not going to cut it, and this younger generation, regarded for its activism, won’t hesitate to make that known, according to panelists during a Groceryshop session focused on marketing to the up-and-coming consumer generation.

TikTok is a fast growing and powerful social media platform, with over 1 billion monthly active users, 60% of whom are Gen Z, according to Wallaroo Media, and retailers across the board are tapping into its power to advertise and gain a new, younger customer base.  

Though the world of social media is daunting, Kristin Patterson, head of big box, department and grocery retail at TikTok, encourages retailers to “jump right into TikTok,” she said Tuesday during the panel. However, there are certain approaches that have proven most effective when utilizing the app, specifically when trying to gain the attention of Gen Z.

Partnering with creators and their already established following is a strategy Patterson noted. According to her, when a TikTok creator advertises a brand or product on the app, Gen Z consumers are overwhelmingly more likely to buy it or research it. 

When trying to establish a social media presence independently, some grocers have tapped into current TikTok trends as well as popular hashtags. 

Patterson credited Whole Foods Market with using trending sounds on the app to gain views. She gave the example of a video the grocer created showing off its Berry Chantilly Cake that utilized a trending audio track. Whole Foods went the extra mile, Patterson explained, when it replied to a viewer’s comment on wanting a dairy-free option of the cake with an additional video showing off the Vegan Berry Chantilly Cake Ice Cream it carries from its private label brand. 

Hashtags and hashtag challenges are another social media tool Patterson highlighted. Back in 2019, Kroger created the shoppable hashtag challenge #TransformUrDorm on TikTok, making it one of the first brands to do so on the social media app. Though it’s a few years old now, the hashtag has over 914.7 million views.

Even when grocers aren’t trying to become an internet sensation, TikTok can make them one. This past summer, Sprouts Farmers Market went viral after praise for its $5 deli sandwich took off with the hashtag #sproutssandwich, which now has over 10 million views.

While social media is an effective tool to draw in Gen Z consumers, the generation asks for more from companies than being trendy online, according to the panelists. 

While sales and merchandising are core focuses for retailers, Gen Z wants to know what companies stand for in areas like sustainability and diversity — something smaller startups are leaning into to gain the generation’s attention.  

“Their BS meters are so much higher,” Vanessa Pham, co-founder and CEO of Omsom, which makes Asian sauce kits and pantry shortcuts that are sold in stores and online, said during Tuesday’s session. She said that Gen Z consumers pay close attention to not only a company’s values, but also to how well a company abides by them. 

Gen Z shoppers look to storytelling and connection to determine their loyalty to a company or brand. For Omsom, as a smaller, start-up food brand focusing on Asian flavors, this means using social media platforms — and especially TikTok — to project authenticity to the brand’s growing customer base. 

Pham founded Omsom with her sister, and a majority of their TikTok content features them. The first video on their feed recounts their story as Vietnamese-Americans, daughters of refugees and the lack of diversity they grew up seeing in mainstream grocery stores’ “ethnic” aisle.

Education is also a driving force of Omsom’s marketing strategy, talking not only about the significance of its product, but also about the grocery industry’s treatment and categorization of ethnic foods. 

“As a brand, we live with our ethos,” said Pham. “And that's something that we build every day so that consumers can trust us and see that this is something that's genuine.”

REI stores on Election Day will open two hours later than usual to give employees paid time off for voting and other civic engagement, the outdoor retailer said Tuesday.

The move is part of the company’s “Your Vote Can’t Wait” campaign, which includes an online resource hub aimed at both employees and customers, per its press release. Feedback from employees prompted the decision to open late for this purpose, the company said.

REI is among nearly 2,000 retailers participating in the nonpartisan Time to Vote organization, founded in 2018 “to ensure that their employees had a work schedule that allowed them time to vote in that year's midterm elections.” Vote.org similarly advocates for paid time off to vote.

In recent years, elections emerged as opportunities for marketing and even selling merchandise. But the stakes are a bit higher these days: As retailers work hard to court Gen Z — people roughly aged 10 to 25 — that means speaking to a largely progressive, politically active segment of the population.

REI has made a name for itself by closing stores for higher purposes. Its #OptOutside campaign, which has entailed shuttering stores for Thanksgiving and Black Friday, is now a tradition in its eighth year, for example.

“Every election is an opportunity for each of us to engage, participate and help create the change we want to see in our world and this year's midterms are no exception," Chief Customer Officer Ben Steele said in a statement. "No one should be forced to choose between going to work and participating in the democratic process.”

But the company may have to work harder to hang on to its enlightened reputation in light of consumers’ growing support for unions, which is especially strong among younger people. CEO Eric Artz’s remarks that unionizing isn’t “the right thing for REI” as New York store employees worked to form a union rankled some customers who see the company as reliably progressive. The store voted overwhelmingly to organize in March, and another REI location in Berkeley, California, voted to do so in August.