The business world’s obsession with millennials appears to have reached a fever pitch. The Wall Street Journal recently reported on a booming industry of “millennial experts” (aka intergenerational consultants) billing corporations up to $20,000 an hour to decode millennials for them.
With so much attention lavished on those born roughly between 1980 and 2000, marketers are just beginning to focus on millennials’ younger siblings: Generation Z. According to the retail and brand consultancy Fitch, by 2020 today’s 14-to-19-year-olds will be the largest group of consumers worldwide, making up 40% of the US, Europe, and BRIC countries, and 10% in the rest of the world. It won’t be long before discerning, digitally adept Gen Zers begin exerting their outsized influence on the retail scene.
The fact that many retailers are still grappling with how to attract millennial shoppers doesn’t bode well for their success with postmillennials. Understanding Gen Zers’ social and shopping behaviors is key to capturing this new wave of shoppers, says Fitch. Gen Z’s allegiance to digital and video communication and predilection for intimate experiences is a challenge for traditional retailers — department stores in particular.
With a business model built on appealing to a broad swath of consumers, department stores risk alienating Gen Zers looking for a sense of community around a specific interest or product, according to Retailing Today. Gen Zers — aka “iGen” and “Digital Natives” — look to video, especially YouTube, not only for inspiration but as a means of purchasing goods. In response, department stores need to more fully integrate video into stores, mobile apps, and other points of contact with customers, including the point of sale. Some department stores have already begun offering shoppable videos, recognizing that the next generation of consumers may prefer to skip the in-store experience altogether.
Industry Impact: Department stores seeking to connect with Gen Z may need to scale back on assortment and offer smaller brick-and-mortar storefronts that rely more on digital and video components and less on physical space and merchandise to connect consumers with products.
Alexandra Biesada shops everyday, whether she wants to or not, and pines for the days when it was strictly a recreational activity. She has covered the retail beat for Hoover’s since 2001. Follow her on Twitter.