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Af­ter the Mil­len­ni­als, Gen­er­a­tion Z chal­lenges re­tail with a mix of ‘new and old world’ val­ues

While ev­ery in­dus­try has been busy keep­ing an eye on the mil­len­ni­als and their be­havioural pat­terns as busi­ness op­por­tu­ni­ties, a whole new gen­er­a­tion with a fresh mind-set is fast emerg­ing, ready to push the mil­len­ni­als into the back­ground.

While ev­ery in­dus­try has been busy keep­ing an eye on the mil­len­ni­als and their be­havioural pat­terns as busi­ness op­por­tu­ni­ties, a whole new gen­er­a­tion with a fresh mind-set is fast emerg­ing, ready to push the mil­len­ni­als into the back­ground. Welcome to the world of Gen­er­a­tion Z –a brigade of young­sters born post-1990 and now en­ter­ing the work­force, ex­ert­ing their pref­er­ences and be­liefs. So even as the re­tail in­dus­try is still try­ing to fig­ure out how to cap­ture and re­tain the at­ten­tion of the mil­len­ni­als, a new chal­lenge that is dif­fer­ent and com­plex has al­ready reared its head! Many re­tail an­a­lysts be­lieve that the ‘Mil­len­nial’ co­hort is re­ally two gen­er­a­tions – Gen­er­a­tion Y (born be­tween 1978-1989) and Gen­er­a­tion Z (born be­tween 1990-1999; some even pre­fer to in­clude only those born post-1995). Ac­cord­ing to es­ti­mates, Gen Z rep­re­sents about 60 mil­lion peo­ple in the US and about 2.6 bil­lion peo­ple world­wide. As of to­day, this group makes up a quar­ter of the US pop­u­la­tion and by 2020, will ac­count for 40% of all con­sumers. Un­der­stand­ing them will be crit­i­cal for com­pa­nies want­ing to suc­ceed in the next decade and be­yond. In the mean­while, me­dia and mar­ket re­search com­pa­nies have al­ready la­belled them as “screen ad­dicts” with the at­ten­tion span of a gnat (a re­cent study sug­gests that Gen Z at­ten­tion spans have shrunk to eight sec­onds). No won­der, many an­a­lysts also re­fer to them as ‘Net Gen’. On a per­sonal level, Gen Z seeks im­me­di­ate val­i­da­tion and ac­cep­tance through so­cial me­dia, since that’s where all their peers are and where many of the im­por­tant con­ver­sa­tions hap­pen. “Never be­fore has there been a gen­er­a­tion in­ca­pable of re­mem­ber­ing the world with­out the in­ter­net,” said Gold­man Sachs an­a­lyst, Christo­pher Wolf, in a pre­sen­ta­tion re­cently. How­ever, iron­i­cally, these are the same peo­ple who are also look­ing to dif­fer­en­ti­ate them­selves pro­fes­sion­ally. Re­search sug­gests that Gen Z is also the ‘en­tre­pre­neur­ial gen­er­a­tion’ who like the idea of work­ing for them­selves, the ma­jor­ity of them be­ing riska­verse, prac­ti­cal and prag­matic. Sig­nif­i­cantly, these young­sters are also very cau­tious about their pri­vacy and are less in­clined to share in­for­ma­tion with­out un­der­stand­ing the con­se­quences.

Ac­cord­ing to Gold­man Sachs re­searchers, this bunch of highly in­formed, but rest­less con­sumers will be the big­gest in­flu­encers for re­tail trends in the fu­ture. “That’s be­cause (their) di­ver­sity, flu­ency with tech­nol­ogy and con­ser­va­tive at­ti­tude to­ward money will have pro­found so­cial and eco­nomic im­pli­ca­tions,” rea­sons Wolf. In fact, the di­ver­sity of this gen­er­a­tion is the most dy­namic in the his­tory of the US. Re­search pro­vided by Frank N. Magid As­so­ciates sug­gest that Gen Z com­prises a mix of

55% non-His­panic Cau­casian, 24% His­panic, 14% African-Amer­i­can, 4% Asian and 4% mul­tira­cial peo­ple. This in­ter­est­ing mix of cul­tures and in­flu­ences will also be re­flected in their re­tail choices.

Hav­ing seen how their elders strug­gled through the re­ces­sion,

Gen Z is very con­ser­va­tive in its fi­nan­cial ap­proach, a ma­jor dif­fer­ence from the mil­len­ni­als. It is a group that will rely on debit pay­ment sys­tems, and not credit cards. Ac­cord­ing to a mar­ket re­search by The Cen­ter for Gen­er­a­tional Ki­net­ics, 29% be­lieve per­sonal debt should be re­served for a few se­lect items and 23% be­lieve it should be avoided at all costs. The fo­cus is on get­ting max­i­mum value

for money. While Gen Z is re­al­is­tic about the chal­lenges ahead, 89% of them re­main op­ti­mistic about their fu­tures, which is higher than any other gen­er­a­tion on record.

Vi­sion Crit­i­cal, in part­ner­ship with re­search firm MARU/VCR&C, re­cently ran a study ex­plor­ing the at­ti­tudes, be­hav­iour and val­ues of this gen­er­a­tion. In an in­ter­est­ing find, it was dis­cov­ered that the num­ber one thing that Gen Z shop­pers look for in the prod­ucts is ‘aes­thet­ics’ and ad­mit­tedly, fash­ion­able design mat­ters for 67% of them – more than that mat­tered to any other gen­er­a­tion. Since this gen­er­a­tion is al­ways post­ing pho­to­graphs, they pre­fer to be seen in clothes that do not have prom­i­nent brand lo­gos. They do not want to be walk­ing ad­ver­tise­ment bill­boards.

Re­tail­ers are al­ready sens­ing this op­por­tu­nity, and re­cently Tar­get in­tro­duced a cloth­ing line called Art Class, de­signed with the help of 10 trendy ‘Gen Zers’, with col­lec­tions that re­fresh ev­ery four to eight weeks. Con­trary to their so­cial per­sona and love for the net, these Gen Zers love shop­ping in-stores for their per­sonal styles. One may as­sume that this is good news for brick and mor­tar stores, but in fact the pres­sure is more, as these young­sters are well aware of what other re­tail­ers are of­fer­ing and the best ‘buys’ avail­able on­line, putting pres­sure on the re­tail­ers to de­liver. So, to win with

Gen Z, re­tail­ers must be sharp with both the in-store and on­line shop­ping ex­pe­ri­ences. Some favourite Gen Z re­tail­ers of to­day in­clude Ur­ban Out­fit­ters, UGG, Games­top, The North Face, Sun­glass Hut, Amer­i­can Ea­gle, For­ever 21 and H&M. As a gen­der­spe­cific ob­ser­va­tion, while guys spend more on prod­ucts, girls spend more on ex­pe­ri­ences.

It is widely ac­cepted that Gen Z is even more at­tuned than mil­len­ni­als to is­sues like sus­tain­abil­ity, and be­lieves in its own power to make a dif­fer­ence. A ma­jor change be­ing pre­dicted is that fast fash­ion is go­ing to turn to slow fash­ion, be­cause this gen­er­a­tion is not go­ing to see the need to spend money. Ac­cord­ing to an IBM/NRF study, these young con­sumers have ac­cess to US $ 44 bil­lion in buy­ing power, with 75% say­ing they spend more than half of the money avail­able to them each month. They’re very much will­ing to switch brands, and they’re de­mand­ing too. They’re also less swayed by tra­di­tional mar­ket­ing tech­niques, like har­ness­ing celebrity power, and they have gone from block­buster celebri­ties to un­likely role mod­els they see and con­nect with on YouTube.

An­other note­wor­thy char­ac­ter­is­tic of these young Gen Zs is that though they see the work­place as a bat­tle­field where get­ting a good job is a pri­or­ity, they are in­clu­sive and tol­er­ant of dif­fer­ence. They have grown up in a world where a black man was lead­ing the coun­try, women were in po­si­tions of power in the work­place and gay celebri­ties were role mod­els in the open. Hence, they are not judge­men­tal. Re­tail­ers are us­ing these fea­tures to grab at­ten­tion, as Gen Z is cre­at­ing their own per­sonal brand and not get­ting im­pressed by big names.

Ac­cord­ing to es­ti­mates, Gen­er­a­tion Z rep­re­sents about 60 mil­lion peo­ple in the US and about 2.6 bil­lion peo­ple world­wide. As of to­day, this group makes up a quar­ter of the US pop­u­la­tion and by 2020, will ac­count for 40% of all con­sumers.

SINCE THIS GEN­ER­A­TION (GEN Z) IS AL­WAYS POST­ING PHO­TO­GRAPHS, THEY PRE­FER TO BE SEEN IN CLOTHES THAT DO NOT HAVE PROM­I­NENT BRAND LO­GOS. THEY DO NOT WANT TO BE

WALK­ING AD­VER­TISE­MENT BILL­BOARDS.

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