The generational shift
Retailers need to start preparing for the influx of younger consumers, Chloe Winter reports.
Retailers are failing to deliver to a new generation of shoppers, a retail advisor says. Emily Duncan, of Retail NZ, says by 2020, one of the largest generations in history will be moving into their prime spending years, but retailers are yet to adapt.
The year 2020 will be a time when Millennials, those typically born in the 1980s and 1990s, will be reaching their peak years of financial earnings, and will be shopping for themselves, their children, and their families in ways that will challenge retailers.
In addition, Generation Z, those born between the late 1990s and the present day, will also have an impact on the retail scene, as they are set to become the largest group of consumers worldwide, Duncan said.
With that in mind, retailers needed to start making improvements to cater for its new customers, and to stand our in an ‘‘extremely competitive retail environment,’’ Duncan said.
‘‘A lack of engagement with two generational groups as large as these is not an option for retailers,’’ Duncan said.
‘‘Instead, retailers and entrepreneurs should be embracing the fact that these two groups can make significant positive impacts in the retail sector if they learn and adapt to fill their needs.’’
However, in order for retailers to flourish in the wake of a new generation of shoppers, Millennials and Generation Z needed to be treated as two different groups, she said.
For example, Millennials were always looking for bargains, while Generation Z expected more from technology. Generation Z was also big on individuality and uniqueness.
Millennials and Generation Z consumers were ‘‘the most conscious spenders we have seen’’, Duncan said.
‘‘Growing up in an era where technology and information was so readily available for most, if not all, of their lives has allowed them to be more educated in their purchase decisions.
‘‘This means these generations are conscious about price, quality, environmental impacts, health benefits, trends and much more.’’
Shoppers wanted to know what retailers cared about and what they supported, Duncan said.
‘‘[This] requires brands and retailers to take an interest in their communities and the greater good of society.
‘‘Those brands which are viewed as ‘generous brands’ will define the future for stores, especially as Generation Z will use this perception as a deciding factor when purchasing,’’ she said.
‘‘This means that stores should be focusing now on becoming integral parts of their communities and neighbourhoods.’’
Retailers could achieve this by hiring local, incentivising employees to ride to work, or car share, and give back to their local communities, she said.
The changing consumer was a ‘‘huge opportunity’’ for retailers, Duncan said.
First Retail Group managing director Chris Wilkinson said new generation shoppers was new territory for many retailers, who were already struggling with ‘‘massive changes’’ in consumer behaviour.
He agreed Millennials and Generations Z had ‘‘very different needs and expectations’’.
Wilkinson’s advice for retailers was to better understand existing customers and those that could be shopping with them, he said.
‘‘This insight should be the foundation for strategy to help their businesses change both culturally and operationally to better align with the future.’’
'...These generations are conscious about price, quality, environmental impacts, health benefits, trends and much more." Emily Duncan