Winning Over Gen Z

WASHINGTON—Members of Generation Z influence a significant amount of household purchases and enjoy spending their own money, according to the latest issue of the Consumer View report released yesterday by the National Retail Federation.

“We’re seeing a shift in the way families shop where children are much more involved with purchasing decisions,” said NRF Vice President for Research Development and Industry Analysis Mark Mathews, in a press release. “This year during back-to-school shopping, teens and pre-teens were heavily involved with purchasing decisions and contributed significantly more of their own funds compared with a decade ago.”

According to the report, 87% of parents say their children influence at least some aspect of their purchases, either for household items or for themselves. Gen Z is most likely to have an influence on clothes, outings, toys and food purchases. They are also most likely to spend their own money on entertainment purchases such as apps, books/music and toys/games.

While Gen Zers might not always expect to be involved in family purchase decisions, their parents find it important to include them. The report said parents involve their children for a variety of reasons: The children will be using the item (57%), their opinion matters to their parents (57%), and to teach decision making (56%). The most common time parents involve their children is at the front end of a purchase—when researching features and product reviews and when price checking or looking up product availability.

The report also found that Gen Zers influence different aspects of shopping, including the specific brands parents consider (52%), product features that are important (48%) and specific retailers that are considered (41%). “Shopping is a great way for parents to bond with their children, and parents want retailers to make it even easier to involve their children,” Mathews said. “As the industry continues to evolve, retailers have a huge opportunity to expand all-inclusive family shopping.”

Meanwhile, the oldest members of Gen Z have already graduated college and are in their early 20s, and as more of these consumers enter the workforce, it will be important to tap into their increased buying power.

According to research from the NPD Group, Gen Z accounts for 27% of the current U.S. population. The marketing firm recently compiled a report on the thrifty generation and had this to report:

• Retailers and brands should offer digital and in-store experiences that appeal to Gen Z's passion for unique products.
• New digital platforms, like Twitch and other videogame streaming services, have high engagement among Gen Z, offering brands an exciting medium with which to connect with younger audiences. 
• Purposeful and convenient options are critical to winning over the hearts and minds of Gen Z consumers—businesses that provide both have captured Gen Z’s attention and spending in recent years.  

Drive In-Store Traffic, Digitally

Online shopping growth continues to outpace the shopping growth of bricks and mortar, but physical retail locations are still where most sales occur. Gen Z tends to shop across general merchandise. Lower rates of credit card ownership drive much of this behavior, so for now brands and retailers must focus on in-store strategy to reach Gen Z.

“Gen Z wants unique products sold by unique retail, made by unique brands,” said Sports Industry Advisor Matt Powell. Recently, the run specialty footwear channel reversed years-long sales declines after certain retailers began carrying brands that weren’t available elsewhere.

Tap into Emerging Content Formats

The first generation to be raised fully immersed in a digital environment, Gen Z is comfortable with digital platforms. Nearly two-thirds of U.S. boys age 13 to 17 watch gaming content on video services like Twitch and YouTube, plus they play videogames. The average gamer who watched gaming content, across all age groups, watched for seven hours per week.

Gaming is creating new opportunities to advertise to Gen Zs. Fortnite developer Epic Games and Nike recently partnered to integrate Nike’s Jordan Brand shoes into gameplay. With the partnership, Fortnite players (often Gen Z) could customize their characters’ outfits by purchasing the Nike “skins” that were visible to other gamers. The move generated buzz among people who play and watch videogame content online. The results were that when Gen Z footwear consumers shopped in stores, they spent more than in the past.

Satisfy Gen Z’s Appetite for Purpose and Convenience

For Gen Z consumers, meals must have purpose. “Meals are no longer viewed as isolated occasions. They’re part of an integrated lifestyle,” said Food Industry Advisor David Portalatin. He noted that 19% of U.S. Gen Z consumers said food is their passion and an essential part of their lifestyle and identity, compared with 16% of millennials, in a June 2019 CivicScience poll.  Gen Z are increasingly going for ethnic cuisines, such as Asian and Hispanic dishes. “This generation grew up in a global environment with more diverse classmates than prior generations. As a result, Gen Z expects to explore the world through their food,” said Portalatin.

Gen Z consumers also value convenience when eating, and their foodservice delivery orders amounted to $552 million in the year ending December 2018. That was $1 million shy of millennial delivery orders. What is most impressive about this is that only a portion of Gen Zs are old enough to order their own delivery.

As Gen Z continues to grow in commercial importance, it’s critical to keep up with the latest trends in order to win, the report concluded. Smart marketers are leveraging social media, digital content and in-store experiences to find novel ways to engage this generation.

“Success will come from doing it right, differently, and with added benefits. Innovation drives growth,” said Chief Industry Advisor Marshal Cohen. Whether it’s in a videogame, an app or a store, now’s the time to discover fresh ways to rise above the noise.

Advertising Category Management Market share Metrics Consumers Product availability Inventory management Merchandising Pricing Promotions Device integration Social media E-commerce Store maintenance