How Gen Z is reshaping the retail industry

Generation Z, also called Zoomers, are the generation born between the late 1990s and early 2010s. This generation grew up as “digital natives,” meaning they grew up in a world where the internet and early forms of social media had taken flight, according to Futures Platform.

Older Gen Zers became adults during the COVID-19 pandemic. Since the pandemic shut down the world, brick-and-mortar stores were closed, grocery stores were limited capacity, and schools switched to online classes, this caused a shift in the way Zoomers shop, create, and learn. Gen Z shopping habits can be broken down into four distinct categories; they need to feel inspired, they need to explore the brands or products, they need to feel a sense of community, and they need to feel a sense of loyalty.

Inspiration

Gen Z grew up as digital natives, using social media as their main source of inspiration for fashion, style, and beauty ideas. Three in 10 Gen Zs use social media as a source of inspiration. Of those social media platforms, YouTube (57%) is the most popular platform, followed by TikTok (53%) and Instagram (44%), according to Archrival.

Although 51% of Zoomers believe social media influencers create new trends, 49% of Gen Zers said they trust their algorithm to serve them the content and products they want. Despite this, 74% of Zs said they still prefer the in-store experience, but not before doing a deep dive into research about the brand or product. 

Exploration

Gen Z often uses social media to research a brand or product before buying. However, this in-depth research doesn’t stop 34% of Gen Zers from impulse buying. 56% of Zoomers said they believe brands lie about services and products, which is why 70% of Zs said they are more likely to trust a brand or product after conducting their research.

One way Gen Z is more inclined to trust a brand or product is while conducting their research, the brand has its comment section turned on. This open communication between the brand and the consumer allows the brand to educate the consumer on products and services. If Gen Z wants a specific item or product, they have a specific way of researching the product or brand before making the purchase.

Data in the chart above was provided by Archrival. Archrival is a youth-generated culture agency. 750 Gen Zs (13-25) were nationally polled for this chart.

Although Gen Z seems to make the most well-informed decision before making a purchase, they can also be discouraged away from a brand or product. Zoomers said they get discouraged if they can’t find independent information or reviews online (46%); if they are given a time-sensitive deal before they are ready to buy the product (44%); if they see too many sponsored or promoted ads on the product or brand (43%); if the ad disrupts the content they are consuming (41%); if they have to provide an email or other personal information (34%); or if they have never heard of the product or brand before (27%).

Fashion and beauty brands are starting to lean more toward User-Generated Content (UGC). UGC is when brands approach customers with 1,000 followers or more with a product to use, try, or buy to inform young consumers about the brand or product on social media. This win-win situation allows the user to gain more followers and possibly go viral, while the brand gets recognition and more authentic content, according to Vogue Business.

Community

Since the COVID-19 pandemic, 73% of Gen Zers said they feel lonely, higher than any other generation, with 29% being prone to anxiety, according to Psychology Today. Because of this loneliness epidemic, brands need to make Gen Z feel like they are part of a community. 54% of Gen Zs said their favorite brands make them feel part of a community. Even though Gen Z is very specific about what makes a brand “cool,” they seem to agree that “cool” brands make them feel part of a community.

A “cool” brand to Zoomers is brands that make exclusive content, like unboxing videos and behind-the-scenes content (55%). Brands that hosted sponsored events (55%), collaborated with artists or other brands (52%), dropped limited-edition products (52%), have active social media comment sections (51%), brands who challenged social norms – such as advertisements with gender nonconforming individuals or disabled influencers – (45%), and brands with a presence on community chat forums, such as Discord, are considered “cool.”

Over one-third of Gen Z and millennials agreed that a unique in-store experience, such as live music, influencer meet-and-greets, or pop-up shops, would make their retail experience more exciting and they would be more inclined to shop in-store, according to Vogue Business.

Some 84% of Zs said they are more likely to shop a brand that is “cool,” which is why more brands are moving toward building a brand universe to capture the loyalty of Gen Z. By keeping their content fresh, users engaged, and creating a journey or universe for the consumer to explore, brands are more likely to earn Gen Zs loyalty. However, the loyalty brands need is not easily reciprocated by this young generation.

Loyalty

Brand loyalty used to consist of the consumer making repeat purchases, but this new generation requires brands to go the extra mile. Even if Gen Z isn’t a customer of a particular brand, they still expect to be offered benefits, loyalty programs, exclusive offers, and discounts.

A way for brands to create loyalty is by celebrating customers online after they’ve purchased an item. This type of content allows Zoomers to stay connected and remain part of the brand’s journey or universe, furthering their place in that community. Another way for brands to gain loyalty is by creating micro and nano-influencer content.

Micro-influencing is when a celebrity or influencer shows off a brand or product on their platform that quickly catches on and just as quickly dies out, according to TechTarget. Nano-influencing is when a social media platform approaches a user – usually with less than 10,000 followers – with a product to showcase in their content. Unlike user-generated content, nano-influencing is usually paid and promotional, according to Moburst.

The most important ways for Zoomers to show brand loyalty are by shopping a brand often (56%), telling a friend about the brand or product (54%), loving the brand without making a purchase (40%), visiting the store in person (38%), following the brand on social media (29%), exclusively buying from that brand (28%), daily visits to the brands website or platform (21%), and posting the brand on social media (20%).

Gen Z has not only created a new way to shop but has also created a new way for brands to stay connected, fresh, and active online. Gen Z strives to get inspired, explore new brands, be a part of a community of like-minded individuals, and get a mutual sense of loyalty. Brands can help in this exchange by creating user-generated content, allowing exclusive behind-the-scenes access to products, and creating a universe or journey for the young consumer to explore fresh new ideas.  As more Gen Zers reach adulthood, the way they shop will further evolve into something more inspiring.