Gen Z and the Reinvention of Retail

Not only are Gen Z not shopping like their parents, they're actively trying hard not to. After all, they have their own channels now, ones that they navigate with facility — the very channels that their elders will often avoid altogether. The behaviors of Gen Z (those born between 1997 and 2012) as they become a growing economic force as wage earners are having such a profound impact on shopping that retailers will need to find whole new ways to sell, appeal to and communicate with them.

Retailers and brands will first need to understand these behaviors in the context of similarities with how millennials (those born between 1981 and 1996) shop if they are to win and retain Gen Z consumers' business. Research we undertook in early 2023 among 8,000 shoppers in the U.S., Canada, Hong Kong, and Europe (UK, Germany, France, Switzerland and Spain) explores how Gen Z demands are evolving and how their shopping patterns are changing.

Looking at five demographics — Gen Z (1997-2012), millennials (1981-1996), Gen X (1965-1980), baby boomers (1946-1964), Silent Generation (1928-1945) — what emerges is a view that it's Gen Z that will have the greatest influence on the size and shape of retail and direct to consumer (DTC) over the coming years.

The Conflicted Consumer

First of all, our research showed that Gen Z are by far the most impatient generation in terms of when they expect to receive their orders. Nearly one-third (32 percent) said the following day, while 27 percent wanted their orders delivered on the same day. They were therefore less interested in grouping products in an order because they would all arrive later.

In terms of sustainability, Gen Z was the group most interested in carbon-neutral or emission-free deliveries. They also took the greatest interest in returned items being donated to charity or reused in some way so that they weren’t wasted.

What emerges is a picture of a conflicted consumer who has greater interest in sustainability but still wants their orders delivered quickly, a process that can be less sustainable. However, on a more positive note, when asked if they would pay more for more sustainable delivery and returns services, Gen Z respondents were more affirmative than other generations, particularly where deliveries could benefit from technology such as electric vehicles (EVs). However, at the same time, Gen Z prioritizes speed of delivery, further evidence of conflicted behavior.

The Curious Consumer

Gen Z was conspicuous in the research in terms of the number of touchpoints — including website; social channels like Instagram, TikTok, Facebook; TV ads; print ads; media; printed brochures; direct mail; in-store — they have with a brand and retailer before buying from them domestically. Gen Z is using 12.6 touchpoints as compared to the Silent Generation who use 8.2. This rises to 13.2 for international purchases against 7.5 for the Silent Generation.

And while older demographics favor more traditional channels, including catalogs and stores, as well as direct to the retailer or brand’s website, Gen Z is shunning some of these channels for inspiration, discovery, price comparison, product reviews and purchase on social platforms such as Instagram, TikTok, Facebook, YouTube, and Twitter. Furthermore, while the engagement figures are small for the metaverse, a channel still in its relative infancy, they are measurable as consumers use metaverse building block platforms, such as Roblox.

The Omni-Present Consumer

What's clear is that the journey to purchase is complex in terms of the number of distinct processes and the number of channels used by consumers that retailers need to manage, not just for purchases but the entire journey to purchase. For instance, 52 percent of Gen Z tend to consume content from the brands they already know on social media rather than discovering new ones. Presence clearly is key here.

In a long list of priorities on what would make them more loyal to a particular retailer, the top three were being able to "experience" the brand more; being able to access more brand storytelling content; and the ability to buy from the brand in the real world as well as in the metaverse.

Given how they shop and the channels they now use, primarily digital, Gen Z has changed the rules of retail, and the rate of change has accelerated since the end of the pandemic. While many people have returned to some extent to their old ways, Gen Z clearly has not. The challenge now for retailers and brands is to read these new behaviors and to take control of their own destiny when it comes to shaping the authentic shopping journeys consumers are now demanding.

As the research makes clear, shoppers increasingly expect accountability and transparency from retailers, whether through greater transparency around supply chain emissions, delivery promises, or offering low- or carbon-neutral shipping options. And they expect this level of service all the way from ordering through to returns. There's no room here just for areas of excellence. Gen Z expects the whole experience to be frictionless.

Renaud Marlière is the global chief of business development of Asendia, a cross-border delivery service for international e-commerce and mail.