Could Gen-Z spending habits save retail shopping?


Have you ever wondered why your teen wants to spend endless Saturday afternoons hanging out at your local mall? What’s the appeal of trying on endless outrageous outfits? How many gallons of bubble tea can one girl drink?

Obviously, this is nothing new: shopping centers, along with main street stores and cafes, have long been popular spots for teenagers to get together with friends.

But what’s changed is that kids and teens now love the mall experience way more than their parents – and their habits could hold the key to revitalizing the retail industry.

Big Spenders

We’re used to hearing about Generation Z’s digital natives living their lives (and spending their money) online. But when it comes to shopping, they’re taking a more traditional approach.

gohenry data shows that US kids and teens are spending over half of their allowance (53%) via debit card payments in store. Girls spend even more: their love of fashion means they spent 65% of their income in popular retail stores.

What's happening to the retail industry?

The last few years have been challenging for retail. In 2019, big name stores in the US like Abercrombie & Fitch Co. and Charming Charlie closed hundreds of stores. Altogether, retailers announced more than 8,600 store closings in 2019. And a report from Credit Suisse predicted that 25 percent of US malls will close by 2022.

December is usually a busy month for retail shopping as we rush to buy Christmas presents and stock up on everything we need for the big day. Indeed, retail sales across the board increased 0.3% in the US in December 2019; however, department stores suffered a drop in sales of 0.8%.

Changing shopping habits

This all points to a transition in shopping habits as experts say that changing shopping habits are to blame for the decline of mainstream retail sales. We’ve been seduced by the convenience of shopping online, and retail sales reflect this. More than half (62%) of US consumers with Internet access now shop online at least once a month and more than 8 in 10 people (83%) are satisfied overall with their online shopping experiences.

There have been other shifts in consumer behavior, too. With sustainability in the spotlight, we’re more aware of the impact our purchases have on the planet. As well as making more effort to ‘reduce, reuse and recycle’, there’s increasing buzz about the ‘No Spend Challenge’, where participants commit to cutting out all non-essential purchases for a set period of time: a day, a week, a month – or even a whole year.

In response, many mainstream retailers are now taking steps to ensure their products are ethical and sustainable. Some of teen girls’ favorite brands – including H&M, Gap, Zara and New Look – have already made great strides and this is reflected in their higher-than-average scores on Fashion Revolution’s Transparency List 2019, which maps retailers’ social and environmental policies and practices. This is especially important for brands who want to attract the Gen-Z customers who are actively participating in climate strikes and protests and want to shop sustainably.

The joy of shopping

With Gen Z making up 25 percent of the US population, smart retailers are catering to their tastes. According to a study from RIS and Tata Consulting Services, this means implementing new in-store technologies such as smartphone self checkout, interactive shoppable screens, and virtual try-on for apparel.

Overall, brands are working to bring new, fun and curated experiences to their stores to help drive discovery of the latest trends and overall drive more of a branded experience for their customers.

The classic example most often referred to is Apple’s extremely successful retail stores. According to the CEO of Euclid, Brent Franson, “You’ve got the product playground that is the physical experience, supplemented by human beings that can answer questions…It’s a seamless and integrated experience.”

Sephora, is another good example. They have captured the hearts of millions of beauty shoppers and are expanding across the globe in the midst of a decline in retail. It’s not surprising as walking into any store it’s clear they have enhanced the overall experience, integrated in-store technologies to engage their customers, and done a great job cultivating loyalty and using the knowledge they have on their customers to drive recommendations based on their preferences – overall, delivering a more personalzied and engaging shopping experience for their fans.

Bricks and clicks

So what would Gen-Z’s ideal retail shopping experience look like? Generational expert Dr. Eliza Filby believes that young shoppers want the best of both worlds – an offline shopping experience with the convenience of online shopping. For this reason, she says that retailers should think in terms of “bricks and clicks” to create a more fun and social experience.

She echoes the sentiments of Euclid’s Brent Franson: “One of the reasons Apple has become so successful is because you can go to the store to charge your phone, learn how to do new things – and shop. It’s a place of learning and experimentation: where tech meets reality, online and offline.”

As long as retail chains can still deliver on the value, choice and convenience offered by online stores, they have a great opportunity to attract new customers, boost sales and build brand loyalty.

“Great in-store experiences stir teenagers’ dreams, creativity and sense of individual expression,” says Dr Filby. “This is the generation who are true digital natives and so a real experience – as opposed to an online experience – is a novelty.”

So now you know why teens get so excited about an afternoon at the shops. You might dread the crowds, the lines and the loud music but, for Gen-Z, it’s a creative, exciting and inspiring experience, which gives them an opportunity to try on different versions of the person they could grow up to be.

gohenry is not directly affiliated to, or sponsored by, any brands or retailers mentioned in this article.


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