A New Generation of Shoppers Offers Hope for Brick and Mortar

Gen Z doesn't write off in-store shopping

Author: Andria Cheng

September 22, 2017

As teens and young adults increasingly become a key target for retailers, one big question has been the relationship this so-called digital native group has with brick-and-mortar stores.

It turns out the relationship is not bad at all and the group, broadly described as Gen Z, is far  from abandoning physical stores despite their reliance on digital devices and digital media, according to several studies published this week.

For instance, when it comes to buying apparel and accessories, while so-called showrooming indeed exists (for instance, 85% of the female Gen Zers said they occasionally or regularly make a purchase online after seeing the product at a retail store) the reverse is just as true—91% said they browse online before buying in a physical store, according to surveys of about 600 female college students respectively in March and August by Chegg, which has helped brands from Best Buy to Coca-Cola market to college students.

In another sign that there’s opportunity for physical retailers despite growing online shopping, 65% of the respondents said they order goods online and pick them up in stores, according to the study, released this week at WWD's Digital Forum in New York.

A survey of more than 2,000 consumers aged 18 to 55 released Friday by payments platform provider Adyen also offered similar findings about the Gen Z shoppers.

The study, which defines Gen Z as those born between the mid-1990s and mid-2000s with the oldest Gen Zer around 22 years old, said the demographic has high expectations that retailers’ online and in-store operations should work together. Some 48% of Gen Zers said in the study they expect to be able to return or exchange items bought online in the store, and 33% expect to be able to buy online and pick up in-store. The expectations are backed by how they actually shop: 54% of Gen Zers said they have already ordered items online to be picked up in store, according to the Adyen survey.

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Why is Gen Z the growing focus of the marketers? The group’s own spending power totals $44 billion, Adyen said, adding Gen Z represents the second-largest age demographic of “tastemakers,” or early adopters. Perhaps more importantly, Gen Zers hold sway in their family’s purchasing decision. For instance, about 65% of shoppers said that at least half of their back-to-school spending is a direct result of their children’s influence, up from about 57% who said so last year, according to a National Retail Federation study published in July. 

In another plus sign for physical retailers, an HRC Retail Advisory study released this week found that 54% of the students it surveyed said they prefered to shop exclusively in store this back-to-school season with another 30% saying they would shop both online and in stores.

An IRI survey of about 750 consumers across all age groups, also released this week, found that for Gen Zers, physical retailers also stand on par with online retailers on many metrics: for instance, 70% of Gen Zers said both channels offer low prices, while 79% of them said both provide brands they want.

However, all these encouraging signs don’t mean physical retailers can take this group for granted. They still have plenty of work to do in the age of mobile phone-driven price comparison. One good example: the Chegg study showed even though 34% of those surveyed said they make purchases on their phone from within a retail store from that retailer’s website, 54% actually make purchases on their phone from within a retail store on another retailer’s site.

Retailers also need to crack the code of how to speak to a group that is highly focused on social media and influencers when it comes to purchase decisions. The IRI study showed that Gen Z is the only group where there's a higher percentage of shoppers that ranked social media above  sales or discount pricing as the best way to get them to notice a new product when they are in a grocery, drug or convenience store or a mass merchandiser.

Retailers also need to figure out how to cater to a demographic that sees itself as self-reliant in the store: The Adyen study showed only 7% said they wanted sales associates readily available to make recommendations while shopping in-store.

Interestingly, as Nordstrom recently announced the Nordstrom Local concept to primarily use the much smaller-than-average location as a showroom and service and community gathering place for shoppers, the Adyen study found that about one in three Gen Zers want showrooms to be commonplace within the next 12 months.