Retailers: Brace for a New Wave of Generational Disruption

Youngest millennials, with Gen Z in their wake, have distinct shopping habits.

Author: Andria Cheng

March 1, 2017

Retailers, still struggling to adjust to millennial shopping preferences, face a new wave of disruption from the youngest millennials, with Gen Z in their wake.

While there are some similarities between the youngest millennials and their older predecessors, there are also distinct differences, according to an Accenture survey of nearly 10,000 consumers ages 18 to 37 across 13 countries. For instance, while Facebook remains the most popular social platform for both younger (21-27) and older (28-37) millennials, YouTube is actually the most regularly used social media platform among the very youngest group, those 20 and under.

Meanwhile, two thirds of the younger shoppers said they regularly use Instagram, compared with only 40% of the older ones. Echoing other survey findings, the study found the younger group was twice as likely as the older millennials to use Snapchat.

Why does their social media preference matter? More than two-thirds of the youngest group said they are interested in purchasing via social media directly, and more than two-fifths use it for product inspiration. Also worthy of note, more than one-third said they’ve increased their use of social media in the past year to help determine whether to buy a product.

(Definitions of generations vary from firm to firm. The Accenture survey defined those ages 20 and younger as Gen Z. Under eMarketer's definition, some of those are part of the broad millennial generation, which is those born from 1981 to 2000.)

"If they are spending their time on social platforms, this is where they want to be buying their products."

“Social media has emerged as a real disruptor in targeting Gen Z shoppers,” said Jill Standish, senior managing director of Accenture’s retail industry practice. “Retailers must understand Gen Zs’ expectations, influencer circles and behaviors—especially their social-media habits and how they differ from those of millennials. If they are spending their time on social platforms, this is where they want to be buying their products.”

In one positive sign for retailers (especially those selling fashion and nonessential goods), the survey found that nearly 60% more Gen Zs are more likely to be impulse shoppers than the older millennials. “When they see something they like, they want to buy it immediately,” the report said.

Amid growing concerns about “overstored America” and store closing announcements from retailers including teen chains American Apparel and Wet Seal, the study had some good news for retailers: most Gen Zs still prefer visiting stores to make their purchases.

Gen Zs are more likely to interact with store sales staff, comparison shop on mobile devices while in stores and to like to ask friends and family, either in person or via social media and texting, for their opinions about a product, the survey found. The number of likes a product or service receives on social media also holds greater sway for the Gen Z consumer.

As the popularity of personal digital assistants like Amazon’s Alexa-powered Echo grows, the Gen Z group could become a good testing ground for retailers experimenting with new concepts: about three-quarters of Gen Z shoppers said they are currently using, can’t wait to try, or probably will try voice-activated ordering, the study found.

Meanwhile, it looks like monthly curated subscription services such as Birchbox beauty products service has continued room for growth: 71% of Gen Zs said they are interested in automatic replenishment services.

Signaling same-day or one-hour delivery may be the new shipping imperative for retailers, the survey found Gen Zs are much more demanding when it comes to when they receive an order: many more of them compared to millennials said they will cancel an online order if a delivery timing is “ambiguous.”

But Amazon and other retailers, whose profit has been hurt by consumers' increased demand for free shipping, can breathe one sigh of relief: Gen Zs at least don’t mind shelling out for faster delivery. Nearly three-fifths of them said they’d pay more than $5 for one-hour deliveries, the study showed.

Whether that amount alone is enough to cover retailers' cost is another question. 

Photo credit: Flickr