In a world where #tiktokmademebuyit has 6.7 billion views, it would be easy to assume that Gen Z is all in on e-commerce.
But in fact, many analysts are touting younger generations as the “saving grace for malls,” with 48% of Gen Z and 78% of Gen Alpha preferring to shop in-store — more than any other generation.
In other words: the pressure is on — and here to stay — for retailers to win with young consumers.
Considering Gen Z’s estimated $360 billion (and growing) disposable income, combined with their proclivity for in-person shopping, the opportunity is massive. But younger generations have increasing demands for their IRL shopping experiences around technology, sustainability and community.
Lean in to the social experience
Gen Z views brick-and-mortar stores more like a third space than simply a transactional counter. That makes sense, considering the overall decline of third spaces over the past decade. Whatever you want to call it — experiential retail, retailtainment, community commerce — this group is looking for a branded environment to connect, learn and create just as much as a place to buy.
Nearly half of Gen Z and even more of Gen Alpha engage with retail experiences such as pop-ups, workshops and performances because they help connect them with communities and allow them to experience brand personalities in design-heavy formats.
Some brands are starting to catch on. Bowery Showroom, an NYC shop targeting Gen Z, is a sought-after pop-up destination for fashion, lifestyle and even beverage brands. The space operates as a social destination and community center for youth, where physical events blend with a diverse array of digital content. A recent collaboration with Ed Hardy during New York Fashion Week gave customers not only a chance to purchase exclusive pieces but also to personalize them with paints and airbrushes while creating their own content for social media.
With 80% of Gen Z agreeing that store experience is as important as the products being sold, it’s clear that shifting IRL spaces from sales counters to event spaces, content studios, education centers or community gathering spots is crucial to getting people to come in stores vs. buying online.
Promote sustainability
Gen Z is looking for brands to help course-correct societal problems, as governments are seen as increasingly slow to react.
This is reflected in their shopping habits: 62% of Gen Z shoppers preferring to buy from sustainable brands. Compared to Baby Boomers, Gen Zers in the U.S. are significantly more interested in buying products secondhand (71% vs. 34%) and products made from recycled materials (72% vs. 46%).
As 80% of Gen Z feel sustainability is “an integrated part of their personal identity,” brands must keep in mind that physical retail has an outsized pressure to behave more sustainably compared with online shops.
Stores can play a big role in how brands are (or aren’t) connected to sustainability. For example, Ikea is testing innovations such as furniture leasing; take-back and buy-back schemes; and helping customers repair, resell or recycle old furniture.
Karen Pflug, chief sustainability officer at Ikea parent company Ingka Group, noted the importance of using stores to “better tell our stories and get our messaging in front of shoppers” in an interview with Forbes. Today, sustainable living shops are present in 300 locations, and customers can also order assembly replacement parts through an online tool.
It’s smart to use your retail space as a bridge between Gen Z’s commitment to sustainability to easy, habitual ways of acting sustainable. Brands should think of their retail presence as a front door to sustainability, not a roadblock.
Merge IRL and online
IRL shopping can’t be viewed in isolation with a generation that spends six hours per day on their phones. But these mediums should not be at odds either, as 51% of Gen Z say they tend to browse online before making a purchase in person.
Retail spaces should instead be thought of as the physical manifestation of a brand’s online presence. With young consumers looking to social media creators to highlight new pop-up experiences and product drops, physical retail is an extension of the brands Gen Z first meet online.
With 68% of Gen Z expecting their online and offline shopping experiences to be unified, retailers must begin to connect all of their customers’ behaviors. Access to exclusive in-store content and services, from free shipping to events, boosts brand advocacy and loyalty.
A good example of this strategy in action is Target’s updated Circle membership, which brings online personalization to stores. The app guides users to products in store and provides recommendations or automatic promotions based on interests and viewing habits.
Shining a spotlight on customers and rewarding their participation offline and online is key to winning with Gen Z. They want to be recognized and rewarded for their past online and offline behaviors — and to see how the brand will build upon them.
While these three imperatives have independent gears, together, they create a retail experience that grows businesses while building brands among Gen Z.
Gen Z is a critical opportunity for a retail sector searching for new growth. By linking a brand’s values to technology, sustainability and community, marketers can create experiences that wins.
Reid Litman is global consulting director at Ogilvy Consulting.