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Marketers are obsessed with pinning down the elusive millennial. But what about Generation Z, the 14- to 19-year-old teens coming of age and wielding growing purchasing power? These digital natives may not even know what a VHS is or was but, by 2020, they'll comprise 40% of the populations of the US, Europe, and BRIC countries, and 10% of the rest of the world, according to a FITCH survey.
Of the over 8,000 US teens with an average age of 16.2 surveyed in a Piper Jaffray study from September 2013, 71% of females and 57% of males reported shopping at off-price retailers. One in every two young women and almost that many young men also reported it was popular among their friends to do so.
Generation Z also tracks items, not necessarily brands. FITCH described this behavior as a lack of brand loyalty. Generation Z seamlessly switches from platform to platform, device to device, and brand to brand, trying to locate the item they want at the best possible price.
They research extensively before buying and "most of the research happens online," Jamie Gutfreund, chief strategy officer of The Intelligence Group, told eMarketer in a May 2014 interview.
They are digital and social natives. Born between 1995 and 2001, they were between the 3 and 9 years old when Facebook was born. There was no period of adjustment to new digital platforms and outlets. Those platforms and outlets just were.
A Niche study broke down social network site use among graduating high schoolers. The survey found that, among more than 7,000 US high school students graduating in 2014, most used Facebook and Instagram at least once a day.
Nine in 10 are communicating via text message daily while almost half report Snapchatting daily.
Online all the time also translates to shopping all the time, Gutfreund added. "What we think of as back-to-school is now more a period of time that reflected 'old school' shopping habits [which was concentrated around August] and corresponds with seasonality and shopping. High school and college kids now are looking all the time...More than ever, it's about the deals, as well as waiting until after school starts when they've had a chance to see what classmates are wearing. So they're buying less in bulk and more consistently and selectively."
Popular retailers like ASOS, Anthropologie and Urban Outfitters play particularly well to what Gutfreund thinks is an entrepreneurial spirit common among Generation Z-ers.
Generation Z appreciates this kind of "me-tail" and celebration of smaller creative enterprises, says Gutfreund: "Twenty six percent of this Gen Y and Z group in school has sold something on a retail site, 27% have sold their own items at a consignment store, and 16% of this group has sold something they've made themselves online through sites like Etsy... My generation was limited to garage sales and lemonade stands, and then about 18 years ago, eBay and craigslist popped up."
Yes, the mall model may be slowly going the way of the drive-in movie theater, but fear that Generation Z won't step foot in stores is still largely unfounded. While most of their shopping research does take place online, Gutfreund notes, "58% of the purchases still happen in the actual store," although that number collapses Generation Z in with millennials ages 20 to 29. Continuing, Gutfreund explains, "I think the reason young people still buy that much in the physical stores is because they still like that tangible feel, and they want to see the item in person. Plus, it's fun for them."
They're not the only ones. While ecommerce sales are expected to grab an ever-larger share of total retail sales, the number remains low.
So to say that Generation Z is a retailers' nightmare isn't entirely accurate. Generation Z is not unreachable; consumers ages 14 to 19 love buying. They are certainly harder to track, as they move seamlessly between online and offline browsing and consumption, but so is everyone else. That's why storefront retail is harder than ever and retailers are trying to figure out how to optimize omnichannel marketing and tracking every day.
Storefront retailers need to factor generational differences into their business models if they're looking to attract this demographic as they have with any and all generations that have come before Z—but none of that should come as a shock or raise end-of-times hysteria. One size never fits all and smart retailers are flexible and adaptive.
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