Meet the Future

While millennials have been on the tip of every marketer’s tongue in recent years, a new generation is starting to garner attention: Generation Z. Born after 1995, this group is considered to be fundamentally different from millennials. Consider their points of reference: Millennials grew up with DVDs, instant messaging, cell phones (that only made calls and sent texts) and iPods as their most important pieces of technology. Gen Z is growing up with YouTube, Snapchat, smartphones and online music streaming services instead.

Another way to understand their differences is to look at Beloit College’s 2019 Mindset List, a list that provides a look at the cultural touchstones that shape the lives of students entering college. Young adults who will be graduating from college in 2019 were typically born in 1997 and have never known a world without Google, invented in 1998. To this group, Wi-Fi is seen as an entitlement, and smartphones are so ubiquitous in class that teachers don’t know which students are taking notes and which students are planning a party.

And with an average weekly allowance of $17, which translates to $44 billion per year, Gen Z is already a powerful purchasing force, states Sparks & Honey in its June 2014 report titled “Meet Generation Z: Forget Everything You Learned About Millennials.” Retailers that want to successfully market store brand products to this generation will want to emphasize technology, diversity and a holistic sense of wellness.

Digital natives

“Many of this group’s defining characteristics stem from the fact that they were born into a time of advanced technology and high-speed Internet,” states Michelle Malison, retail research associate for London-based Euromonitor International. “They simply don’t know of a time without smartphones and tablets.”

Naturally, this cohort has extremely high expectations for technology and expects everything to be immediately accessible through as many channels and as few clicks as possible. They’re also heavy users of apps and social media platforms, and they live their lives publicly online. Consequently, they are very conscious of brands and what they say about one’s identity, Malison says.

As a result of this hyperconnectivity, Gen Z is constantly faced with a very large amount of information and is often characterized as having a very short attention span and being impatient, she states.

In fact, according to the National Center for Biotechnology Information, Bethesda, Md., Gen Z attention spans have “shrunk” to 8 seconds. However, Altitude, a Somerville, Mass.-based design and innovation consultancy, believes instead that this generation is growing up in a world where their options are limitless, but their time is not, forcing them to evolve an “8-second filter” that they use to sort through the enormous amounts of information they receive on any given day. In its May report titled “Through the Eyes of Gen Z,” Altitude says that this filter allows them to quickly decide if the information with which they’re presented is worth their time. And if something does catch their attention, Gen Z members become “intensely committed and focused.”

One way retailers could get past the “8-second filter” to reach these consumers is by offering ways for Gen Z to talk to them. Gen Z is a generation that places great emphasis on word of mouth and online reviews, so retailers are better off encouraging active discussions regarding their brands rather than sporadically sending out carefully constructed marketing messages, Malison says.

Gen Z is used to being a part of the conversation and wants participation in the products they buy and the experiences they have, says Shilpa Rosenberry, senior director, global consumer strategy – retail for Daymon Worldwide, Stamford, Conn. Their desire to participate is leading to the importance of co-creation of products, build-your-own platforms at retail and personalized or customized offerings.

But no retailer will be able to communicate with Gen Z if they are not able to use technology successfully, Malison says. Retailers will be judged by how well they come across to Gen Z on the five screens the generation uses daily: smartphones, computers, TVs, tablets and wearable devices. Members of this generation have extremely high expectations for omnichannel retailers and will hold retailers to high standards when it comes to the integration of online and offline stores, delivery and customer reviews. Therefore, retailers will need to make themselves available on all devices with minimal technology issues, as Gen Z will not be patient with technology glitches.

“Retailers that are not already moving to create an infrastructure to provide seamless purchasing experiences would be wise to move quickly,” Malison notes.

Incredibly diverse

Still a very young generation — the oldest members are only 20 years old — Generation Z represents more than one-quarter of America’s population, Sparks & Honey states. And these young adults, teenagers and children are part of very modern, diverse families.

“Generation Z is well-positioned to be the most diverse generation yet,” states Christina Bowden, director of consulting services for The Hartman Group, Bellevue, Wash. “We are in the midst of a shifting racial makeup from immigration and intermarriage. This diversity is already helping to create a group that is entirely fluid and playful, where identity is a highly nuanced concept.”

As a group, Generation Z is more comfortable with a range of different cultures, races and ethnicities. This level of comfort will have an impact on how they eat, how they communicate and how they shop, Bowden adds. For example, they are exposed at early ages to foods from varying parts of the world, creating a more diverse and exploratory palate when it comes to both flavors and textures.

Moving forward, retailers will need to keep the increasing diversity within this generation in mind as they develop store brand products, Rosenberry states.

“Retailers’ product development must go even deeper to discover the new and unusual, from flavors and cuisines to multi-sensory experiences,” she adds.

Redefining wellness

As a group, Gen Z is very much focused on “wellness.” However, their idea of wellness differs greatly from other generations. Instead of focusing simply on physical health, Gen Z views “wellness” in terms of social well-being, spirituality, sustainability and a better overall quality of life, including feeling happy and fulfilled, Rosenberry says.

This cohort is also interested in preserving the planet and understanding how their actions, including their eating behaviors, could affect it. For example, 78 percent of Gen Z members are concerned about world hunger, and 76 percent are concerned about man’s impact on the planet, Sparks & Honey says.

And according to “We Are What We Eat: Healthy Eating Trends Around the World,” a January report from New York-based Nielsen, 40 percent of Gen Z survey respondents said ingredients sourced sustainably are very important in their purchase decisions, and 41 percent said they would be willing to pay a premium for sustainably sourced ingredients.

Part of Gen Z’s affinity for sustainability could be tied to an increasing number of school programs that are teaching them from an early age how to grow their own fruit and vegetables and bringing in farmers and dairy producers to talk about how they grow produce and manage their farms, Bowden says.

It would make sense, therefore, to assume that Gen Z will want to do business with companies they know are giving back to the community, taking care of their people and making effective use of the planet’s resources, Rosenberry says.

“We recommend that retailers focus on transparency, answering questions on sourcing [and] production, and helping to tell the narrative of how a product was made and by whom,” Bowden adds.

Gen Z is used to being a part of the conversation and wants participation in the products they buy and the experiences they have.
— Shilpa Rosenberry, senior director, global consumer strategy retail for Daymon Worldwide

Retailers will be judged by how well they come across to Gen Z on the five screens the generation uses daily: smartphones, computers, TVs, tablets and wearable devices.
— Michelle Malison, retail research associate for Euromonitor International

Gen Z is exposed at early ages to foods from varying parts of the world, creating a more diverse and exploratory palate when it comes to both flavors and textures.
— Christina Bowden, director of consulting services for The Hartman Group