The Future of Retail belongs to Teens

It should come as no surprise to those paying attention to the current shopping ecosystem that retailers targeting under-served demographics are winning big, thanks to clever marketing, digitalisation, segmentation and shifting demographics. And though millennials are clearly the most talked-about such demographic, it is actually Gen-Z which will upend the retail world order within the next few years. And we’ve already begun to see their influence (get it?) at work.

What do we know about Gen-Z and their shopping habits, beyond the incredibly bland statement that they are “digitally native” (ergh)? In order to explore this theme and gather some basic insights, we will ourselves give in to some good old-fashioned segmentation: the ever-important 5Ps of marketing (Place, Price, People, Product, Promotion).

1. Place

We’ve known for decades that stores need a digital footprint. But what analysts seem to have a harder time understanding is that this investment should not come out of the physical store budget, as physical assets are equally important, albeit for very different reasons; the store is above all a fantastic way to interact with a product and/or a brand: to see, touch, smell, hear, taste…

With regards to teens, a store is also (and perhaps most importantly), NOT mom & dad’s house, giving them a place to meet and socialise (damn I miss Hot Topic). It is also a place for various social and communal experiences, something younger generations are particularly fond of (bunch of degenerates as they are). Given their innately live, sensorial and experiential quality, physical stores have the potential to become powerful media points from which retailers can articulate their brand story, excite teens about products and then funnel their purchase to any number of channels, devices and distributors (aka omnicanality).

This ever-lasting love for physical retail is best exemplified by teen’s shopping habit: if you were to listen to retailing 101 by Prof. NeverGetsOutTheHouse, you’d hear that Click & Ship and/or Click & Collect are the future of extracting value from gullible children, because they are “digitally native” (ergh again). Not so: teens and young adults are in fact much more likely to engage in Webrooming, Scan & Scram, or Showrooming, all of which involve a very real place at one point or another of the purchasing process.

2. Price

Teens, as a group, have a significant amount of purchasing power, especially within the food and clothes ecosystem (note that those things that are hard to buy online).

Unlike adults, which purchase… Sofas? Flower pots? I’m still learning… they are however comparatively broke: most teens only have a modest allowance, making value-added products incredibly important: everything sold should either be in line with the customers’ beliefs and needs, or be exceptionally cheap (which explains Nike’s free shipping policy — easier than not using slaves).

These penny-pinching ways may seem familiar for the simple reason that, when it comes to shopping and price-sensitivity, the newer generation is only widely different from their adult counterparts at the extremes (the incredibly wealthy or the incredibly poor). That is to say a rich teen now shops fairly differently from a rich teen 20 years ago, but a middle-class teen will have many similarities to a late 90s middle-class teen. As it was then, price is still much more important than convenience, mostly because we’re all poor and you need a PhD to do a job on trained monkey was able to do just 30 years ago.

3. People

Speaking of trained monkeys… youth apparently doesn’t need help in stores from employees: only 7% want the help for salespeople when shopping. Those 7% are however important : the expertise, social sensitivity and problem-solving skills of good employees will differentiate the good stores from the bad, the stores that will endure from those destined to fade from the scene.

Though they may not be be needed to help customers as was once the case, employees are nevertheless brand ambassadors, and still the easiest and best medium to convey an image to a customer. As such, shops need to know their clients exceptionally well before potentially deciding to scrap some jobs, lest they lose the very reason customers came shopping at the store: one never knows if 50% of last week’s sales were due to the fact that “Hot Trevor” was manning the till on Tuesday.

Empathetic workers will remain relevant when tills are automated, robots fill up the isles and replenish stocks and smart mirrors answer customer questions. Having been raised in an overwhelmingly unkind world, teens know this better than anyone.

4. Product

As previously mentioned, when teens do choose to open their wallets, they are extraordinarily value-oriented about it. In fact, newer generations don’t seek personal fulfillment through shopping nearly as much as previous generations might have done (shots fired — Sometimes AT kids if you’re American). As such, products need to be more specialized, more personalised, more relevant (the new word for in or on-trend) and more in line with teens personal beliefs (there’s never been a better time to buy a kombucha slushies with flavors including pineapple ginger and marionberry mint — yes those are all real words).

Personalisation really is key here, as it offer the possibility of having millions of versions of a single product to fit each customer’s quirks. This allows the teen to say “I am unique”, while also saying “I shop the same product, at the same store as my peers, so please don’t think I’m different and ostracise me”. I’m sure many will recognize themselves in that sentence.

Gen Zers are impatient and will quickly discount those who can’t immediately deliver on these needs. Hence, Big Data is something that absolutely needs to be leveraged to consider trends, seasonality, and make sure the store is not oversupplied and has enough “essentials”. Trends move fast in the teen world: better keep up.

5. Promotion

Promotions. Stores should have some. Except Apple.

Beyond that, stores should engage in hyperlocal strategies as teens overwhelmingly use “around me”-type apps.

Finally, younger, digital-first brands (such as #MelodyEhsani) moving into physical retail have made their stores Instagram-ready to attract millennials and Gen Zers, giving them a reason to come in with state-of-the-art interior design as a backdrop to artsy Instagram posts (hey, it’s free advertising). In essence, the store becomes an immersive and experiential advertisement for the products it represents and a direct portal to the entire universe of distribution channels available. Woo.

Attracting a new customer used to cost up to seven times more expensive than keeping an existing one. No longer. Yet the retail world remains dangerously competitive, and the shift to a different generation will show which brand has what it takes to change, and which doesn’t.