Commerce Trends

by Manhattan Associates

Move over Millennials – are retailers ready for Gen Z?

Retail strategies have focused on attracting Millennials in recent years; but with Generation Z coming of age – as both employees and customers – retailers need to embrace the expectations of this ‘digital native’ generation. And it will be the retailers that are able to create a truly digitally enabled, end to end business model that have a chance to capture this increasingly influential generation.

Coming of Age

In a Millennial obsessed market place, retailers may be surprised to realise that Gen Z now makes up over 20% of the current EU population¹. This generation, born at the turn of the millennium, is growing in importance not only as potential customers but also as employees and their arrival in the marketplace will hail a new era of retail.

Indeed, anecdotal evidence is already beginning to show a new overlap between online and bricks and mortar stores: while in store footfall is generally falling, closing stores has a significant negative impact on online sales within that location.  And it is becoming apparent that Gen Z are using the store as a shop window before buying online. It is with this in mind that retailers need to get savvy to ensure every aspect of the experience reflects the expectations of this increasingly significant customer group.

So how do they differ to Millennials?

While the temptation may be to bracket Gen Zs with Millennials – especially in their attitudes towards technology – the reality is very different.  While Millennials have grown up alongside a digital revolution and actively embraced it, Gen Zs were born into ecommerce and social media. It is their world and, as such, their expectations of the adult environment, as both consumers and employees, will be very, very different. New technologies, from Amazon Drones to Virtual Assistants, will become part of the new shopping norm for Gen Zs.

Clearly as consumers, Gen Z will expect a slick retail experience, one that offers a frictionless shift between channels. And as they share every aspect of life via Snapchat and Pinterest, Gen Zs can make fantastic brand ambassadors – but only if the experience meets their expectations.

More critically, perhaps, for retailers already struggling to attract the right talent, is the role of Gen Z as employee.  This digital native generation is used to being empowered with the right information; and they will expect that experience to be mirrored in the workplace. Their digital skills could and should be a major asset – and they will be baffled and frustrated to be asked to work in a retail store where the customers have more information than the Store Associates. This single device generation will look askance when shown one system to check inventory, a separate iPad for recommendations, plus another fixed EPOS.

Retailers need to ensure they are creating a working environment that supports Gen Zs’ digital technology expectations will be key for retailers looking to secure the next wave of fresh talent.

A seamless digital experience

Of course, retailers have looked to improve the digital experience in response to the demands of Millennials. But Gen Zs’ digitally native expectations are a step ahead. Equipping Store Associates with iPads is step one – ensuring they can also close the sale on the shop floor, rather than returning to the EPOS or using a separate system to check inventory is an essential next step.

Similarly, retailers can build on the investment in virtual reality technology and digital hubs by extending beyond the current provision of web site access to create a destination experience that connects the store to the enterprise supply chain and online system.  Every in store experience, whether delivered by kiosks or Store Associates, has to be personal, timely and relevant – and that means embedding technologies within the end to end retail model.

Conclusion

Businesses across every market are looking to attract the best young talent, to harness the insight of digital natives to deliver competitive advantage. The catch 22 is that without creating a positive working environment in the first place, it will be incredibly tough to recruit these high quality employees. Retailers need Gen Zs – and it will be the creation of a digital native retail experience that will be key to attracting this generation as both consumers and employees.

¹ http://appsso.eurostat.ec.europa.eu/nui/show.do?dataset=demo_pjan&lang=en

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