Originally Published in Total Retail // November 7, 2017 – Move over millennials, Gen Z is taking center stage for the holidays. Pundits agree that this new generation, loosely characterized as born between 1993 and 1999, have been raised on technology — but that’s where consensus ends. One day they are “millennials on steroids,” the next they are “very different in fundamental ways from previous generations.”
Retailers, which can’t afford to live in abstract theory, are forced to make real decisions about Gen Z (and their older millennial counterparts) in their businesses every day. How do they want to engage? What do they want to buy, and how? And one of the foundational questions of retail: What do they consider a good purchasing experience?
To help answer these questions, Vyze teamed with market research firm Survata to dig into some of the assumptions and outstanding questions around younger shoppers, payments and the holidays. The survey of 1,000 U.S. shoppers found that, with more than $680 billion in holiday retail sales up for grabs, the way millennials and Gen Z think about checkout, payments and pricing isn’t all that different from older generations.
Despite news cycles on millennials’ distaste for debt, Gen Z (age 18 – 23) and Gen Y (ages 24 – 34) are pretty comfortable with credit card borrowing. Nearly seven in 10 younger shoppers are at least “somewhat comfortable” carrying a credit card balance, and nearly one in four are “very comfortable.” In fact, 80 percent of millennials and 71 percent of Gen Y prefer credit cards to monthly payment options, and a majority of both pick credit over cash when offered common marketing promotions like 5 percent cash back.
However, Gen Z consumers are still naïve shoppers. When it comes time to buy, this generation is the least likely to know their credit score (42 percent vs 69 percent overall) and least likely to feel they have the financial information they need to make a decision about whether to apply for credit online or in-store (53 percent vs 76 percent).
Beyond checkout, Gen Z also shows some significant differences in what they want and expect from the shopping experience. While Gen Z cares about pricing and discounts like everyone else, they’re more heavily focused on quality (57 percent vs. 48 percent for older shoppers age 35-44) when it comes to holiday gift purchases. They’re also much more influenced by special events and pop-ups (18 percent vs. 9 percent); word-of-mouth and social media (28 percent vs. 13 percent); and social causes (15 percent vs. 9 percent).
Whether Gen Zers are driven by authenticity, value or personal brand, retailers can earn loyalty and sales this holiday season by making small changes in key areas. Consider the following options:
- The store setup doesn’t need to be re-evaluated and disrupted, but try adding a fun event. Think big. For example, hire a local celebrity or pick a unique theme that stands out. Also, be sure to include discounts, giveaways, free gift-wrap, music, and food and drink. The longer shoppers stay in-store, the more likely they are to spend.
- Don’t ignore the checkout process. You can create a lot of fun and excitement with an event, but don’t forget to make it easy for customers to actually make a purchase. Staff up to ensure register lines are short. And for customers who want to use credit, make sure to give them easy access to multiple credit options at checkout.
- Finally, lend a helping hand by providing more information on interest rates, promotions and individual credit scores — i.e., the top things that Gen Z shoppers wish they knew more about.
With a few small tweaks, retailers can easily meet the needs of all generations, even younger shoppers who are mistakenly characterized as “drastically different.” The data has shown us, evolution will go a long way. No revolution necessary.
Doug Filak is the chief marketing officer of Vyze, a provider of consumer financing solutions for businesses.