• by Dax Dasilva , January 25, 2016

In just two and half years, the first contingent of Generation Z — people born from the mid-’90s to early 2000s — will graduate college. They’ll have independence, careers, and, soon, disposable income. While Gen Y was the most researched generation in history, businesses that want to capture the hearts, minds and market share of Gen Z shoppers have some catching up to do.

Gen Z is sometimes lumped in with Millennials, but that’s a mistake. Gen Z has some important distinctions: they grew up watching their parents struggle through the recession, making them more frugal and skeptical than the generation before them. They are also the first age group made up completely of digital natives; for them, using technology is a fact of life, not something new or exciting. They switch from screen to screen, but still place high value on tech-free interactions.

Gen Z is a unique generation and considering they already have $44 billion in purchasing power, the group is worth paying attention to. Retailers that spend time understanding generational preferences and motivations will be ahead of the game when Gen Zers open their pocketbooks in full force. Brands that failed to pay attention to the millennial movement suffered in terms of brand reputation and bottom line, and they can’t afford to miss the boat this time.

As retailers plan for the new generation, here are a few things to consider:

The world is their marketplace

Gen Z was practically born with smartphones in hand. Unlike Gen Y who discovered Facebook in college or high school, this group has never known a time when they couldn’t connect with distant friends, or access information from resources around the world. They are no longer getting fashion cues from an older sibling; they’re influenced by trendsetters on blogs and YouTube from places like Korea, Japan, London and France. 

Retailers need to expand their global footprint, catering their website and marketing strategy to connect with customers who speak different languages and use different currencies. Retailers that fail to seamlessly serve customers internationally will fall out of favor with Gen Z, who have only ever known a world that is flat.

They are constantly evolving — and expect retailers to, as well

Gen Z shoppers have different expectations for loyalty. They have a propensity to try new things and ask for opinions from friends, trendsetters and online forums. They will steer toward brands that speak to them in the moment, rather than make a purchase just because they know and trust a brand.

As a result, it will be more important than ever that retailers constantly evolve their approach, and reach consumers through multiple media — brick-and-mortar, online, pop-up stores and markets. And just selling products won’t cut it: stores need to create immersive experiences that draw customers in and offer them something beyond a bag to take home. Retailers seeking inspiration can look to brands like outdoor cookware company Urban Bonfire that serves up BBQ at festivals and hosts cooking workshops or exercise outfitter Lolë that hosts daily yoga classes.

They value transparency and authenticity

This generation is driven by social change —they care about where their products come from and want their purchases to make a difference. Gen Z shoppers will expect retailers to be upfront about labor practices and environmental impact. Those that are open, honest and working toward better solutions will come out ahead.

Additionally, Gen Z consumers will see right through blanket marketing tactics. They don’t necessarily hate ads, but they want marketing to be personalized and realistic. A recent study showed that 44% of Gen Z are not averse to ads as long as they are relevant, and they are twice as likely as Millennials to want to see “real people” in them, rather than celebrities.

There’s still a lot to learn about Gen Z, and smart retailers need to get a head start. By starting to understand their digital habits, social preferences and values, retailers can be prepared for the next generation of shoppers when they decide to pull out their wallets.