Latest retail marketing research reveals that ‘Generation Z’ still prefer real shops

3rd February 2017

According to the latest retail marketing research by IBM, ‘digital natives’ still prefer shopping in bricks and mortar stores to shopping online. And retailers must acknowledge and respond quickly to this – because ‘Generation Z’ is going to be much bigger than ‘Generation X’.

The Yellow Submarine in the store

The IBM Institute for Business Value spoke to more than 15,000 consumers aged 13-21 from 16 countries. The findings of this ‘Uniquely Gen Z’ study, released on Jan 12th by IBM and the National Retail Federation, reveal that despite being what they describe as the first ‘digitally native’ generation – born in the mid-nineties – Gen Z still prefer to shop-in store. The global Gen Z population grew up in a world of mobile phones, home computing and internet access and now the retail industry is beginning to take notice of their habits, as their number is expected to swell to 2.6 billion by 2020. Brands need to get on board to create more opportunities for digital engagement in order to serve what this ‘always on, mobile-centric, high-spending demographic.’

Discussing the findings, Steve Laughlin, General Manager of Global Consumer Industries at IBM asserts that Generation Z expects technology to be intuitive, relevant and engaging because “their last great experience is their new expectation”:

“This presents a significant challenge for retailers and brands to create a personalised, interactive experience with the latest digital advances – or risk falling behind. This kind of innovation is not linear or a one-time project – it is a new way of thinking, operating and behaving.”

Matthew Shay, CEO and President of NRF concurs:

“Just as Millennials overtook Gen X, there’s another big buying group retailers need to plan for, and it’s even larger: Generation Z. They appreciate the hands-on experience of shopping in a store. With technology constantly evolving but some shopping habits remaining the same, retailers need to be agile enough to serve both needs. Retailers are constantly focused on experimenting with new innovations both online and in-store to remain relevant to evolving consumer demand.”

Initially coined by Marc Prensky in 2001, the terms ‘digital natives’ and ‘digital immigrants’ are used to describe people born into the digital age – and those who were not. The metaphor is not about what people can or can’t do with technology but about their culture and attitudes. Digital immigrants have lived in both the digital and pre-digital age, whereas digital natives have only experienced digital culture. Many digital immigrants attitudes and preferences were formed in the pre-digital culture and age and are reflected in their attitudes and behaviour.

Although they prefer to shop in store, Gen Z consumers also enjoy engaging with brands online, especially with those that present interactive environments or facilitate personalisation, enabling them to tailor their retail experiences.

74% of respondents said that they spend their free time online. 25% are online five hours or more each day. The degree to which bricks and mortar sales are influenced by digital has become inevitable in modern retail – and continues apace. The study provides a number of useful insights into digital native shopping habits, which retailers can leverage for maximum effect:

  • 73% of Gen Z primarily use their phones socially – to text and chat to friends and family – but they are willing to extend these conversations to brand relationships.
  • They demand a seamless digital experience and have no patience for technology that is not easy to use.
  • They require transparency. They are fully aware that their personal information is valuable to retailers and want to know how brands are using it and how their personal data is protected.

As retailers develop their offer and respond to these results, Shay suggests that it is important to stay agile in their approach, continually responding and adapting to feedback from consumers. This generation is known for their loyalty, as brand champions both online and offline, especially when brands acknowledge and value their opinions.

How is your brand preparing for Gen Z and the influx of digital natives? We’re interested to hear your opinions in the comments section below.