Despite expectations that the first “digitally native”
generation would want to shop online, a new study released today by
IBM (NYSE: IBM) and the National Retail Federation found that
almost all members of Generation Z prefer to shop in
bricks-and-mortar stores. With the global Gen Z population set to
reach 2.6 billion by 2020, retailers need to create more
interactive engagement around their brands to serve the “always
on,” mobile-focused, high-spending demographic, according to the
study.
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“Generation Z expects technology to be intuitive, relevant and
engaging — their last great experience is their new expectation,”
IBM General Manager of Global Consumer Industries Steve Laughlin
said. “This presents a significant challenge for retailers and
brands to create a personalized, 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.”
“Just as Millennials overtook Gen X, there’s another big buying
group retailers need to plan for, and it’s even larger: Generation
Z,” NRF President and CEO Matthew Shay said. “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.”
Released just ahead of NRF’s 106th annual Retail’s BIG Show next
week in New York, the “Uniquely Gen Z” study conducted by the IBM
Institute for Business Value is based on findings from more than
15,000 consumers aged 13-21 from 16 countries.
Born after the mid-1990’s till early 2000s, Generation Z is the
first “digitally native” group to grow up not knowing a world
before cellular phones, smartphones and other digital devices. But
the study found that 67 percent of Generation Z shop in a
bricks-and-mortar store most of the time, with another 31 percent
shopping in-store sometimes, indicating that 98 percent of Gen Z
shop in store.
The new generation is important to retailers because it has
access to $44 billion in buying power, with 75 percent saying they
spend more than half of the money that is available to them each
month, according to the study. And the generation is demanding: the
study found 52 percent of Gen Z consumers will transfer loyalty
from one brand to another if the brand’s quality is not up to par.
They care the most about retailers getting the basics right, with
66 percent saying product quality and availability are the most
important factors when choosing one brand over another; 65 percent
focus on value.
The study found 74 percent of respondents spend their free time
online, with 25 percent online five hours or more each day. The
degree to which in-store sales are influenced by digital is
inevitable in today’s shopping journey — and continues to grow. The
study discovered a number of insights into Gen Z’s digital habits
and preferences brands can leverage to reach them:
- 73 percent of Gen Z use their phones
primarily to text and chat socially with family and friends, but
members are willing to extend their conversations to brand
relationships.
- 36 percent would create digital content
for a brand, 42 percent would participate in an online game for a
campaign and 43 percent would participate in a product review.
- They have no patience for hard-to-use
technology and demand a seamless mobile/digital experience.
- 62 percent will not use apps or
websites that are difficult to navigate and 60 percent will not use
apps or websites that are slow to load.
- Gen Z knows personal information is
valuable to retailers, so members want to know how brands are using
it and how the information will be protected.
- Less than 30 percent are willing to
share health and wellness, location, personal life or payment
information; 61 percent would feel better sharing personal
information if they knew it would be securely stored and
protected.
The study found that Generation Z consumers like to engage with
brands online, especially with those that create an interactive
environment where customers can shape their own experience. As
retailers develop and engage in such practices, they will be able
to capture Gen Z ideas for new products, services, engagement and
shopping experiences, the study said. The generation is known to be
brand champions both online and offline, especially when brands
acknowledge and value their opinions.
IBM IBV Lead Researcher Jane Cheung and STORES Magazine Editor
Susan Reda, along with two Generation Z students from the Fashion
Institute of Technology’s Fashion Business Management (FBM)
program, will participate in a live online discussion of the
study’s findings at 11 a.m. Eastern time on Friday. Reporters can
watch the discussion at https://zoom.us/j/719741456.
About IBM Institute for Business Value
For more information, http://www.ibm.com/iibv
Download the IBM IBV app from iTunes and Android Market
About IBM Retail
For more information about IBM Retail:
https://www-935.ibm.com/industries/retail/
For more information about IBM Consumer Products:
https://www-935.ibm.com/industries/consumerproducts/
About NRF
NRF is the world’s largest retail trade association,
representing discount and department stores, home goods and
specialty stores, Main Street merchants, grocers, wholesalers,
chain restaurants and Internet retailers from the United States and
more than 45 countries. Retail is the nation’s largest private
sector employer, supporting one in four U.S. jobs — 42 million
working Americans. Contributing $2.6 trillion to annual GDP, retail
is a daily barometer for the nation’s economy. nrf.com
About the Fashion Institute of Technology (FIT)
The Fashion Institute of Technology, a part of the State
University of New York, has been a leader in career education in
art, design, business, and technology for more than 70 years. With
a curriculum that provides a singular blend of hands-on, practical
experience, classroom study, and a firm grounding in the liberal
arts, FIT offers a wide range of outstanding programs that are
affordable and relevant to today’s rapidly changing industries.
Internationally renowned, FIT draws on its New York City location
to provide a vibrant, creative community in which to learn. The
college offers more than 50 majors and grants AAS, BFA, BS, MA,
MFA, and MPS degrees, preparing students for professional success
and leadership in the global marketplace. Among notable alumni in
fashion are Calvin Klein, Michael Kors, Amsale Aberra, Reem Acra,
Brian Atwood, Dennis Basso, Francisco Costa, Norma Kamali, Nanette
Lepore, Bibhu Mohapatra, Ralph Rucci, John Bartlett, and Michelle
Smith. Other prominent graduates include Leslie Blodgett, creator
of bareMinerals; international restaurant designer Tony Chi; Nina
Garcia, creative director, Marie Claire; and Joe Zee,
executive creative officer, Yahoo Style. Embodying the mantra
“where fashion meets business,” the Fashion Business Management
(FBM) program at FIT is the largest and oldest degree program of
its kind in the country. Blending a curriculum of design
knowledge and business practices, students study fashion marketing,
product development, planning, and fashion management, and can earn
a one- or two-year AAS degree, and a two-year BFA
degree. Visit fitnyc.edu.
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NRF:Ana Serafin Smith,
855-NRF-PRESSpress@nrf.comorIBM:Katie Leasor,
212-671-9356kleasor@us.ibm.com
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