While some members of Generation Z may not be buying luxury goods today – many of them still being in grade school – they are certainly influencing purchases, requesting gifts, and are soon to be shopping for themselves. Born roughly between 1995 and 2010, this generational cohort has about 2 billion members worldwide, so it’s clear that they will have an important impact on global markets. One recent study predicts that by 2025, Millennials and Generation Z combined will account for nearly half of the global personal luxury goods market. (Bain & Company). However, it would be a huge mistake to lump Gen Z in with their Millennial peers when observing their shopping behavior. In fact, some have dubbed Gen Z as the “anti-Millennials”. At 60 million strong in the United States, they outnumber Millennials by 1 million. (Fast Company) These cohorts could not be more different from one another, as we will explore below.
Millennials are often erroneously referred to as “digital natives”. While it’s true that they had access to technology and computers from a much younger age than previous generations, Gen Z, on the other hand, never knew a world without the Internet. They learned to swipe and search YouTube for cartoons as toddlers. If you thought that the web and digital experiences were important to Millennials, you’re only scratching the surface. To Gen Z, there are no lines between channels. They expect nothing less than fluidity and transparency. They won’t accept excuses for technological hurdles: if it can be done, it must be done. Nowadays, shoppers often find themselves better equipped than store associates to place orders, check inventory, read reviews, and compare prices. Gen Z won’t be as understanding, and retailers must be prepared. Retailers also need to look for innovative ways to put Gen Z shoppers in control. This generation was raised with on-demand services like Netflix and iTunes, and like to be in the driver’s seat. This extends to control over their brand interactions, as well as products through personalization. Members of Gen Z are also less comfortable with phone conversations, so it’s important to offer service options by social media, text, or chat.
Luxury for a Better Life
Ostentatious expressions of luxury – huge logos, branded everything – saturated the generation ahead of them, and Gen Z is rebelling. Does that mean that the younger generation is anti-luxury? No. It means that their appreciation of luxury goods and brands is motivated by different factors: a respect for quality workmanship and a desire to align with brands that are making a difference in the world. Gen Z will spend on luxury products if they think the item will improve their lives, rather than their social status. The same goes for their shopping experiences: if they find their brand interactions enhance their lives, they are more likely to reward the retailer with their loyalty.
Whereas luxury brands have often counted on impulse purchases to drive a significant portion of their business, Gen Z tends to be much more calculated. Having grown up during difficult economic times, they are cautious spenders. This means that brands need to look at the entire path to purchase to entice Gen Z consumers. Creating long-lasting brand-consumer relationships with Gen Z is going to be just as important as crafting salient in-store experiences. “Compared to any generation that has come before, they are less trusting of brands,” says Emerson Spartz, CEO of the digital media company Dose. (Fast Company) Although they are hyperconnected, recent survey data on Gen Z reflects that they are actually more inclined to shop in stores than Millennials. According to research conducted by IBM for the National Retail Federation, more than 98% of Gen Z shoppers still prefer to make purchases in brick-and-mortar stores. (LSA Insider)
Getting to Know You
Gen-Zers also tend to trust individuals more than big institutions, making social media, influencers, YouTubers and word of mouth some of the most impactful marketing tools for brands. (Fast Company) What does this mean for luxury retail brands? It will be extremely important to learn who the influencers are in your domain. What’s more, hiring knowledgeable staff in-store and equipping them with the right tools (for example, Clienteling) to help them build lasting, impactful relationships with their customers will also be increasingly important as Gen Z makes up a larger and larger percentage of purchases.