The retail sector is increasingly concerned about the decline in footfall to high streets and seems fixated on the fact that millennials, that most beloved demographic, prefer to buy online.
This does represent a challenge, but their younger counterparts, Generation Z – the true digital natives – may actually be the saviours of high street shopping.
We recently carried out a major pan-European research project among more than 50,000 adults across 11 countries – the Retail Buying Study 2018. It revealed that while only 14% of millennials (those aged 25-34) do their research and purchasing in-store, nearly a quarter (22%) of Gen Z (those aged 18-24) do so.
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More importantly, those youngest adults are also the age group most likely to say that going to the shops is enjoyable (76% of them think so) and that shopping on the high street with friends and family is a special time (again, 76%). It even found that 74% of Gen Z grocery shoppers say they prefer shopping in a physical grocer or supermarket store.
The European country where most Gen Z say they prefer to shop in a physical store is Spain at 59% – and where they do so least is the UK (though the figure is still a relatively high 56%).
Younger audiences often have the time and inclination to physically go shopping. While other retail segments are looking for ways to bring in new, younger customers, bricks-and-mortar retailers already have that audience. They just need to keep them.
Although millennials may prefer online shopping, they’re unlikely to enjoy it quite as much as younger shoppers love the physical retail experience. So the question then becomes, how does the high street keep that spark alive?
The answer lies in another fact unearthed by the study – more than three-quarters of consumers across Europe begin the shopping process digitally, researching products or looking for inspiration online. More than half even say they go online for inspiration or information before they buy groceries (56%) or pick up food or drinks from a sandwich chain or coffee shop (60%).
The high street experience needs to shift to reflect this transformation, and to acknowledge that most people will have engaged with a brand online before they walk into a store. As digital natives, Gen Z is the group most likely to be looking for an in-store experience that merges seamlessly with what they find on the internet.
In China, for example, Alibaba’s Hema supermarkets blend offline and online, with a mobile app that scans barcodes on all items to show everything from sourcing and price points to brand heritage and nutritional value. You can even purchase digitally with Alipay.
The research also noted that click & collect, fast becoming a retail go-to, is actually not that popular among Generation Z. Only 58% of that bracket have ever used it, the lowest of each age group other than those aged 55-plus. In fact, there is a significant correlation here, as the data shows those people who don’t shop entirely physically are more likely to use click & collect.
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This suggests that the service plays very well into the millennial and Generation X mindset because it suits time-poor shoppers – and gives them a reason to come into the store. Gen Z typically don’t need that reason. However, the danger is that click & collect then becomes a way for customers to avoid engaging with physical retailers rather than one that enriches the relationship.
Therefore, what they do need is a more interesting and immersive retail experience, which means all those buzzwords like data, personalisation, webrooming, experiential and frictionless come into play.
Shopping is a social event for younger consumers that they genuinely enjoy. As such, fmcg brands and retailers have an incredible longer-term opportunity to pull back a significant share of audience from the online space – but only if they can engage Gen Z both now and as their circumstances change over time.
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