Gen z Case Study by andralouise

2016 Gen Z Case Study

Richardson, Andra Ashley HomeStore 5/3/2016

Gen Z Case Study

Executive Summary This case study examines Generation Z or â&#x20AC;&#x153;Gen Zâ&#x20AC;?, the largest consumer group to come in the next five to seven years. While many retailers have been focused on targeting Millennials, it is now time to begin strategizing on how to target Gen Z. Gen Z was born between 1996 and 2011, and their parents are members of Generation X. They are highly technologically savvy. In fact, they show signs of distress when disconnected from the online social world. They want to own their own businesses and houses, and they want to change the world. They also have high self-awareness and mature faster than other children have in the past. In comparison to Millennials, Gen Z accounts for a bigger portion of the population, and there are a few major differences between the two consumer groups. Millennials have often been seen as egotistical, being told they deserve the best. Gen Z, on the other hand, believes in going out and making a difference in the world instead of believing the world should cater to their needs first. When it comes to online screen time, Gen Z tends to multi-task on more screens than Millennials. In addition, Gen Z shops differently than Millennials. Gen Z wants more sensorial aspects in-store, whereas Millennials prefer to shop at stores where they can quickly find everything in one place. If retailers want to attract Gen Z, they are going to have to adopt a whole new approach. They will need to offer aspirational browsing experiences. They will also have to integrate technology, sell on mobile platforms, offer frequent deals, and make their sustainability efforts known. Retailers will also have to capture Gen Zâ&#x20AC;&#x2122;s parents in some cases, since they will be the ones making the purchase for their children. Perhaps, the most important thing to remember is that Gen Z is not loyal to brands. As one looks beyond the United States, he or she can see that retailers abroad have made great efforts to cater to Gen Z. The Asian market, in particular, is setting a great example of how to adapt to change as Gen Z enters the market. After all, effective change management through in-store changes and online marketing efforts will be crucial in the process of capturing Gen Z as a customer or employee.

Gen Z Case Study

5 Table of Contents

Introduction ………………………………………………………………………………………………………………………………… 6 Who is Gen Z ……………………………………………………………………………………………………………………………….. 6-8 The Difference from Millennials ………………………………………………………………………………………………….. 8-10 How to Attract Gen Z …………………………………………………………………………………………………………………… 10-12 Gen Z Abroad ………………………………………………………………………………………………………………………………. 12-13 Conclusion ………………………………………………………………………………………………………………………………….. 13-14 References ………………………………………………………………………………………………………………………………….. 15 Appendix A …………………………………………………………………………………………………………………………………. 16-19

Gen Z Case Study

Introduction Millennials have been the object of attention in the retail world as of late, but there is a new generation on the rise, Generation Z or “Gen Z” for short. In 2015, Gen Z was estimated to have a population of 2 billion globally and slated to be the single largest group of consumers worldwide in five to seven years (Bell, 2015). According to Marks (2016), Gen Z will account for 40% of all consumers by 2020. This consumer group was born roughly between 1996 and 2011 (Williams, 2015). Gen Z is beginning to have purchasing power as the oldest members turn 20 this year (Burrus, 2016). As a retailer, it is important to know who Gen Z is, how they differ from millennials, how their behaviors vary internationally, and how to attract their business. Who is Gen Z As stated above, Gen Z ages range from five to twenty. Their parents are members of Generation X (Williams, 2015), and their total buying power is $44 billion (Geller, 2015). With the new purchasing power of twenty-year-olds already entering the market, one must know Gen Z’s habits and aspirations. Bell (2015) sums up Gen Z with the following quote: “Look out world, Generation Z is determined to change you. A lifelong connection to technology is creating a generation that prefers career stability over high salaries, activism over partying, and fresh food over fast food- and you have eight seconds to capture their attention.” Gen Z is highly sensorial and tech-savvy. They are curators, not consumers (WGSN, 2013). They have been raised on technology and do not know a world without swiping, zooming, and pinching, hidef, surround sound, and 3D (Bell, 2015). In fact, Gen Z spends more than three hours a day in front of a screen (Benhamou, 2015). They live in constant fear of missing out and being out of the loop. Social media platforms like Pinterest, Instagram, and Tumblr are their greatest attractions because of the visuals. They also enjoy self-educating on YouTube and vlogging (video blogging) in hopes of becoming internet famous (Benhamou, 2015). Knowing this, it is easy to understand why one would have only

Gen Z Case Study

eight seconds to capture the attention of a Gen Z audience. Gen Z expects to be communicated with via pictures and videos and very little wording as they are constantly multi-tasking and can process a great amount of information within eight seconds. Gen Z wants everything, everywhere and immediately. They do not mind paying a great amount of money for the latest smartphone but are not willing to pay for a film or a song that they can find for free online (Benhamou, 2015). In fact, they use their smartphones as their main way of browsing the internet, and 76% of them look at their mobile device multiple times throughout the day (WGSN, 2013). Gen Z enjoys movies like “Hunger Games” and “Divergent.” They listen to Korean K-pop, and when they dance, they “twerk” (Benhamou, 2015). They speak with acronyms in the same way that they type text messages, and their idols are Internet starts like “PewDiePie,” who has the world’s most subscribed YouTube channel (Benhamou, 2015). Gen Z finds it easier to talk online than in person, and their online friends are as important to them as their friends in real life. Surprisingly, they actually meet up in person with some of their online friends. More than eight out of ten Gen Z members are hooked on social networks, and more than half of Gen Z thinks that this is where real social life takes place (Benhamou, 2015). They are even on dating websites from the age of sixteen, sometimes before. Gen Z is so addicted to social networking that 79% of them displayed symptoms of distress when they were kept away from their laptops and mobile phones (WGSN, 2013). As a result of being born into a technological age, Gen Z children mature more quickly than previous generations, with modern childhood ending at age twelve (Bell, 2015). They prefer electronics such as smartphones, tablets, and computers as opposed to childhood toys. Some Gen Z girls are developing an unhealthy obsession with physical appearance. Girls aged eight to twelve use an average of over four different beauty products, and 80% of American girls say they have been on a diet by age ten (Bell, 2015). In addition, Gen Z members have healthier eating habits as a result of being aware of

Gen Z Case Study

their physical appearance at an earlier age. Bell (2015) states that 41% of Gen-Z’ers are willing to pay a premium for ‘healthier’ products. In fact, gourmet coffee sales are replacing caffeinated sodas such as Coke and Pepsi, whose sales are down 40% with teens in the last ten years (Bell, 2015). In regards to career aspirations, the majority of Gen Z is not interested in working for someone else. Between 50% and 72% want to run their own start-up company, and 76% plan on making their hobby their job (Benhamou, 2015). Once they are settled and doing well in their careers, they want to establish homes for themselves. Marks (2016) states that 79% of Gen Z would rather own a home than rent, and 83% aspire to purchase a home one day. With this great aspiration of home ownership, home furnishings retailers, in particular, should be preparing themselves to offer products with which Gen Z would love to fill their home. The Difference from Millennials Since Gen Z immediately follows the Millennial generation, it can be easy to confuse the two. However, there are several characteristics that set Gen Z apart from Millennials. Firstly, Gen Z accounted for 25.9% of America’s population as compared with 24.5% Millennials in 2011 (Bell, 2015). Millennials are often characterized as egotistic, but Gen Z is independent, stubborn, pragmatic, and always in a rush (Benhamou, 2015). Unlike their preceding generation, Gen Z is full of realists who have grown up in a post- 9/11 world filled with constant reminders of what is wrong and what needs to change. Millennials grew up as optimists and were constantly told they are special and deserve the best the world has to offer (Bell, 2015). Williams (2015) sums up the two generations as follows: “If Hannah Horvath from ‘Girls’ is the typical millennial- self-involved, dependent, flailing financially in the real world as her expectations of a dream job and life collide with reality – then Alex Dunphy from ‘Modern Family’ represents the Gen Z antidote… Alex is a true Gen Z: conscientious, hard-working, somewhat anxious and mindful of the future.”

Gen Z Case Study

As a result of their attitudes towards life, Gen Z is outpacing other generations in volunteer work, with one in four currently volunteering. Gen Z believes that the existence of different types of people, beliefs, and opinions within a society is a good thing; they are not afraid to fight for equality, whether it be for marriage, transgender people, or more (Bell, 2015). Generation Z is highly motivated to change the world. Sixty percent of Gen Z wants to have an impact on the world as compared to just 39% of Millennials (Bell, 2015). Secondly, Gen Z is more tech-savvy than Millennials. Millennials were digital, and their teenage years were defined by iPods and MySpace. However, Gen Z is the first generation to be raised in the era of smartphones, and many of them do not remember a time before social media (Williams, 2015). The brains of those born into Gen Z have evolved to process more information at faster speeds, so they are able to handle bigger cognitive challenges (Bell, 2015). Yet, Gen Z lacks spatial awareness due to extreme multi-tasking. â&#x20AC;&#x153;While Millennials average three screens multitasking, Gen Z-ers average five: TV, phone, laptop, desktop, and either a tablet or gaming deviceâ&#x20AC;? (Bell, 2015). When it comes to social media, Gen Z prefers visual platforms like Tumblr and Pinterest that allow self-expression and privacy. Gen Z enjoys Instagram as well because it offers many of the things that they really value like sharing, community, and self-expression (WGSN, 2013). They also use Snapchat, Secret, and Whisper for communication. Facebook is not high on their list of social media networks, and three million Gen Z teens have deserted it in three years (Bell, 2015). Facebook lacks the privacy that Gen Z seeks. Third, Gen Z pursues a different shopping experience than Millennials. Gen Z seeks more sensorial aspects in-store. They shop at stores like Forever 21 that enable them to try on various sizes and styles that are difficult to pinpoint online. They also enjoy samples and demos in stores like Sephora (Wilson, 2016). Millennials seek efficiency and quality. Many of them are launching careers and have

Gen Z Case Study

young families, so they need to shop often. They favor big-box stores for their ability to quickly find everything they need in one place (Wilson, 2016). How to Attract Gen Z As Gen Z begins to enter the market, it is important for retailers to begin strategizing on how to attract them. First and foremost, stores need to offer compelling, brand-led experiences centered around aspirational browsing and less about a direct push for transactions if they plan on attracting Gen Z as a customer (Ng, 2015). Even though Gen Z is over-connected and playing with multiple devices all the time, they still prefer to interact in person when it comes to shopping. Seventy-seven percent of Gen Z-ers have a bank account but only 38% make most of their purchases online, and 43% favor brick-andmortar shops (Ng, 2015). Since Gen Z is engulfed in technology, stores should consider how they will integrate technology onto the selling floor, whether it is by mobile checkout, interactive displays, virtual reality experiences, and more. Ng (2015) states that food and beverage, lifestyle and entertainment options continue to be a popular way for retailers to enrich their in-store experience. It may even be a great idea to offer unisex collections and interior design themes since nearly two-thirds of Gen Z say their generation is pushing the boundaries of what it means to be feminine and masculine (Bell, 2015). In addition, Gen Z is composed of smart shoppers, so retailers should offer frequent deals to draw them in (Ng, 2015). Retailers should focus on offering curated collections, too. Gen Z grew up in a world where options are limitless, but their time is not. Therefore, it helps them when retailers have a tightly edited merchandise selection to help them shrink their options down to a more manageable size (Ng, 2015). Plus, product is more important than the brand in Gen Zâ&#x20AC;&#x2122;s opinion. Retailers cannot expect for Gen Z to be loyal based on brand image and marketing campaigns (WGSN, 2013). Next, Gen Z is extremely socially conscious and aspires to change the world. It is important for retailers to make

Gen Z Case Study

sustainability commitments that are not overly exaggerated but easily visible and searchable online (Ng, 2015). When it comes to online efforts for attracting Gen Z customers, retailers should still focus on being aspirational and not overwhelming Gen Z with promotional efforts. All online platforms should be mobile optimized since Gen Z spends a great deal of time browsing the internet on their phones. Retailers will fail to attract Gen Z if they are not focused on attracting them via mobile; every retailer should have a mobile app. If a retailer wishes to advertise on social media, they should focus on Instagram, Pinterest, and YouTube since Gen Z uses these sites often. Williams (2015) advises to communicate in five words with a big picture. Visuals can be the reason one attracts Gen Z or the reason one loses Gen Z online. On the other end of the spectrum, retailers will want to attract Gen Z as employees, which can be difficult since Gen Z is focused on owning their own companies. Work environments need to be inspirational since 76% of Gen Z wants to make their hobby their job (Benhamou, 2015). While Gen Z is motivated by financial stability, they are not fixated on salary or company perks like flexible work hours and vacation time. “Their top priorities are career growth (36%), fulfilling work (19%), and stability (19%)… the highest salary (6%) was the lowest priority” (Bell, 2015). Based on these numbers, retailers should focus on developing careers-focused benefits like outlined growth plans and educational tools if they plan on attracting and retaining Gen Z employees. Lastly, retailers may need to attract the younger Gen Z’s parents if they plan on selling to Gen Z. Gen Z parents are most likely born in Generation X between 1965 and 1982 (Klara, 2016). They were born into an analog, pre-internet world where they had to scramble to catch up at the dawn of the digital age. As a result, brands often forget or neglect to market to them because they are confused as to which platforms should be used to reach Gen X. Klara (2016) states the following:

Gen Z Case Study

“According to Forrester Research, traditional media is still important to Gen X (48 percent listen to the radio, 62 percent still read newspapers and 85 percent have favorite TV shows). But at the same time, Gen X is plenty savvy when it comes to digital media. A survey by Millward Brown Digital found that 60 percent of Xers use a smartphone daily and 75 percent are routinely on social networks. Gen Xers are quite active online as well when it comes to banking, shopping and researching products they want to buy.” Retailers may find themselves having to use the right mix of old and new media to attract Gen X and convince them to purchase what their children, Gen Z, want. After all, Gen X is in their prime when it comes to income; they have more spending power than any other generation and account for 31% of consumer spending (Klara, 2016). Gen Z Abroad Gen Z is indeed quickly growing to become the single largest group of consumers worldwide. As of 2009, India and China counted the largest numbers of teens and tweens with 286 million and 215 million. Brazil counts 41 million Gen Z-ers. In the Philippines, Egypt, Saudi Arabia, and South Africa, eight- to nineteen-year-olds represent one quarter or more of the population (Bell, 2015). Many retailers overseas are already honing in on Gen Z. Asia is making great strides in attracting Gen Z. Korean eyewear brand Gentle Monster is known for its artistic showrooms, with interior design themes changing as frequently as every 25 days. “In Seoul, local boutiques such as Be Slow, Boon the Shop, and Henry Beguelin opened new stores with dedicated space for events that show off the brands’ ethos and culture. Similar new openings can be found across the region in Shanghai and Tokyo” (Ng, 2015). In Japan, department stores often reserve entire floors for luxury chocolates and pop-up shops for Valentine’s Day. Some even do chocolate demonstrations and chocolate-themed decorations (Ng, 2015). All retailers should take into

Gen Z Case Study

consideration which holidays are most popular in their area and make arrangements for creative instore events to celebrate. (See photos in Appendix A) In 2014, Zara opened its most sustainable flagship globally in Hong Kong, stretching 55, 000 square feet over six floors. The store marks a first to meet the Inditex groupâ&#x20AC;&#x2122;s sustainability commitment where it reduces energy consumption by 30% and water consumption by 70% as compared with a regular store (Ng, 2015). Other shopping malls in Asia are rebranding as eco-friendly as well, emphasizing their open air feel, spacious courtyards, and water-conservation installations (Ng, 2015). All of these efforts help attract socially conscious Gen Z-ers. (See photos in Appendix A) In reference to work, Gen Z has the same attitude in France as mentioned earlier. They are not primarily motivated by salary. If given the same pay, 25% of Gen Z in France would choose the most fun company, 22% the most innovative, and 21% the most ethical (Benhamou, 2015). All in all, the mindset of Gen Z does not change tremendously as one travels from country to country. Conclusion In conclusion, Gen Z is taking the retail world by storm. Retailers can no longer solely focus on capturing Millennialsâ&#x20AC;&#x2122; attention. In 2015, Gen Z was estimated to have a population of 2 billion globally and slated to be the single largest group of consumers worldwide in 5-7 years (Bell, 2015). As a retailer, it is important to know who Gen Z is, how they differ from millennials, how their behaviors vary internationally, and how to attract their business. Without this information, it will be difficult to attract Gen Z as a customer or employee once they really begin flooding the market. Gen Z members are in love with technology. They have the world at their fingertips and are more mature than any other generation has been during childhood. They are able to process a load of information within eight seconds and multi-task on up to five screens at a time. They value online communication, privacy, sharing, and self-expression. When it comes to their gadgets or healthy eating, they do not mind spending at premium prices.

Gen Z Case Study

Unlike Millennials, Gen Z considers themselves world-changers and the statistics show that they are indeed world changers. They want stability and their own businesses and houses. They also want aspirational shopping experiences and sustainability from retailers. Many retailers abroad are already capturing Gen Z, and American retailers will soon need to follow their lead.

Gen Z Case Study

15 References

Bell, A. (2015). Generation z. Retrieved from https://www.wgsn.com/content/board_viewer/#/59313/page/1 Benhamou, L. (2015). Everything you need to know about generation z. Retrieved from http://www.businessinsider.com/afp-generation-z-born-in-the-digital-age-2015-2 Burrus, D. (2016). Gen z will change your world again. Retrieved from http://www.huffingtonpost.com/daniel-burrus/gen-z-will-change-your-wo_b_9150214.html Geller, J. (2015). Move over, millennials. Gen Z is new target audience. Retrieved from https://www.bostonglobe.com/business/2015/08/31/brands-turn-attention-towardsgen/wV99rNryDEEEhd06UjioFN/story.html Klara, R. (2016). 5 reasons marketers have largely overlooked generation x: theyâ&#x20AC;&#x2122;re at the peak of their careers, but many brands have forgotten them. Retrieved from http://www.adweek.com/news/advertising-branding/5-reasons-marketers-have-largelyoverlooked-generation-x-170539 Ng, E. (2015). Adapting retail for gen z â&#x20AC;&#x201C; top 5 store & space trends in Asia. Retrieved from https://www.wgsn.com/content/board_viewer/#/59435/page/1 Marks, J. (2016). Zeroing in on gen z. Retrieved from http://www.homeandtextilestoday.com/blogpost/14148-zeroing-gen-z WGSN. (2013). Generation tech: gen z, pluralists. Retrieved from https://www.wgsn.com/m/board_viewer/#/129640/page/1 Williams, A. (2015). Move over, millennials, here comes generation z. Retrieved from http://www.nytimes.com/2015/09/20/fashion/move-over-millennials-here-comes-generationz.html?_r=1 Wilson, M. (2016). Study: young shoppers want stores. Retrieved from http://www.chainstoreage.com/article/study-younger-shoppers-wantstores?utm_term=CSA159246&utm_source=MagnetMail&utm_medium=subject&utm_term=Da yBreaker%3A%20Ron%20Johnson%20retail%20startup%20Enjoy%20expanding&utm_content=C SA-NLE-Daily-03-30-16#.VvuoKHYKbng.mailto

Gen Z Case Study

16 Appendix A

Gentle Monster

Gen Z Case Study

Boon the Shop

Gen Z Case Study

Takashimaya upscale retailer- chocolate demonstration

Zara

Gen Z Case Study

Zara

City Square Mall Singapore