“Every single generation, from Gen X to Millennials to Gen Z, requires things faster and faster. And one good experience means that you now expect that the next time,” says Shopper Behaviouralist Ken Hughes. In this Q&A, Hughes reveals the secrets retailers need to know to market to, and employ, Gen Z — the first truly “phygital” generation. Hughes will be delivering Keynote and Creativity sessions during the Retail Innovation Conference, April 30-May 2 in New York City.
Retail TouchPoints (RTP): What are the most significant changes retailers need to make in response to the emergence of Generation Z, compared to how they have engaged the Millennial shopper?
Ken Hughes: I think that one of the main differences between Millennials and Gen Z consumers is the merge between physical and digital. Millennial consumers discovered omnichannel part of the way through their lives. But the Gen Z shopper has grown up inside an omnichannel world. Every brand, every business needs to be ever-present in their lives at every touch point. Brands need to have a common voice, common data and common systems. This has become the expectation of the Gen Z consumer.
Gen Z shoppers see everything in their world as phygital; that is the first challenge. The second challenge is the Sharing Economy. Millennials were there for the beginning of the Sharing Economy, looking for ways to do things better. That includes Twitter, Uber and Airbnb. Millennials kind of started chipping away at the edges of the Sharing Economy; I think Gen Z will probably make it their own, and they will look to have access to what they need rather than ownership of it. And that access-versus-ownership is a real challenge for consumerism, which is based on the concept of “we make stuff and we sell it to you.”
RTP: How have you seen consumer expectations change from one generation to the next?
Hughes: Every single generation, from Gen X to Millennials to Gen Z, requires things faster and faster. And one good experience means that you now expect that the next time. So, with technology and everything coming faster and better to us, our expectations are now at that level and that will only get better.
The Gen Z shopper wants to be identified at every point along the customer journey. That’s their expectation, that you know them. And I’m really fascinated by that. With digital retail, you can go on to a retailer’s web site and it will immediately identify you. It will tell you what you bought last time and predict what you might want to buy next time, and it’s a good, warm experience. If the predictive algorithms are right, they are telling you what you should buy next and fitting into your life. Great, but then literally the next day you can walk into the store and the store system has no idea who you are.
I think that in the next-generation shopping experience, retailers will know a shopper when they enter the store. They will offer free delivery and free returns.
RTP: How will the shopping behavior of the next generation impact retail and retailers?
Hughes: Generation Z really has grown up inside a fantastically technologically advanced society where everything’s possible with technology. They have come to expect that everything should work the first time, should be seamless, fluid, and everything should be flexible and suited for them. They also believe, and this is one of the difficulties in managing a Gen Z employee, that they should have a seat at the boardroom table the moment they join the organization. So, some of their energy is good, but some of it’s hard to manage.
Of course, they expect the best from businesses and brands the first time and every time; and they expect those brands and businesses to be all about them. The Gen Z consumer seems to not really want to buy a car, not really want to have a 40-year mortgage on a property. They won’t want to stay in one place. So, they want geographical mobility where they can have freedom. The Airbnb model suits them. And they’ll probably change careers multiple times during their lifetime.
RTP: What is Sharable Experiential Equity, and what is its implications for brands?
Hughes: I coined the term two years ago to teach brands and businesses the importance of creating experiences that a consumer can share. What you’re looking for is a tribal brand following, where the consumers self-identify with your brand and you give them positive experiences. You’re giving people a reason to talk about your brand, either at the water cooler or at the digital water-cooler: social media. Every brand needs to look at what they’re pushing out into the world and ask themselves: Is the customer walking away thinking more about the brand because of the experience?
Retailers and brands need to measure their Shareable Experiential Equity on a regular basis to make sure that they are delivering messaging that allows consumers to share the story. That’s the future of marketing.
RTP: What will brands look like 10 years from now?
Hughes: First of all, because 10 years ago we didn’t even have a smartphone, who knows what technology will come along in 10 years and re-disrupt the entire industry? I think in the future, with all the technology coming our way, we still need to keep a focus on the fact that the brands that will survive in 10 years’ time will be the brands that put the shopper at the center, and that add value at every touch point.
RTP: What three things would you advise retailers and brands to do right now to ensure future success with the next generation of shoppers?
Hughes: OK, the first one is a boring one, but I think number one is invest in systems that allow us to identify who the shopper is, where they are, what they want, and what they might need next. The second one I think is refocus the business around the shopper, which is easy to say, but a lot more difficult to actually do in retail. It involves co-collaboration between the retailer and the shoppers. The last one I think is about creating Shadow Boards of Gen Z and Millennials in the workforce, so the company can gain insight into where consumers are right now.