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Who is Generation Z – and How Do They Shop?

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To the German article

Although most Gen Zs still live with their parents, they have spare cash and will become the largest consumer group in 2020. As such, they have the necessary clout to change the market. In fact, they make up about a quarter of the population – and in the USA, as much as 40 percent of all consumers. Retailers who cling to the old ways will feel the effects of this in the coming years.

What Matters to Gen Z

A study by C. Priporas, N. Stylos and A. Fotiadis, published in the “Computers in Human Behavior” Journal, found that most Gen Zs shop online on their smartphones. Only 10 percent use a laptop or desktop PC due to security concerns.

In physical stores, Gen Zs prefer self-service checkouts, informative touch points and new payment methods such as Apple Pay or contactless. When it comes to online shopping, these young customers rely on retail apps and social media. The most popular payment methods in this context were Apple Pay, PayPal and credit card. Paying by credit card, however, is not widespread in Germany, especially among very young customers.

It is therefore particularly important with regard to this generation to make the payment process as simple as possible. Being able to find products without the assistance of sales staff and avoiding long queues is also important to them.

For retailers, this means satisfying the desire for quick transactions, extensive information and convenience. The level of technological features not only shapes the customer experience, it also significantly impacts the purchasing decision of this large group of buyers. We sometimes forget how much retail has already adapted to the needs of customers.

How Retail is Adapting to Gen Z

The retail industry is experiencing two major transformations. On the one hand, it is having to deal with constant technological development in order to provide a good customer experience and to remain competitive. On the other hand, there’s an ever-expanding consumer group that is different to all previous ones. They shop differently, have different expectations and want constant innovation paired with a unique customer experience.

So far, retail chains have been trying to meet the growing demands of Gen Z by using self-service technologies such as informative touch points, self-service checkouts, interactive changing rooms and apps. Others have set up completely virtual shop fronts where you can locate products with your smartphone. Although smart retailing offers flexibility compared to traditional retail, rapid technological changes are also causing rapid changes in consumer expectations.

An important factor in purchasing behaviour, however, is and always will be the age of the buyers, as this has a decisive influence on the scope of technological expectations. It is well known that older age groups are associated with reduced access to technology, as well as with reduced willingness to deal with new technologies.

A Generational Overview

When was Gen Z born? The definitions range from 1993–2000 as the first year of birth and 2009–2012 as the last. Unlike the unclear starting point for this cohort, 2012 seems to have largely established itself as the last year of birth for Gen Z.

It is difficult to define generations, but 1996 is often defined as the boundary between Millennials and Gen Zs, which is why the definition 1997–2012 is used here. That puts the birth span of this cohort at 16 years, just like that of generations X (1965–1980) and Y (1981–1996).
The Baby Boomer generation (1946–1964), by contrast, is the only one that was officially created by the U.S. Census Bureau. As the name suggests, it’s based on the high birth rate that began after World War II and ended in 1964.

What Defines Generations

No other generation has as objective a point of reference for determining its limits as that of the Baby Boomers. This is why exact time spans are difficult to define. In the view of the Pew Research Center, 1996 proved to be a significant turning point due to various political, economic and social events that shaped the formative years of the Millennials.

At the time of the 9/11 terror attack, Millennials were between 5 and 20 years old. Most of them were therefore able to comprehend the historical significance of this terrible occurrence, or at least understand the fundamentals of the tragedy.

Generation Z was four years old or younger at the time and has little or no memory of the terror attack. The consequences of 9/11 had already come to pass before many of them were born.

Millennials also grew up in the shadow of the war in Iraq and Afghanistan, the great polarisation of which shaped today’s political environment. Similarly, the youngest Millennials were at least 12 years old when the first African-American president in US history was elected. Like the election of the first female German chancellor in 2005, this was a significant moment in history.

The global economic crisis of 2008 had a massive impact on many Millennials entering into adulthood, which for many people around the world meant a slow start to working life – something which is still being felt in some nations to this day.

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Environment, climate change and sustainability are important to Generation Z.

Generation Z

Baby Boomers grew up in the presence of the expansion of television, which had a significant impact on their lives. Generation X, on the other hand, grew up in the shadow of the computer revolution, while Millennials (Gen Y) grew up with the explosion of the Internet.

Generation Z is the first generation in human history to have had access to all these things and much more from the start. When the first iPhone was introduced in 2007, the oldest Gen Zs were only ten years old. High-speed Internet and mobile devices were already commonplace for the older members of the generation during puberty. As were social media, on-demand entertainment and being contactable at all times. For the younger Gen Zs, a reality without all these things does not exist. For many, Donald Trump is the first US president of whom they are consciously aware. This certainly shapes a cohort differently from the elections of Obama or Merkel, even if all three elections were equally historically significant.

Growing up in such a highly technological environment seems to have its consequences according to the Pew Research Center. The latest research shows that there are dramatic changes in the behaviour of adolescents and children, some of which are interpreted as positive, some as negative. However, it will be several years before we can be sure whether these are just new adolescent behaviours that fade away with the onset of adulthood or whether they are actually persistent features that characterise an entire generation.

Even today, we need to bear in mind that no definitive statements can be made about Gen Z for a long time yet. Many of the events that will shape this generation are yet to have happened; after all, the youngest of this generation won’t turn 18 until 2030.

Generations Are Not Homogenous

The way we view the world doesn’t usually change from year to year. If you are born between two generations, you may identify with both.

There are also large differences within the same generation. A Gen Z born in 1997 will have been, and will continue to be, affected differently by the events of the world and shaped differently to a child of the same generation born in 2012. Nevertheless, these generations provide a certain classification with a raison d’être, and help to explain differences in thought and behaviour.

Thinking Ahead

A small town called Troy in Ohio, USA, or rather the Mash supermarket located there, became famous in 1974. Mash was the first supermarket to check out a product using a scanner. It was a pack of chewing gum that made its way across the cash desk.

It’s impressive how much shopping has changed in the last 45 years alone. Today, if all you have is a scanner and you refuse to keep up with the times, you’re going to get left out in the cold. Generation Z is here and should be considered an important target group.