As different audiences enter the retail market and come into spending power, the retail industry has found the need to tailor their marketing strategies to ensure products relate to young buyers. For this reason, much research had been conducted surrounding the analysis of the new generation’s buying patterns and habits in retail. This paper conducts research into identifying Generation Z’s preferred shopping experience, analysing different marketing strategies that have been implemented and evaluating their effectiveness. The paper sets out one case study for a retailer who has ultimately succeeded in its strategy, and similarly one retailer who has failed to reach Generation Z. The paper gathers findings from secondary research sources and arrives at some conclusions and recommendations in identifying possible gaps in their promotional activities and suggesting two potential forms of marketing strategy as a way forward.
One of the main features of Generation Z’s shopping and buying habits is convenience. For the younger generation, convenience proves to be king, and this is exhibited in the popularity of not only online retail, but also purchases that are made from a single smart phone. The prevalence of smartphones has meant that social media is intrinsic to the way this age group shops (Gilliland, 2016). Unlike older generations, Generation Z shoppers have incorporated social media naturally into their lives and therefore the group operated digitally at their fingertips. According to research conducted by shopping research analysts Shoppercentric in 2017, 97% of Generation Z persons own a smartphone, 63% own a tablet, and over 55% use either Facebook or Instagram to connect with brands and retailers via this platform. This is a meaningful set of data to highlight the importance of market strategy via social media platform to reach out to the Generation Z shoppers.
Case Study – ASOS
It comes as little surprise that the focus group of Generation Z as a consumer target market tends to prefer brands and sellers that set out to meet their desires and satisfy their convenience. As established earlier in this paper, convenience has proved to play a crucial role for this focus group and arguably defines the success of some sellers, particularly online retailers. ASOS has become particularly successful in recent years, and has reached record revenues, largely thanks to their business model. What ASOS ultimately manages to encapsulate is capitalising on the fact that young people use social media platforms to engage with a brand online. ASOS continually boasts a heavy presence on all social media platforms and reaches out specifically to those with an even heavier teenage user-base such as YouTube or Tumblr. What young people enjoy most is not only the convenience of being able to scroll and browse through different products at their very fingertips, and have product information easily accessible, but also it revolutionises the way consumers perceive shopping. Online shopping through these platforms have provided the user with a easy to use interface that is above all, fun to use. Generation Z views shopping as a fun activity thanks to this as opposed to what used to be merely a necessity. ASOS have shown that they understand that as young people are always on their phones, they would be subsequently always open to buying.
Furthermore, what makes ASOS successful is how it strives further to be different and innovative in a way that speaks directly to Generation Z consumers. According to Microsoft (2018) it is said that the attention span of Gen Z customers to engage in retail related headlines is around 8 seconds. As part of its most modern marketing strategy, ASOS has just introduced a visual search tool that allows shoppers to easily filter its almost 100,000 products using only a photo. The tool picks out key items featured without even needing to input text (Woodhead, 2018). ASOS keeps up with the group’s demand for new ways to surface what their customers desire.
ASOS has said it would further increase the amount it spends on marketing strategies in 2019. Not only has its strategy tailored to changing consumer habits proved successful, but it now seeks to expand and capitalise on its model that has proven to work. The company reported a 28% increase in annual profits from 2017 to 2018 and has become one of the fastest and most differentiated online retailers (Robert, 2018). With Amazon holding almost 50% of e-commerce sales in the US, other online retailers such as ASOS need to be innovative with their approach to stay profitable, and it seems to be working for them.
Case Study - American Eagle
For many retailers, both on the high street and online, Generation Z consumers represent a nightmare; and thus, a serious threat to many of their sustainability. Above all, they are traditional retailers’ worst nightmare. For the fourth consecutive year, the retailer American Eagle has experienced sales declines. Firstly, American Eagle lacks in establishing a social media base, as many of its competitors have achieved. The brand has been openly criticised for not sharing influence on platforms and consequently not being able to cater for the demands of the new generation. For a company that exerts so much influence over Gen Z, accounting for 80% of shoppers, these criticisms have been largely justified (Richards, 2019). Therefore, marketing power in their hands was an easy choice for the brand, but whether they implemented it effectively is a different question. Much research points to the brand seeming unable to establish a relationship with its young shoppers. In the past, advertisement campaigns have featured older models rather than younger, their website didn’t offer a facility for collection points, and the brand barely marketed itself on social media, and this became one of the main gaps in their promotional activity. These key elements determined a major set back in the company and were much to blame for the consistent decline in profits over the last 3-4 years. Thanks to its large customer base, American Eagle can still pick itself up if it implements an effective strategy the incorporates these features that are so essential to the Gen Z. The following section provides some recommendation as to how marketing strategies can fill in some of the gaps in the promotional activity in many retailers.
Conclusions and Recommendations
From product selection and presentation, through to user interface, search facilities and filtering, retailers such as ASOS are really proving to be top of the range when it comes to speaking to Generation Z. The technological and digital fluency exhibited by the next generation of consumers has proved to become a significant feature in the way retail will operate in the years to come, and traditional marketing methods have proved to be less effective, opening gaps in retailers’ promotional activities. Generation Z-ers want to see relatable people in marketing campaigns. This is where some retailers such as American Eagle described earlier on, have fallen behind. Ultimately, young people want products and services to provide value to them and meet their needs.
There is one final significant difference to be raised when evaluating different marketing strategies. When millennials were teens, they were spending much of their budgets on clothing according to studies. However, the desires for Generation Z young people have without doubt transcended. Teens nowadays tend to spend most of their money on food and drink more than anything else. In the US the popularity of Starbucks, Chipotle, Olive Garden or Taco Bell continue to soar over that of clothing retail (Peterson, 2014). Marketing campaigns must understand that buying patterns have shifted and that retail is playing catch up behind large food and drink stores.
In conclusion, to summarise two main ways forward as marketing strategies, I would firstly recommend: 1) for brick and mortar stores, to gradually consider shifting away from its reliance on store sales, and invest in e-commerce facilities, depot and collection points and online retail interface. These must use social media platforms using promotional techniques on things like Instagram or Snapchat stories that make it even easier to engage with Generation Z. We understand that they rely on social media for a number of reasons; hence strategies must adjust to fit their needs. For example, incorporating the uses of Instagram for promotional purposes, encapsulating the fundamental purpose of showcasing a person’s aspirational self. 2) Having established that understanding these key purposes of the platforms are fundamental for this communication with the group, a second plausible marketing strategy must entail a successful business model and purpose which Gen Z-ers can look up to. Whether it’s a brand standing for a good cause, or Fairtrade coffee grains at Starbucks, Gen Z-ers have expressed the positive way they see good causes in the world, and a company that stands out different to a standard brand, will without doubt achieve a strong engagement with this new generation of buyers.
Bibliography
Dunwiddie, J. (2018). How to Reach Generation Z With These 5 Marketing Strategies. Available: https://www.revlocal.com/blog/digital-marketing/how-to-reach-generation-z-with-these-5-marketing-strategies. Last accessed 14th Mar 2019.
Gilliland, N. (2018). How retailers are targeting Generation Z.Available: https://econsultancy.com/how-retailers-are-targeting-generation-z/. Last accessed 14th Mar 2019.
Petersen, H. (2014). Generation Z Is A Complete Nightmare For Retailers. Available: https://www.businessinsider.com/generation-z-is-retailers-nightmare-2014-6?r=US&IR=T. Last accessed 14th Mar 2019.
Richards, K. (2019). American Eagle Surrendered Creative Control for Its Latest Marketing Effort to Gen Z. Available: https://www.adweek.com/brand-marketing/american-eagle-surrendered-creative-control-for-its-latest-marketing-effort-to-gen-z/. Last accessed 14th Mar 2019.
Robert, Y. (2018). How Asos Is Making E-Commerce All-Inclusive.Available: https://www.forbes.com/sites/yolarobert1/2018/10/23/now-trending-how-asos-is-making-e-commerce-all-inclusive/#606891e2297d. Last accessed 14th Mar 2019.
Shoppercentric Research. (2019). Generation Z Statistics. Available: https://www.shoppercentric.com/. Last accessed 14th Mar 2019.
Woodhead, K. (2018). Selling to Generation Z: what brands can learn from online fast fashion. Available: https://www.the-gma.com/generation-z-brands-online-fast-fashion. Last accessed 14th Mar 2019.
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