Big-box stores have been around since the 1960s, and like all retail experiences, they have had to evolve. But will the evolution be enough to ensure their appeal to the next generation of consumers?
Countless headlines have touted the impact of millennials on retail, and as gen Z comes of age, the question is how they will force change in the retail industry. To understand what those changes might be, first, we need to grasp the gen Z consumer.
According to a report from WP Engine, gen Z represents $150 billion in buying power worldwide, influencing $600 billion in spending. And in 2020, gen Z accounted for 40 per cent of global consumers.
Two things bode well for big-box stores: gen Z loves to shop in-store, and they appreciate a bargain. That said, a report from Voxburner found 77 per cent of gen Z shoppers want to purchase from a retailer that fights for the values they believe in, and this generation is more likely to shop with brands that support their passions. The same report found gen Z shoppers willingly boycott brands that go against their values.
That gives big-box stores something very different to think about. At their core, they are about delivering low margins rather than aligning with “passions’”. But that’s not to say it can’t be done.
As is increasingly becoming the case for bricks-and-mortar retailers of all sizes, some clues can be found in the online space. A great example of aligning with gen Z values is the online fashion retailer The Iconic, which has created the Considered initiative. The curated line of products includes items made using at least one material or process that is better for humans, animals, or the environment. Similarly, online retailer Adore Beauty has its Global Shades initiative. It aims to offer the most extensive range of beauty products for all complexions appealing directly to the most racially and ethnically diverse generation ever. It’s a move straight out of the gen Z playbook and a small step big-box retailers can take to appeal to this demographic.
In addition to values, gen Z is also seeking a personalised experience, with WP Engine finding 60 per cent of the demographic’s shoppers are interested in personalisation. According to a report by IBM, gen Z consumers want value tailored to them, and they want to be able to co-create an experience that is uniquely theirs.
An example is jeweller Tiffany & Co. and its Make It My Tiffany initiative, created to appeal to gen Z shoppers. Tiffany personalises jewellery, with the brand’s former CEO Alessandro Bogliolo noting his 14-year-old daughter had a piece with an image of her pet on it.
For big-box stores, this could mean the personalisation of products, the experience in-store or the marketing around the offering. That could be as simple as recognising where your customer lives and tailoring accordingly or through personalised purchase offers such as discounts based on previous purchases.
Extending from the personalised experience, gen Zers expect a seamless interaction with brands that bridges the physical and the digital. This is little surprise, given they have grown up in a world where the boundaries between the two converge.
According to research by IBM, gen Z consumers appreciate innovation, but only if it can remove friction and empower them to engage with the brand on their terms. For big-box stores looking to adopt tech solutions to win over gen Z consumers, it’s about balancing gimmicks with value and frictionless convenience.
For an extreme example, look no further than Japanese streetwear brand Hipanda. The brand’s flagship store “tells a story where the customer is the lead character”. Visitors to the store begin by scanning a QR code that downloads the Hipanda app, which guides shoppers through the store, and interactive displays take away the need for a sales team.
The coming of age of gen Z could well signal the next progression in the life of big-box stores, but before they take over, brands will have their work cut out balancing this generation’s needs with shoppers from older cohorts.
– – –
Note: Original article appears in the Professional section behind the paywall at insideretail.com.au.