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Teen Generation Z is being called 'millennials on steroids,' and that could be terrifying for retailers
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Retailers have been obsessed with
millennials.
But now, they're scrambling to understand Generation Z,
the teen generation. After all, teens are the future of retail.
"From a spending perspective [teens] are millennials on
steroids," Marcie Merriman, executive director of growth
strategy and retail innovation at Ernst & Young, told
Business Insider.
A recent study by Ernst & Young sought to find out how
the two groups of young people differ. The firm polled 1,000
adults and 400 teens.
It's important for companies to recognize the differences between
the two generations, and how failing to do so could harm them.
Here are some crucial facts:
Teens are even more frugal than millennials, but in a different way.
Gen Z captures millennials' behavioral traits ... and then
expands upon them.
"The things you see millennials
doing when it comes to spending, Gen Z are just taking it to
another level," Merriman said. "Millennials have been in the
position of being frugal and very careful with their
money."
Gen Z isn't just frugal - they're
out to find the best value, Merriman said: "They look beyond just
what the price says it is to what you're going to get for it [the
price] - are you going to get free delivery? What other services
come along with it?"
Gen Z doesn't shop online nearly as much as millennials.
Forty-nine percent of the teens surveyed shopped online once a
month - and most of them don't even have credit cards yet. This
number will increase, according to the study, once they get them.
Millennials shop online more, unsurprisingly: 74% of the
millennials surveyed shopped online at least once a month.
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Teens shop online for "efficiency purposes."
According to the survey, each generation had different reasons
for shopping online.
Sixty-three percent of Gen Z-ers polled said that they shopped
online because it "saves [them] time," whereas only 55% of
millennials said the same. Fifty-three percent of Gen Z-ers
surveyed said that "the selection is better online," whereas only
44% of millennials surveyed agreed with that statement.
Fifty percent of teens polled agreed with the statement that "the
prices are lower online," and only 41% of millennials said the
same. Thirty-four percent of teens said that the "products are
organized [online] in a way that's easier to shop," and only 21%
of millennials agreed with that statement.
Further, Ernst & Young concluded that "Gen Z is most likely
to buy online for efficiency purposes."
Gen Z shops in stores because they have a "problem."
According to Ernst & Young's study, Gen Z goes into physical
stores because it's "functional" - not because it's born out of
"true desire."
Fifty-eight percent of teens surveyed said that they wanted to
see and feel the product. Fifty percent said it was to avoid the
cost of shipping. Forty-three percent said it was because it
helped get the product faster. Seventeen percent said it was
because they didn't have a credit card.
Merriman said:
If they're [teens] coming to your store, it's not because they
just want to buy a product. If they wanted to do that, they could
do that anywhere. [They can] do it online. Coming to the store is
to solve a problem. It's because they have a need, whether it's a
need to browse, or they don't know what they want ... or they're
not sure about the sizing of your clothes or whatever it is.
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Millennials care about bargains more than teens.
Millennials care more about prices than teens. This is arguably
because they came of age during the recession.
Sixty-seven percent of millennials surveyed said that they would
go to the website to get a coupon, whereas only 46% of teens
polled said they would do the same.
Millennials are also more attuned to ads - 71% of millennials
polled said they saw an ad online for a store before making a
purchase, and only 59% of teens said the same. Fifty-nine percent
of millennials surveyed said they had received an alert from a
shopping app on their phones before purchasing, and 38% of teens
said the same.
More millennials ask for help or use online customer service than teens.
Sixty percent of millennials surveyed said they would speak with
a sales associate before making a purchase in a store.
Forty-seven percent of Gen Z-ers polled said the same. Forty-nine
percent of millennials polled said they'd use a live chat before
making a purchase, but only 24% of Gen Z-ers polled agreed with
that statement.
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Teens care more about "experiences."
"Both millennials and Gen Z
through the recession ... part of it's been learned, some of it's
been trained - that products are no longer the cool thing,"
Merriman said.
"It was cool to save a dollar ...
and save money and get something for really cheap. Through that
whole process they've learned the value's not in the product or
the thing, it's in the experience," she said.
Merriman pointed to going out to
eat or going to an event as examples of this. More importantly,
they can share this, so now they "actually have something that's
tangible," which they might not have had before.
And when it comes to retailers, Merriman said that fast food
restaurants - or fast casual - are doing a better job at
delivering what teens want than apparel retailers.
Gen Z has higher expectations than millennials.
Think of it this way: Millennials remember playing "The Oregon
Trail." They fondly recall dial-up internet and AOL. Gen Z was
born into a world with ample technology, so what was a pleasant
surprise to millennials is taken as a given for teens.
"When it doesn't get there that
fast they think something's wrong," Merriman said. "They expect
businesses, brands [and] retailers to be loyal to them. If they
don't feel [loyalty] they're going to move on. It's not about
them being loyal to the business."
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Teens hate feeling like they're disrespected and when things don't work. Millennials don't get as angry when things break.
Teens hate feeling like they're disrespected.
"If you think about these young
people ... they've been treated with respect or equality much
more so than other generations because so much of their activity
does happen online," Merriman said. "Online, nobody knows they're
a kid or not."
Merriman said that "within these
other areas of their life, they're treated as almost mini adults.
They're treated as people with knowledge and respected."
So shopping at a clothing store
could be a turnoff. Merriman pointed to a "locked dressing room
because they're not trusted. They're given a number for the
number items so that they're trying on to make sure they don't
steal."
Teens also hate when things don't
work.
Millennials grew up getting
their AOL access interrupted. But teens can't stand when things
don't work, Merriman said, pointing to teen's privacy concerns -
"they've already given ... information" when they're online
shopping - as one reason for this.
Millennials are more tolerant than teens.
Millennials will give second
chances.
"What we've seen is that they're
willing to try the website again, just in case it's something
that they did wrong or maybe they entered the wrong number, they
might be willing ... to give it another shot," Merriman
said.
Whereas "Gen Z does not give
second chances. Either it works or doesn't and they're on to
something else."
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Millennials have brand loyalty; teens do not.
"So it really is a level of
tolerance and what they're willing to accept, and
a
degree of brand loyalty," Merriman said. "So millennials still
have a little bit of loyalty to different brands or places that
they've shopped."
"Gen Z doesn't really have that loyalty," she
said.
Teens are influencing the way their parents are spending, more than millennials ever did.
"They're actually challenging
parents," Merriman said. For instance, teens are asking their
parents, "How much are you gonna pay for that?"
"The parents might not be
price-sensitive, but the kids are going to educate upwards,
whereas [with] millennials, we didn't see that same type of
behavior," she said.
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Retails should be focusing on teens rather than millennials — they're a "barometer."
"If you do the right thing by
them, you're going to please everyone," Merriman told Business
Insider. "If you're focused on just getting millennials, you're
going to lose the generation that's coming up behind.
"What I'm suggesting is that they
[retailers] understand the needs of Gen Z as the
barometer.
"They have the highest
expectations. If you please them, you're also going to please
millennials - and Gen X and baby boomers and others will be
happy."
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