How merchants can avoid ‘abandonment’ and win over ‘Generation Green’

How merchants can avoid ‘abandonment’ and win over ‘Generation Green’

Via Polina Tankilevitch on Pexels.

Sustainability-focused, social media-literate and sophisticated consumers are set to flood the Australian retail market as Gen Z moves out of the teenage phase and into the prime spending years of their lives.

With the oldest consumer in Gen Z being 26 years old, many are already approaching milestone spending moments, ready to spend big on clothes, homewares, tech, food and more.

Combined with the Millennial cohort - the oldest of which is about 42 in 2023 - the youngest group of spenders in Australia is set to be substantially larger than that of its predecessors according to research from Afterpay. Therefore, strategising now on how to capture emerging customers is imperative according to the Australian Retailers Association (ARA).

As per the 2023 ARA Retail Insights Report, released today, it is increasingly important for merchants to be familiar with the retail habits of the next generation of shoppers.

“While Gen Z is still young, they have already experienced two significant global financial events (the GFC and the pandemic),” the ARA said.

“Over 50 per cent of Gen Z start their buying journey on social media, overtaking any other channel. Gen Z don’t just love social media – it’s a crucial part of their lives.

“These consumers are sophisticated, digitally savvy and concerned with conscious consumption, with almost 90 per cent of shoppers agreeing that business values matter.”

According to the ARA there are four key Gen Z trends that all merchants should be aware of:

Generation Green

The existential threat of climate change is something those in Gen Z feel pointedly.

As the second-youngest generation currently alive, they’ll likely experience the ramifications of decisions made by their forebears. Despite this, many are optimistic and driven, and turn out in droves for demonstrations against companies and governments that choose not to make a difference.

This is reflected in their shopping behaviours too according to the ARA ,which said Gen Z consumers are proactively seeking out sustainable brands.

“This gen cares deeply about a company’s ethical values, with over half buying sustainable products where possible,” the ARA report said.

“Brands with poor reputations around sustainability and ethics are seeing abandonment by Gen Z.”

All is not lost though for those ‘cancelled’ by throngs of angry young Australians according to the Retailers Association.

“We have learnt that Gen Z believe in second chances, and cancel culture isn’t set in stone,” the ARA said.

“Over half of Gen Z are willing to forgive when brands change their approach and buy into sustainable and ethical practices. Transparency around a brand’s eco footprint is fundamental in sustaining trust.”

Social Commerce

TikTok, Instagram, Twitter - you name it, Gen Z is there, and they want to shop on these platforms too.

“As the lines of entertainment, commerce and social media blend into one, being able to shop directly from one platform is key,” the ARA said.

“Social media has significant conversion power, with nearly half of young consumers willing to purchase a product based on an influencer’s recommendation.

“Factor in some platforms’ direct purchasing offerings and it’s clear that social media has become a powerhouse across the entire consumer shopping journey.”

But don’t assume Gen Z are blindly following influencers like sheep - they’re quick to notice a dodgy deal when they see one, and as quick to use their own platforms to call out bad actors.

“Despite all this, young consumers know that a curated social media presence is not a true reflection of real life – they are sceptical about whether influencers use the products they advertise and are concerned about how social media companies are monetising their data,” the ARA said.

“It may be time for retailers to evaluate how they are using social media to drive new customers in store and online and ensure they are emphasising authenticity.”

Convenience and CSR go hand-in-hand

On the one hand, young Australians want instant gratification, cheap delivery, and the ability to use their preferred payment method. On the other - inclusiveness and a demonstrated commitment to corporate social responsibility (CSR) is a must.

As such, merchants need to strike a balance between the two if they want to secure Gen Z’s loyalty.

There are many factors to take into consideration, but being as transparent and communicative as possible with customers is essential according to the ARA.

“They think carefully about the long term impact of their purchases on others and the environment, to the point of abandoning a purchase if it just doesn’t feel right,” the ARA said.

“Reasons not to shop with a retailer include hefty delivery fees, a lack of reviews, poor reputation around ethics and sustainability and a preferred payment method not being available.

“Younger consumers are also focused on ethical issues such as inclusive and transparent advertising, eco friendliness and corporate social responsibility, with greater numbers of Gen Zs citing these loyalty factors as reasons to keep coming back to a retailer.”

Omni-channel and the metaverse

The rise of new technologies has run in parallel to Gen Z’s growth into being mature consumers. They’re accustomed to many tech tools and readily embrace new avenues of entertainment.

As such, an omni-channel approach needs to be embedded in all smart merchants’ attempts to sell to Gen Z. Get on or get left behind is the message according to the ARA.

“Gen Zs want more ways to shop 24/7 – no matter what time it is or where they are. Ease, accessibility and comparison are the key themes of why over half of this demographic prefer online to in-store,” the ARA said.

“Reviews, price comparisons and online algorithms to personalise the experience also have gained Gen Z’s favour.

“A streamlined online experience is important, as more than half of Gen Z consumers believe online algorithms help them see more of what matters.”

That’s not to say that in-store retail is dead; the ARA believes bricks & mortar still has the ‘it’ factor for younger buyers.

“Shoppers still recognise the importance of being able to try before they buy – with delivery delays and costs turning even more young consumers into omni-channel shoppers,” the ARA said.

“With that said, they have high expectations for their in-store experiences – the rise of physi-digital shopping is a trend that’s here to stay. 

“Shoppers want to compare by feeling, seeing and trying items; want to access their items immediately; and want to take delivery easily and without paying a high cost. As a result, omni-channel selling is fundamental for retailers to retain loyalty and remain competitive.”

Further, the promised metaverse remains something for merchants to consider when future proofing. The ARA’s report claims that more than half of the Gen Z cohort believe the metaverse will be an everyday part of life in the next 10 years.

“The Metaverse promises an integrated world that offers it all – from shopping to socialising – entirely from the comfort of your headset,” the ARA said.

“It is important for retailers to continue exploring new technologies to entice consumers and market product offerings.”

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