JillStandish
TECHNOLOGY

Gen Z: Seven ways to win the next big consumer market and purchasing powerhouse

BY CSA STAFF

For good reason, retailers in recent years have sought to understand the shopping habits and preferences of the millennial generation. The oldest millennials, born in or after 1980, are now well into their thirties – and have certainly reached maturity as consumers. It’s now time to shift the focus and look at the next generation behind these millennials to see if they differ from their digital-savvy counterparts.

If you think of everything that millennials have set the pace for change, think again. With the rise of mobile shopping and ongoing innovation in data analytics, it’s clear that the next generation of consumers – Gen Z who are those born after 1987 – will have some very different expectations, especially when it comes to digital shopping.

Recent Accenture research – based on a survey of almost 10,000 consumers from 13 different countries (750 from the U.S.) – highlights a number interesting trends regarding Gen Z’s shopping habits and preferences.

What is this generation looking for? Here we outline seven ways that retailers can win their loyalty and a share of their wallets:

Fully embrace social media

With 72% of Gen Z consumers in the U.S. enthusiastic about purchasing directly from social media, retailers should do more to build up their brand presence on the leading platforms and channels. With Gen Z, videos and pictures are becoming more important than text for many younger shoppers. Retailers should also take note for where they are spending their time; 89% of Gen Z are regular users of YouTube while Facebook remains a firm favorite and Gen Z consumers are also more likely to be regular users of Instagram and Snapchat than their millennial counterparts.

Deliver new shopping methods

More than three-quarters of Gen Z shoppers (77%) say they like the sound of curated subscription-type offers for fashion. And significant numbers would shift more than half of their purchases to retailers that can offer automatic replenishment programs. At the same time, 45% of Gen Z shoppers are willing to try voice-activated ordering. Investing in these new shopping methods will enable retailers to capture market share among Gen Z.

Learn to influence in new ways

Gen Z consumers are more likely than any previous generation to make their purchases on the basis of recommendations from friends, family and fellow social media users, with many seeking out others’ views before buying. Retailers must be alive to this trend and ensure their brand has a presence on video channels such as YouTube. It will also be crucial to develop sophisticated social listening tools that provide data on what potential influencers are saying about brands.

Indulge impulsiveness

Gen Z consumers are inclined towards impulsiveness. They often make purchases because they randomly see something that captures their imagination or receive a recommendation from those within their influencer circles. They also want purchases delivered at speed – 68% would pay more than $5 for one-hour deliveries. This impulsiveness offers retailers new opportunities: to develop experiences and tell stories that pique shoppers’ interest, and to invest in fulfilment to add value.

Don’t overlook the physical store experience

As digital channels proliferate, retailers need to stay focused on their brick and mortar channel to woo Gen Z shoppers. Our research found that 77% of Gen Z shoppers still prefer making purchases in-store. The challenge for retailers is to reimagine and reinvent their stores and to focus on the experiences that extend their brand. This may mean providing shoppers with an interactive and hyper-personalized experience or giving sales assistants tools to enhance the sales process.

Invest in making the brand stand out

Gen Z has yet to form its loyalties – just 5% shop at a single store for fashion and only 26% frequent one particular health and beauty retailer. These figures are notably lower than for older millennial generation shoppers. Fickle Gen Z shoppers provide an opportunity for retailers or brands. Those that wow Gen Z’s with exciting store or digital experiences could become their go-to for the future.

Keep it local

We may be increasingly globally connected, but Gen Z has characteristics that certainly differ by market and country. In China, shoppers are more likely than elsewhere to shop online and leverage social media. In Europe, Swedish shoppers are almost twice as willing to buy direct from social media as the global average. Retailers will need to hone their approach to each market according to local attitudes and preferences.

One lesson from the last few decades has been that consumer behavior and preferences evolve extremely rapidly. Keeping up with the latest trends – especially when it comes to technology adoption – is a huge challenge for retailers. Retailers need to continually rethink and redesign their offerings to satisfy ‘Gen Z’ or risk losing market share as these consumers come of age.

The good news is that shoppers born after 1997 have increasing purchasing power. They are open to trying new things and shopping in new ways and in new channels. The question is: Is your brand where they are?


Jill Standish is senior managing director of retail at Accenture.

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MAchine_learning
TECHNOLOGY

Discounter uses machine learning to stay ‘on Target’ with shopper demand

BY Deena M. Amato-McCoy

Target’s omnichannel journey may have started five years ago, but newly-emerging digital touchpoints continue to change the game.

By leveraging machine learning to tap into customer demand, the retailer is defining which touchpoints are not only valuable, but influencing its shoppers' paths-to-purchase. The initiative was discussed during a session ("Determining New Omni-KPIs To Hit Goals And Key Drivers") at the recently held eTail West 2017, in Palm Springs, California.

Retailers continue to break down the barriers separating channels and lines of business as a means of delivering a seamless shopping experience. However, as the industry moves even closer to the holy grail of frictionless, unified commerce, they need to take the next step: transforming their organization, business processes and technology to align with the demands of their customers.

For Target, this means delivering convenience, customer satisfaction and better engagement regardless of the touchpoint consumers use when shopping with the chain.

“We need to tailor assortments to individual shoppers’ needs, and make sure merchandise is available both digitally and in-store,” Meghna Sinha, senior director for enterprise data analytics and business intelligence, Target, said at the session. “This requires us to understand our customers’ demand. To do so, we needed a single view of the shopper.”

This can be a complex task when shoppers engage with the brand through five touchpoints: the Web, a mobile-optimized site, Target's native app, the Cartwheel app, and its network of approximately 1,800 stores.

Aligning digital and in-store shopping data in a central location was the first step in getting a single view of the shopper. However, “looking at [their] total store and enterprise sales wasn’t enough. We needed to dig deeper if we wanted to understand how they visit us and make decisions,” she said.

Enter the value of machine learning — sophisticated artificial intelligence (AI) that is not only robust enough to siphon through increasing levels of unstructured digital information, but continues to learn from previous computations, improving the level of data analysis.

Target began its machine learning journey about a year ago, applying the analysis method to its supply chain operations. Running daily and weekly tests, machine learning is already helping the chain to optimize operations based on insights derived through tests. “We are still at the beginning of this journey,” Sinha said. “The only way to prepare for the future is to understand customer demand.”

Knowing this demand is harder to harness at store-level, Target will use machine learning to measure the influence of its touchpoints — including those used in-store — on customer purchase decisions. “It allows us to test the customer journey as one experience vs. multiple broken experiences,” Sinha said.

Target is in good company when it comes to leveraging AI and machine learning, as 50% of retailers reported they already extensively use automation powered by AI to deliver IT tasks. Meanwhile, 47% use the technology for customer interactions, according to “People First in Digital Retail: Accenture Technology Vision for 2016.”

While it was too soon to share results, Sinha believes the chain will remain committed to machine learning. “Knowing this is not a slam dunk, we will continue to test and learn,” she added. “It’s an ongoing, multi-year journey that will be fine-tuned over time.”

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IoT
TECHNOLOGY

Study: Majority of retailers are ready to invest in IoT

BY Deena M. Amato-McCoy

As the retail industry continues its digital transformation, chains need a new formula to best service its shoppers.

To achieve this goal, 70% of retail decision makers are ready to make changes to adopt the Internet of Things (IoT), according to the 2017 Retail Vision Study, from Zebra Technologies. The study analyzes the technology trends shaping the future of the global retail industry and enhancing the shopping experience.

As online shopping becomes mission-critical in this age of transformation, retailers are challenged with providing unprecedented levels of convenience to help drive customer loyalty. While efforts only scratch the surface currently, within four years, these intentions will become priorities.

With 57% of retailers believing that automation will shape the industry by 2021, retailers will pursue IoT-enabled programs to streamline packing and shipping orders, tracking inventory and checking in-store inventory levels, and assisting customers in finding items. The first step in the equation, however, is to integrate e-commerce and in-store experiences to create seamless shopper experiences — and issue that 78% of companies find important or business-critical.

Within four years, 65% percent of retailers also plan to explore innovative delivery services, such as delivering to workplaces, homes and even parked cars. Meanwhile, nearly 80% of retailers will be able to customize the store visit for customers as a majority of them will know when a specific customer is in the store. This will be enabled through technology such as micro-locationing, which allows retailers to capture more data, accuracy and customer insights.

And 65% plan to invest in automation technologies for inventory management and planogram compliance, the study said.

To speed check-out lines, retailers plan to invest in mobile devices, kiosks and tablets to increase payment options. Specifically, 87% of retailers will deploy mobile point-of-sale (MPOS) devices by 2021, enabling them to scan and accept credit or debit payments anywhere in the store.

With big data becoming mission-critical to 73% of retailers’ digital retailing endeavors, by 2021, at least 75% of companies anticipate investing in predictive and software analytics for loss prevention and price optimization, along with cameras and video analytics for operational purposes and improving the overall customer experience.

These digitally centric tools will also benefit the shopper. The top sources of shopper dissatisfaction include inconsistent pricing between stores and the inability to find a desired item, whether it’s out of stock or misplaced within a store. That said, 72% of retailers plan to fix these issues by reinventing their supply chains with real-time visibility enabled by automation, sensors and analytics.

“Every inch of the retail industry is changing, from the aisles of the warehouse to the shelves of the store, and retailers are driving this change in a race to better serve customers,” said Jeff Schmitz, senior VP and chief marketing officer, Zebra. “The 2017 Retail Vision Study demonstrates that retailers are poised to meet and exceed customer expectations with new levels of personalization, speed and convenience.”

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