Study: The first ‘digitally native’ generation shops in stores
Generation Z grew up online, but that doesn’t mean that’s where they do all their shopping.
Sixty-seven percent of Gen Z — the first “digitally native” group to grow up not knowing a world before cellular phones, smartphones and other digital devices — said they shop in a bricks-and-mortar store most of the time, with another 31% shopping in-store sometimes, in a new survey by IBM and the National Retail Federation.
Regardless of which channel they shop, Gen Z is demanding, according to the “Uniquely Gen Z” study conducted by the IBM Institute for Business Value Fifty-two percent of Gen Z consumers will transfer loyalty from one brand to another if the brand’s quality is not up to par. They care the most about retailers getting the basics right, with 66% saying product quality and availability are the most important factors when choosing one brand over another; 65% focus on value.
With the global Gen Z population set to reach 2.6 billion by 2020, retailers need to create more interactive engagement around their brands to serve the “always on,” mobile-focused, high-spending demographic, according to the study.
“Generation Z expects technology to be intuitive, relevant and engaging — their last great experience is their new expectation,” IBM general manager of global consumer industries Steve Laughlin said. “This presents a significant challenge for retailers and brands to create a personalized, interactive experience with the latest digital advances or risk falling behind.
In other findings about Gen Z:
• They have no patience for hard-to-use technology and demand a seamless mobile/digital experience. Sixty-two percent will not use apps or websites that are difficult to navigate and 60% will not use apps or websites that are slow to load.
• Seventy-three percent use their phones primarily to text and chat socially with family and friends, but members are willing to extend their conversations to brand relationships. Forty-two percent would participate in an online game for a campaign and 43% would participate in a product review.
• Less than 30% are willing to share health and wellness, location, personal life or payment information; 61% would feel better sharing personal information if they knew it would be securely stored and protected.
Target is looking for a few good tech start-ups
Target is bringing back its retail accelerator program for a second round.
On the heels of the first Target + Techstars retail accelerator, the retailer said it has opened applications for a second round of the program yesterday, inviting retail-specific tech startups worldwide to apply for a chance to relocate to Minneapolis and embed themselves at Target.
“The lessons we learned last year were hard-won: More than 150 mentors offered 500+ hours of their time and expertise last year to mentor and help accelerate the startups in a brisk 14-week period. And results from our 2016 companies were significant,” the company said in a blog on its website.
In its posting, Target detailed the progress of some of the program’s start-ups, and said it has just made an initial investment in Inspectorio, a company dedicated to quality inspections for textiles and consumer goods in Asia and South America.
In addition, Target just rolled out a 130-store pilot at its stores nationwide for the shift-scheduling and communications app for hourly workers, Branch, which conducted a 10-store pilot in September.
"Our participation in the Target + Techstars accelerator program has been more beneficial to our growth than even our most optimistic expectations," said Atif Siddiqi, CEO, Branch. “The opportunity to leverage the Techstars network and Target’s remarkable support of our efforts within all levels of the company from the C-suite down to the store employees has been transformative for Branch. Target allowed us to test our platform in some of their stores, which has been extremely helpful with tailoring our offering for large enterprise retailers."
In addition to continuing the Techstars program, Target plans to develop and run several new accelerators, including with its Internet of Things (IoT) team.
“Our accelerator experience has only confirmed what we already knew: that working with startups is an important part of fueling innovation at Target, both when it comes to new ideas as well improving the way we work internally,” said Casey Carl, chief strategy and innovation officer, Target.
Target and Techstars will announce the selected startups in July and host a final demo day at the 14-week program’s close in October.
Study: Grocers fail to meet shoppers’ fresh needs
Many grocery retailers are still missing the mark when it comes to meeting a key shopper demand.
Specifically, 81% of shoppers said they are unable to get produce they want in store, online and at discount retailers, yet 91% of grocery retail professionals are confident they are meeting customer expectations of availability.
This disconnect was revealed in an international survey of 4,000 consumers by Blue Yonder. The research explored consumer shopping habits online and in supermarkets, discount retailers and mass merchants across the United States, United Kingdom, France and Germany.
Shopping experiences both online and in-store are not only failing to meet customer expectations of purchasing goods anytime, anywhere, but 35% of shoppers stated they are let down at least once a week. Sixty nine percent (69%) said there is a lack of availability online, while 85% found the same struggles in supermarkets.
Replenishment practices are also lacking across supermarket chains, as 30% of all shoppers abandoned their carts if they were unable to find the produce they wanted. Meanwhile, 28% saying that they felt unsatisfied when buying a similar product as a substitute, data revealed.
Lacking produce availability can have wider implications for profitability. It has prompted 20% of shoppers to stop shopping with a retailer permanently or for a period of time. This figure rises to 31% for online retailers, the report said.
“We all understand replenishment is incredibly difficult to get right, especially in regards to fresh grocery,” said Professor Michael Feindt, chief scientific advisor and founder of Blue Yonder. “Disruptive shopping behaviors have made increases in demand more variable while grocery shopping missions based on trust, freshness, choice and – of course – value, all add to the complexity of replenishment decisions.”
This is only exacerbated by increased competition from new market entrants — especially those who utilize data-driven approaches and automation at their core. Meanwhile, 46% of grocery directors still drive their replenishment decisions by gut feeling, according to a previous study of 750 grocery retailers.
To overcome this challenge, retailers should adopt artificial intelligence and machine learning technology that “learns” from customer data and predicts their behavior — a practice that empowers grocers to determine the effect of each consideration, on each product, across all locations.
Machine learning can effectively incorporate factors that gut feeling can’t, such as the impact of weather, holidays and promotions. This can be done on a daily basis, resulting in hundreds of millions of daily forecasts. Retailers using machine learning have seen a reduction of up to 80% in out-of-stock rates without increasing waste or inventory, the study said.