Commentary: A Closer Look at Gen Z

BY Guy Yehaiv, Profitect

Generation Z (Gen Z) is the newest emerging consumer group, born after the mid-1990s through the early 2000s, these consumers are quickly reaching the age of substantive disposable income. According to a Bloomberg analysis of United Nations data, Gen Z will comprise 32% of the global population of 7.7 billion by 2019. This means retailers who have been focusing on Millennials (which comprise 31.5% of the population), should be actively working to understand this emerging group and accommodate their preferences.

As the first generation to grow up completely immersed in technology, there have been many generalizations about Gen Z. They can’t communicate face-to-face. They are passionate, but impulsive. They are so engaged in technology, they are less likely to be in-store shoppers. They have short to almost no attention spans. Despite these stereotypes, it’s important that retail leaders truly understand their Gen Z consumers and not get caught up in inferences.

To help retailers better understand the true insights and preferences of the Gen Z shopper, Profitect recently released the findings of the Profitect Gen Z Consumer Survey of more than 1,000 U.S. shoppers, ages 18-22. The survey provides insight into Gen Zers, so retailers can better understand their attitudes towards in-store shopping, products, and even working in retail themselves. A few interesting facts include:

•Gen Z Shoppers LIKE to Shop in Stores
There is a misconception that since Gen Zers are digital natives (grew up with technology, easily communicate via chats and social media channels) they will be hesitant to head to brick-and-mortar stores to shop. However, results of the survey found that 76% of Gen Z respondents chose the store as their shopping destination over only online purchases. The survey revealed that 42% of Gen Z respondents actually preferred to shop in-stores over online and an additional 34% prefer to shop in-stores and online equally, leaving only 23% of Gen Zers who prefer to shop online.

Retailers need to ensure they capture a Gen Zer’s interest while in store, with great displays, customer service, curated localized assortment and more. In-store shopping should feel like an experience rather than a transaction.

•In-Store = More Items
Our exclusive survey data found that about half of Gen Z respondents said that browsing in-stores is their biggest influence to shop. Furthermore, 67% of respondents also indicated that their feelings at the time is what most prompts them to add more items to their shopping basket.

Survey results indicate Gen Z shoppers are openly emotional, and can be impulsive when shopping, like other generations beforehand, so retailers should understand this trait and play to it with in-store messaging, displays, and promotions, making sure it is all aligned with online message, since Gen Zers like to check product attributes online prior to shopping in the store. Nearly half of Gen Z respondents said that in-store displays influence them to add items to their basket. Retailers should pay close attention to store merchandising or promotion data to improve future performance, especially when targeting Gen Z shoppers.

•Inventory Accuracy is Critical
By 2020, there will be 2.1 billion digital buyers worldwide. Gen Z makes up a large portion of this cohort and making sure you’re creating the optimal omnichannel experience is important. Our survey found that 60% of Gen Zers will check a product’s in-store availability prior to going to the store.

Additionally, 21% indicated that if they found that the website said the item was available and then once they went to the store discovered it was not, they would NEVER want to shop at that retailer again. An additional 59% indicated it would severely annoy them. Retailers simply can’t afford to have more than 80% of their Gen Z audience frustrated with their brand, especially when they want to be in stores and adding to their baskets.

Inventory accuracy is critical with this audience. Retailers should look at prescriptive analytics solutions that can drive actionable insights out of their inventory data to drive inventory integrity and identify opportunities for action that can result from operational execution lapses, procedural non-compliance, fraud, vendor quality, transportation, DC/DSD performance, quality, planning and allocation gaps, and more. The right solution should deliver results quickly.

•Reports Are Not the Answer
Another interesting insight showcased that retail is a stronghold for entry-level jobs with young Americans, with 44% respondents touting employment in retail/grocery. What’s more, 65%  of these Gen Zers proved that antiquated processes in task management and reporting across today’s workforce landscape are a detriment to attracting this generation.

Gen Z is used to seeing reports as part of their everyday job however, two-thirds of those respondents claimed the reports are too long and time-consuming. And an additional 30% felt that reports weren’t relevant to the job or too complicated to understand. Retailers and CPG brands need to adopt smarter task management solutions that bridge the gap for Gen Zers and enable employees to work more efficiently to improve business operations. Our study reiterates the need for a smart analytical solution, such as prescriptive analytics, that disseminate simple, easy-to-understand instructions or assignments in the workplace.

Looking Forward
So, what does this mean for retailers? They should be sure to capture a Gen Zers interest while in store, for those who prefer it, and supplement with online promotions driving others into the store, for those who might be indifferent to in-store or online. While this survey was focused on Gen Z preferences for retail, its findings ring true across a variety of industries. I encourage all brand leaders to take a deeper look into this growing and influential group of individuals and adjust sales strategies accordingly as they truly are the future.

Guy Yehaiv is CEO of Profitect.


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Hot Start-Ups: Under 5’10 is resizing clothing for men

BY Deena M. Amato-McCoy

The saying “invention is the mother of necessity” couldn’t be more fitting for online start-up Under 5’10.

Founded in May 2018, the Cedarhurst, N.Y.-based company was created to alleviate the frustration shorter men often feel when shopping for apparel. In fact, it was company founder Elie Robinson’s very own personal frustration that brought the concept to life.

“The average male height in the U.S. is 5’10, and mass manufacturers cut clothing around this average male height,” Robinson told Chain Store Age. “And who can blame them — they want to hit the broadest audience possible. While e-commerce takes away some of this stigma for shorter male shoppers, I knew there had to be a better way to build confidence for consumers under 5’10.”

Robinson brought some 20 years of executive experience in developing and managing start-ups to his quest. After soliciting the opinions of other men under 5’10 — and their spouses — he knew he was onto something. He found out that many men wear clothes that don’t fit them properly, invest in custom clothing, or buy off the rack and then have the clothes tailored.

Robinson knew that a successful line required a more accurate sizing scheme. To that end, the entrepreneur acquired Fittery, a digital company that used predictive analytics to create a sizing database that accurately determines body proportions. This database was filled with large data sets used to formulate the algorithms for both body sizing, and to match bodies to well-fitting clothing. He enlisted the help of his step sister, an analyst with Annalyze101, to query the database.

“We found between 50 and 75 size and fit combinations, but knew we needed to simplify or we would be drowning in inventory,” he explained. As a result, they narrowed down the best fits and cuts to six sizes — XS, S, M, L, XL and 2XL.

Ready to develop a proof-of-concept line, Robinson launched a 30-day funding campaign in May through Kickstarter, attracting 142 backers within 21 days. The process also solicited consumer feedback that he applied to the design of Under 5’10’s first collection — dress shirts that featured a trim, tailored look.

In August, the company’s e-commerce site went live with 11 shirt styles in six sizes, all priced at $59.99. The shirts are made with 100% cotton and feature narrow shoulders, slim torsos, and a shorter overall length. The garments also feature accurate stitching, buttonhole placements, collar heights and cuff lengths, “all elements that guarantee the shirt will fit properly,” Robinson said.

To help customers navigate their online shopping journey, the site features a sizing chart, as well as an interactive size recommender. By inputting neck size and sleeve length, the tool can suggest more accurate size options.

Under 5’10 also offers free returns and exchanges for 30 days in the contiguous 48 states. Adjustments are processed within four and seven days of being received. However, the company has yet to process any returns since its online launch, according to Robinson.

The start-up’s customer base is comprised of an affluent demographic, “one that equates value to time,” Robinson explained. “These shoppers are used to paying for tailoring and waiting to get their merchandise. Besides giving them better fitting shirts, we also wanted to give them instant gratification.”

This motivation, coupled with a seed investment of $750,000 led by brothers Baruch and Jonathan Glaubach, inspired the company to try out brick-and-mortar. (As part of the investment, Jonathan Glaubach joined the company as VP of product and retail and as a partner. He also happens to be 5’2.)

Opened in October, the Under 5’10 store is located on a busy shopping street in the town of Cedarhurst, New York. (Rather than use the space solely as a storefront, the location also serves as the company’s warehouse and corporate headquarters.) Shoppers can browse through the merchandise, and try on items in a fitting room.

The physical location has resulted in increased sales for the fledging business. The store sells an average of six-to-eight shirts per transaction, compared to one or two shirts sold during each online sale. Glaubach credits this higher conversion to “more precise sizing and the ability to test and try product.”

“Ninety percent of our customers who try on our shirts are perfectly fitted the first time,” he said.

Moving forward, the duo has big plans for the brand — including more stores. Specifically, they are considering micro-stores that stand approximately 600 sq. ft. “in every major city.” Pop-up locations are also an option, “as we won’t need to take on long-term leases, and can still test the waters in different neighborhoods,” Glaubach explained.

The company is also expanding its assortment into new categories, such as tech pants and jeans, both of which are launching in January. T-shirts, polo shirts and ties are next on the agenda, however no launch date has been determined.

The partners continue to evaluate how to further blend the two channels. For example, they are considering a “try before you buy” option that will enable customers to order an item online, and receive it in every available size to find the right fit. The customer would be able to return unwanted items and only pay for the ones they keep.

The partners are also keeping their eye on the evolution of body scanning technology to help online customers more accurately select their best size.

Meanwhile, Robinson wants to find new ways to collect customer data — especially at store-level.

“Consumer data is huge,” he said. “We can monitor the online journey and measurements added to the size recommender. But we need to find ways to capture as much data as possible, so we can test new options. We are not at our end game.”


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Target shaking up its retail accelerator program

BY Marianne Wilson

Target Corp. is taking its retail accelerator program global.

The discounter said that its Target + Techstars accelerator program, which is entering its fourth year, will now be held in partnership with Germany-based food retail and wholesale giant Metro AG. Target said that by teaming up with Metro it will be able to better reach startups from around the world.

“Target’s portfolio of accelerator programs allows us to test a broad set of external innovations that can further differentiate and enhance our guest experience,” said Minsok Pak, executive VP, chief strategy and innovation offer, Target.  “The partnership with Metro not only extends our reach globally to bring new ideas to Target, but it further helps startups understand how to scale.”

During the first three years of the Target Techstars program, Target ran tests or pilots with more than half of the 30 participating startups. The retailer said is still actively working with more than a dozen companies.

The application process for this year’s program, is open, with Target accepting applications from retail startups around the world through Feb. 24. The 14-week program will kick off in early May 2019.

Each startup receives up to a $120,000 initial investment, intensive mentorship from Target and Metro business leaders, and a strong network of Techstars alumni. As part of the experience, all 10 selected startups will spend time at Target’s headquarters in Minneapolis and Metro’s accelerator headquarters in Berlin. Sessions will focus on how to bring a business concept to market and craft a compelling pitch to support fundraising and business development.

The accelerator will conclude with a demo day in August in Minneapolis, when the companies will pitch their businesses to Target, Metro and Techstars leadership, as well as the local startup community and potential investors.

The Metro Target Retail Accelerator, Certified by Techstars, is one of Target’s four accelerator programs, along with Target Takeoff, Target Incubator, and the India-based Target Accelerator.


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