Retail analysts are buzzing with talk of the next big consumer group – Generation Z, those born between 1995 and 2010 – and their disruptive behaviour patterns, but how big an impact does this really have on retail right now?
If you’re responsible for the financial department of a retail business, you may think that the answer to this question is ‘not a lot’. Their disposable income and therefore spending power is limited compared to older consumers, and there’s plenty of chance to target younger shoppers further down the line.
But what if we told you the behaviours and demands of Generation Z is completely different to every other generation that has gone before – and failing to start preparing now could have a significant impact on your bottom line within the next three years?
Generation Z: prepare to profit
For those with your eyes on the medium to long-term prize, Generation Z is a lucrative market to target. Their spending power is growing year on year; this sizeable consumer group anticipates it will be earning an average of £36,000 annually in five years’ time, which adds up to a £4 billion+ opportunity for the retail sector.
However, cashing in on the full potential of Generation Z is not simply a case of waiting for them to come of age.
Particularly when it comes to store shopping, Generation Z has a completely different set of expectations to those that have gone before them, because they are the first generation of digital natives. They want far greater use of technology in stores – and that may come at a price for your business.
To understand exactly what those technology requirements are, we surveyed 1,000 UK Generation Z consumers on their attitudes to in-store shopping.
Our study found that 4 in 10 would rather be served by a staff member using a tablet computer than queuing at a checkout, half want free customer WiFi, and a quarter want digital information points at the shelf edge – and that’s just the tip of the iceberg. You can see more statistics if you download our report: Generation Z, the Store, and the Technology Ticking Clock.
Why act now?
We know that the idea of having to speculatively spend on retail technology in anticipation of a new set of customers further down the line isn’t the most attractive proposition financially, and many of you are probably reading this thinking ‘is it really worth it?’
The answer is yes AND no. Five years is a long time in retail tech terms, so the customer-facing devices your business invest in today could be behind the curve or in dire need of an upgrade by the time Generation Z comes of age.
However, the fact that the industry is talking about the impact Generation Z will have on retail now is sounding a very loud klaxon for one particular part of your business: store networks.
While it’s impossible to predict what technology younger shoppers will be using in five years’ time, we can tell you definitively that more tech will be needed in the store to convert customers. And all those devices will be run of a network that, for most retailers, is already struggling to keep up with the demands of the omnichannel store.
Too many organisations are ‘making do’ with networks that are running slowly because they can’t cope with the number of devices trying to use the system, that are slowing to a standstill because customer WiFi is draining bandwidth, or are tripping up because they are overloaded – leading to costly technical downtime.
The simplest, most cost-effective way to stop this happening going forward is to invest in an enterprise network that is robust and agile enough to cope with the future demands of store technology.
While it may seem like a great expense now, acting early gives retail businesses the opportunity to find the best solution for your budget. And with a future-proof network in place, you can sit back and watch the growing spending power of Generation Z directly benefit your business.
To discover more about the opportunity to profit from Generation Z, download Vodat International’s latest report – Coming of Age: Generation Z, the Store, and the Technology Ticking Clock.