STUDY: Gen Z Shopper All Over Brick & Mortar, influenced by Social, Prefers In-Store Experiences

Monday, Mar 23, 2020

Generation Z is the first grown-up (in some cases born) generation to not have a reference of a life without digital interconnectivity; social media, technology and the internet. The very first generation of true tech-fluent, digital natives. Gen Z’s, whose parents are Gen X, are born between 1995 to 2010, which translates to ages approximately 10-25 (as of 2020). Many are currently graduating college and entering the workforce.

Despite Gen Z’s appetite for tech and digital, some of their core characteristics are quite traditional. Whether it’s their inclusive position on community, non-confrontational stance on problem-solving, or their realistic outlook on life. Most surprisingly, and arguably implausible, is their preference to shop in physical stores.

And, as Gen Z’s purchasing power and impact on work and life increases; demographic, psychographic and habitual patterns become increasingly evident and predictable. The first post-millennial generation, according to a study conducted by Adyen, has “much different priorities when it comes to shopping and payment preferences. For one, they prefer actual face time to a FaceTime phone call, valuing human connection over virtual connectivity. In other words, some – but not all – of the trends of the mid-90s are back, in the way Gen Z acts, socializes, and shops.”

Globally, Generation Z makes up 32% of the world’s population (2.47 billion). This year, Gen Z’s will make up 40% of USA consumers. Making it the largest population of shoppers, both globally and within the USA.

Gen Z Consumers: 40%

Total USA Consumers

By the end of 2020, “Gen Z is on track to become the largest generation of consumers in just a few short years. They already represent up to $143 billion in buying power,” said Joe Cardador in an interview with Jeff Fromm. Furthermore, “tweens/teens carry significant influence on household purchases than previous generations,” mentions Deep Focus, “93% say their children have at least some influence on their family’s spending and household purchases.”


Billion in Spending Power


Influence on Family Purchases

Contrary to previously-held industry beliefs, “to Gen Z, retail and e-commerce shopping isn’t an ‘us vs. them’ scenario; rather, the two complement each other and accentuate the shopping experience,” as stated by Marketing Insider.

In research by the National Retail Federation (NRF) and IBM’s Institute for Business Value, the study reported that “67 percent of Generation Z shop in brick-and-mortar stores most of the time, with another 31 percent shopping in-store sometimes.” Despite being the first generation to “grow up not knowing a world before cellular phones, smartphones and other digital devices,” NRF and IBM’s study indicates that inarguably the vast majority of Gen Z shop in stores.


Shop B&M Most of the Time


Shop B&M Sometimes


Shop B&M

According to a recent study conducted by McKinsey & Company, “Gen Z’s like brick-and-mortar stores: in a sense, members of Generation Z are always shopping, because they are always connected. They buy on any device and in any format or channel. At the same time, they are surprisingly old school. They are much more likely to shop in physical stores than millennials, who were the first generation to grow up with online shopping and who are more likely to shop that way.”

“Although they were raised with technology, Gen Z’s still value the brick-and-mortar experience for all phases of the shopper journey – more so than Millennials and Gen X’ers,” reported Kearney. Furthermore, “73 percent said they used in-store for discovering products; 65 percent liked in-store for trial; and a staggering 81 percent like to purchase in-store.”


Discover In-Store


In-store Trials


Prefer to Purchase in-store

Omnichannel, the blending of new and old school methodologies, a more accurate perspective and understanding within the CRE space, has been recently more accepted as the new retail model that will reshape traditional shopping experiences. As reported by Adyen, “Gen Z prefers people over processes. They care more about experience than expediency.” As Matthew Shay, NRF President and CEO, said “Just as Millennials overtook Gen X, there’s another big buying group retailers need to plan for, and it’s even larger: Generation Z. They appreciate the hands-on experience of shopping in a store.”

With a generation that represents $143 billion in buying power, the largest segment of consumers, and a predisposition to shop in-store, this presents an enormous opportunity for brick-and-mortar.

Despite logistical and infrastructural improvements in delivery of consumer goods and management of e-commerce, physical stores continue to appeal practically and psychologically. According to Sara Spivey, Bazaarvoice CMO, “Two-thirds (of Gen Z’s) say they’re comfortable shopping online but still prefer to shop in-store for the instant gratification of not having to wait for their orders to arrive.”

Without having the ability to physically interact with a product, understand its quality through the sense of touch, and try it on for fit, the likelihood of a return and an extended shopping experience greatly increases. According to Business Insider and ModCloth, the born-online, quirky, vintage apparel and accessories brand is opening physical shops at a time when many other retailers are closing or downsizing stores, in part due to an internal survey that found many women want to see, touch, and try on items before purchasing them. “Nothing is more frustrating than ordering something online and finding out it doesn’t fit,” Antonio Nieves said, ModCloth CEO, formerly Chief Financial Officer and Chief Operating Officer of Bonobos, “This is an avenue to improve that experience.” Soon after ModCloth opened its first brick-and-mortar stores in Austin, TX, Walmart purchased the brand for an estimated $50-$75 million, with aggressive plans to further expand ModCloth’s physical presence.

More recently, Burlington Stores Inc. indicated significant constrains with operating online, announcing the company’s plan to halt e-commerce operations.

Furthermore, Kearney, a Global Management Consulting Firm, through their research on Gen Z’s, surprisingly found the digitally-native reported a “love-hate” relationship with social media. “In response to feeling more overwhelmed by social media than other generations,” 28 percent of Gen Z’ers told Kearney they “very much” want to spend less time on social media and use shopping as a means to “disconnect.”

And then, there are the fundamentals of human need, and the opportunity physical stores provide for human interaction; a basic psychological and biological necessity.

“Shopping in a brick-and-mortar store offers a completely different experience than shopping online: there’s a person happy to answer questions, a chance for personalized recommendations, and the opportunity to disconnect from the online world,” mentioned by Wizards Play Network.

Like Baby Boomers, a significant share of Gen Z’s prefer physical stores versus online as the means to shop. “No fewer than 76 percent agree that ‘physical stores provide a more well-rounded and enjoyable shopping experience than online shopping,'” reported in a study by ICSC and Engine.

In fact, “the new black in the world of e-commerce is brick-and-mortar,” said Scott Galloway. According to a study by SEMrush and L2 Inc, data showed the cost of online visitor acquisition decreases when digitally-native brands open brick-and-mortar stores. Additionally, the research also showed that a favorable correlation between the opening of a brick-and-mortar and increase of online traffic to the brand’s website. In other words, it’s a lot more cost effective to operate a retail brand with an omnichannel model, with brick-and-mortar as the driving anchor.

More recently, based on a study we conducted that looked at monthly costs of managing and maintaining paid online traffic (PPC) and the total physical stores being operated, the data correlated similarly with L2’s study; operating physical stores lowers the brand’s expense of paid online traffic. In some cases, significantly. We also noticed that not only were overall monthly PPC costs lower, but the distribution of carrying expenses per physical store were significantly reduced.

Extensive research, studies and data unanimously support and indicate (often contrarian to mass media’s surface “retail apocalypse” communication), that brick-and-mortar is FAR FROM DEAD. But merely undergoing a transformation; adapting technology and social as an integral and seamless part of a physical shopping experience. As the transformation continues, and digital integrates into physical spaces in intelligent and value-building ways, the new and shiny omnichannel model will offer a native experience not only for Gen Z’s and consumers of every age, but  significant opportunity for all operations of retail.

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