generation z, the store & the technology ticking clock · 6. how will generation z shapeshift...
TRANSCRIPT
Coming of age:Generation Z, the store & the technology ticking clock
3. The clock is ticking...
5. Defining Generation Z
6. How will Generation Z shapeshift the store?
8. What purpose will the store serve for future shoppers?
11. How will Gen Z shape in-store customer service?
12. The critical role of in-store tech
14. How to future-proof store customer service
16. Part 1 key lessons: 5 reasons to invest in the store network now
Contents
2.
Without serious consideration and investment,
the lag between how shoppers behave and what
retailers can deliver within a bricks-and-mortar
environment is only going to get worse, for one
simple reason: digital dependency is growing.
Over the next 10 years, a new consumer group
will come to the fore, which will make or
break retailers’ in-store technology strategies.
Generation Z is the first truly digital native
consumer group; their use of tech is as intuitive
as breathing in and out; they expect their lives to
be digitally connective and immersive.
From this moment, the spending power of
Generation Z will grow year on year, placing
new pressures on traditional retail models. The
only way to reap the benefits of this increasingly
lucrative consumer tribe is to start preparing now.
1Deloitte, Mobile Consumer 2015: The UK Cut, 20153.
Generation Z is the first truly digital native consumer group
The store is up against a technology ticking clock. Already,
90% of the UK population use their smartphones while out
shopping, yet most retailers are still struggling to successfully
bring digital interaction into the physical environment1.
How exactly will Gen Z change the store’s
role over the next five years, and what
infrastructural groundwork must be put
in place today to enable technology-
driven engagement?
That’s what Vodat International set
out to discover…
The clock is ticking...
“Brands not only need to give Gen Z
shoppers what they want and how they
want it, they also need to intuitively deliver
on their evolving needs…this will require
substantial business and marketing
changes. What’s more, companies need
to learn to start making such changes
more frequently.”- Marcie Merriman, Executive Director,
business strategy and retail innovation
Ernst & Young2
2 WWD, Think Tank: Generation Z, the Next Big Retail Disruptor, 20154.
5.
DEFINING GENERATION
Z
Born between 1995 and 2010, Generation Z is categorised by the widespread usage of
the internet from a young age.
They are comfortable with technology and interact on social media websites for a significant
portion of their socialising.
Three key themes emerged, which we will share
across three instalments – starting, in this part,
with the role of the store and its customer
service offerings.
Generation Z will undoubtedly prove the biggest
disrupting force to physical retail over the next
five years. The biggest danger to retailers is that
they are completely unknown; their habits do not
reflect those of their predecessors, the Millennials.
So to truly understand how bricks-and-mortar can
evolve to meet Gen Z’s expectations, we must first
establish what role the store plays in their overall
shopping habits.
Though they are a generation of digital natives,
the store has a firm position in the retail lives of
today’s teenage shoppers. Our research found that
4 in 10 still make most of their purchases in-store,
even if they look up a product online as part of the
buying process.
Generation Z will
undoubtedly
prove the biggest
disrupting force to
physical retail over
the next five years.
To understand exactly what the fastest growing consumer
tribe wants from bricks-and-mortar retail, Vodat International
surveyed 1,000 Generation Z consumers in the UK on their
attitudes and expectations within retail.
6.
Our research found that 4 in 10 still make most
of their purchases in-store,
How will Generation Z shapeshift the store?
Aspirational Browsing
Visibility
FINDING OUT
Access
BROWSING
Reassurance
DECISIONMAKING
Price
BUYING
Fulfillment
SHOW & TELL
The concept of research is incredibly important to Generation Z.
Their purchasing journey is highly considered; retail and brand
consultancy Fitch has identified a 5 step process that includes
‘aspirational browsing’ – a trait not exhibited among older shoppers.
The fact Generation Z is young and on a limited budget can explain
some of this, but not all. Remember this tribe has grown up in an
era of recession and economic instability, and so frivolity is not an
encouraged behaviour among their peers. They are
also pioneers of the ‘rental economy’ (streaming
music and videos instead of buying them, to give
an example), so in order to commit to buying
something, they have to really want it.1 in 5 Gen Z
shoppers will do
their research in
a store before
buying online
7.
A quarter (28%) will purchase from a store to avoid paying
shipping charges, while, even among those that do tend to
buy online, 1 in 5 will do their research in a store first.
Source: Fitch
In fact, a quarter (23%) will go into a store twice before buying,
while 7% will go in three or more times, such is their caution and
compulsion to get it right.
Clearly, the store has an important problem solving role for Gen Z
shoppers. It fills the experience gaps or logistical issues that ecommerce
can’t, and that’s exactly why our survey found that a fifth of teenagers will
visit a bricks-and-mortar venue over and above online shopping.
What problems does the store solve for Generation Z?
The store’s unique role of allowing shoppers to see, try and touch items
is not unique to Gen Z – it’s the fundamental reason that consumers
of all ages choose it over ecommerce – but there are some other
interesting problem solving capabilities that attract teenagers to
physical retail.
The instantaneous nature of digital living can
actually drive traffic into the store, as Generation
Z won’t wait for delivery to get an item they
really want. The fine line between lifestyle is also
important here; the store is an important social
hub, and a place to gain inspiration for
future purchases.
Bricks-and-mortar’s role as a research centre has a direct
impact on its purpose for Generation Z. For instance, our study
found that 37% of teenage shoppers will go into a store to
make their final purchase after doing online research, just
to make sure the item is exactly what they want before they
check out.
8.
The store’s unique role of
allowing shoppers to see,
try and touch items is not
unique to Gen Z
What purpose will the store serve for future shoppers?
For what reasons do you typically visit a store?
9.
68%
43%
42%
31%
27%
21%
13%
13%
13%
11%
9%
8%
Try or see a product
Buy something sooner than I can get it online
Out shopping with friends and family
Avoid shipping costs
Get inspiration
Pick up a click-and-collect order
Get exclusive deals
Take back items bought online
Get advice from a sales person
I don't have a debit/credit card
Research a product before buying online
Take product images to post on social media
Quick summary:
3 most important roles
of the store over the
next five years
Validation – physical touch pointswill become vital to reassure evermore cautious consumers
Problem solving – whether that'sgetting something quicker orcheaper, or filling an experience gapthat ecommerce can’t offer
Socialising – the store’s position as asocial hub and inspiration centrewill continue to grow
10.
Gen Z expects the deep level of engagement
they have made online to continue within the
store; more than half (57%) of those we surveyed
think store associates should have mobile
or tablet devices, as it enables them to give a
better service.
In fact, equipping front-line personnel with
technology makes them more attractive to
younger shoppers – 47% would rather go to a
member of staff with a tablet than queue at the
checkout.
The ability to assert independence is important
too, as 45% like to use self checkouts and 41%
want digital information points. This is not
necessarily indicative of an aversion to human
interaction, but their natural inclination to
look for a solution. “Gen Z is highly educated,
technologically savvy and naturally creative and
innovative. They look for solutions on their own
and set out to make things on their own,” notes
Ernst & Young.3
Half of Gen Z
shoppers would
rather go to staff
with a tablet than
queue at a checkout
Like all digitally-driven audiences, the volume of research
carried out online prior to purchase means Generation Z
tends to arrive in the store incredibly clued up. However,
this doesn’t make them ‘know it all’ – far from it – and this is
where store associates play a pivotal role.
11. 3 Ernst & Young, The Next Big Disruptor: Gen Z, 2015
Gen Z expects the deep level of engagement they have made online to continue within the store
How will Gen Z shape in-store customer service?
8.
Not just that, but they believe that tech strengthens store interactions;
45% of Generation Z shoppers like talking to staff and think arming
them with a tablet or mobile device will enhance their experience. %
Our research shows that, for digital natives, going into the store is the
embodiment of omnichannel. It is a truly blended physical and digital
experience, where each channel plays to its own strength to create
a better standard of customer service. The challenge is now on for
retailers to bring digital capabilities into the store to deliver to those
omnichannel expectations.
Whether self-guided or served by a sales associate, our
research established one fundamental fact about Gen
Z’s expectation of the store: they want technology to be
embedded in their experience.
12.
I want staff to have tablets/mobile devices
I prefer to use a self checkout
I would rather go to staff with a tablet than queue
I prefer to use digital information kiosks than ask staff
I prefer to use my smartphone than ask staff'
I prefer talking to staff with tablets/mobile devices
I don't think staff should rely on mobiles/tablets
17%
7%
15%
3%
12%
2%
10%
40
%
28
%3
2%
28
%2
4%
33
%2
8%
31%
33
%3
2%
33
%3
4%
38
%
39
%
8%
16%
16%
19%
22
%
13%
19%
3%
7%
4%
7%
7%
4%
5%
How do you feel about technology in the store?
Strongly Agree Disagree Agree Strongly Disagree Niether Agree nor Disagree
The critical role of in-store tech
13.
Quick summary:
3 ways customer service
must evolve over the next
five years
Enrichment – store associates arethe all-important human face ofthe business, but they must havetechnology to enrich their capabilities
Flexibility – younger shoppers wantto interact and transact where it’sconvenient for them, not the retailer
Total retail – human and digitalshould come together to provide thebest possible experiences, relevant tothe moment, using best of breed
Speed will be the
absolute bedrock
for success.
If the technology clock is ticking now for retailers the
countdown is only going to quicken as Generation Z’s
spending power increases. The reality is that most stores
can’t meet the digital demands of shoppers who walk
through their doors today let alone upcoming web natives,
who have much less forgiving omnichannel standards.
14.
Retailers with a bricks-and-mortar presence
have two choices; ignore the needs of Gen Z
until they’re the most influential purchasing
group, then play a game of catch up once
they realise they’ve lost connection, or put
the infrastructure in place today to meet their
needs tomorrow.
Speed will be the absolute bedrock for
success. Generation Z has the shortest attention
span of any consumer tribe; its members have
grown up in the era of Googling information and
superfast broadband.
How to future-proof store customer service
How to future-proof store customer service
The need for instant gratification pushes Generation Z's expectations of the store to incredibly
high levels, and therefore the potential to disappoint them is great. At the very least, retailers
must prioritise their store network; no amount of investment in customer-facing tech is
going to compensate for a sub-par network which cannot support the functioning of a growing
number of devices.
Business enterprise networks should be the starting point for all retailers’ store technology
investment going forward. It is not enough to meet the needs of today’s store set-up – a
sustainable network must have the capacity to meet the requirements of retail five years
down the line, when Gen Z are driving the store into new digitally-led directions.
15.
Gen Z are driving
the store into
new, digitally-led
directions
1. Store technology is increasing, and the success
of all bricks-and-mortar tech strategies will rest
on the strength of the store’s network
2. Most retailers are already behind on blending
the digital/physical experience, and that
disconnect will only increase as Generation Z
comes of age
3. The lives of younger shoppers are led online,
even when they are in the store environment, so
the store must be able to support (and influence)
their constant mobile usage
4. Generation Z craves a retail utopia in which the
strongest elements of digital physical shopping
come together in perfect experiences, which
cannot be achieved overnight
5. Retailers that put a scalable network
infrastructure in place can grow and flex as their
customer needs change, putting them ahead of
less prepared rivals
Part 1 key lessons: 5 reasons to invest in the store network now
16.
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