Development, Thought Leaders

How Retailers Should Prepare for Generation Z

December 3, 2019

by Kamal Karmakar

CEO, CitiXsys

Generation Z's purchasing power is on the rise. Retailers must adapt their strategies to appeal to this growing consumer group. Gen Z buyers expect seamless customer experiences and digital tools such as AI when making purchases. Retailers need to keep up.

Generations change, our knowledge from today changes, and Gen Z will likely be the dominant generation with the most spending power in 15-20 years. Because of this, retailers must be aware of emerging tech and future customer needs now. 

Omnichannel retail serves as an important foundation today for retailers to drive relevance in an increasingly competitive atmosphere.

Meeting the demands of shoppers requires flexible systems that allow for any number of paths to purchase. 

In retail tech, we think about omnichannel excellence constantly, but do consumers?

We explored the retail generation gaps and the effectiveness of varying omnichannel strategies and found that “a good retail experience” translates differently across generations.

This led us to the question - what could the retail landscape of the future be like in 10-15 years and how can retailers best prepare?

There are two components that we consider integral for a retail future that boosts business relevance and serves customers seamlessly.

Looking at the chart below, it’s easy to see different generations have different needs.

generations preferences chartSource

Ranging from homeownership and job security to wanting to become digital entrepreneurs and career multitaskers, each generation brings a different desire to the table. 

Because of these variations, we’ll lay out how best to plan for the next generation of consumers. 

Pass the Torch From Millennials to Gen Z

Millennials are probably the most researched generation in history with an extensive discussion about their lifestyle and habits. 

Enough time has passed for us to map out the milestones in their lives, and to identify their spending habits in comparison to other generations. However, 2019 has proven to be a significant tipping point. 

A Bloomberg study stated that Gen Z will comprise 32% of the global population of 7.7 billion, edging out Millennials who are at 31.5%.  

By 2020, Gen Z will command up to 40% of all consumer spending as they start their working lives; a number that is sure to rise as they become older and assume the majority of the global workforce. 

Currently, retailers must address these quirks of Gen Z:

  • They are savvy in finding good deals and are not willing to pay full price 
  • They expect deep levels of personalization in all of their experiences
  • Price is still a huge draw for them
  • Balancing price with being unique is a defining trait

Retailers need to think of Gen Z as a generation more than just “Millennials 2.0,” and will benefit most from getting to know them fast. While keeping in mind that they too, like the Millennials, could respond differently as they reach different milestones. 

The image below highlights key differences between Gen Z and Millennials, further emphasizing how retailers must view them as separate demographics to be successful. 

don't treat gen z like millennials


Millennials communicate with text, but Gen Z is more likely to use and respond to images, an important distinction for retailers. 

Implement Emerging Tech With the Retail Experience

The advancements in technology are seldom in isolation, and there will be creative synergies that continually enhance the retail experience. Here are some of the advancements and directions that we can predict that retailers can take advantage of:

Retailers Should Invest in AR and VR 

Furniture retailer, Macy’s implemented VR across 90% of its stores this year, which allowed users to design their own spaces. VR-influenced sales went up by 60%, and return rates were as low as 2%. 

In the future, we could see services that allow users to create a functioning replica and digital twin of their home. This digital twin could be potentially be shared with a retailer so users can drag and drop items to see how they fit. 

The digital twin can work with predictive analytics to notify users if they need to pick a replacement or offer an alternative at a discount.

Use Aerial and Subterranean Options for Last-Mile Delivery

The last-mile delivery capabilities in the future will expand and make close to instantaneous delivery a reality. No longer confined to just roads, last-mile delivery will expand to the skies and underground. 

A drone delivery network with hot-ticket items being circulated and ready to be dispensed is a distinct possibility. With Amazon Prime Air already in the works, drone technology can be silent, and reliable enough for this to happen.

A UN report predicts that up to 70% of the world’s population will be living in cities by 2050. Cities extending their infrastructure underground will be the future as we experience greater population densities. 

Countries such as Singapore are already exploring plans to integrate an underground component. Transport and logistics components can be planned and an underground highway built for the delivery of consumer goods will change the last-mile delivery game.

Ensure Interconnectivity for a Universal, Visible Presence

Gen Z’s expectations of automation translate to an evolution in the way financial services work for them. Financial institutions, fin-tech firms, and retail solutions will seamlessly meld into the background in the future. 

Financial services aided by AI will likely need to become more personalized and robust. They can help guide the generation through a comprehensive lifestyle map and help with decisions to reach their financial goals.

This level of involvement means that retail platforms can be in the background of a Gen Z consumer’s experience, no matter how active or passive they are. 

Expect financial institutions, fin-tech firms, and retail solutions to work diligently to provide a lifetime of value to their Gen Z customers. They’ll need to optimize, stretch, and innovate to match Gen Z’s price and value expectations. 

Prepare Now for the Future Generation

With all of these evolving needs for the upcoming generation, it’s important to take the time now to remain relevant in the future. 

As you adapt your retail experience for the buyers of tomorrow, you should:

  • Understand that needs and markets shift with the changing generations. 
  • Leverage technology to better know and serve your Gen Z customers, otherwise risk losing their loyalty.
  • Embrace integration, as standalone retail platforms will likely be replaced by hybrid versions. If you can’t adapt, you’ll likely be excluded.
  • Structure your business to provide easy and utility to your customers. Retailers who can provide unparalleled support will see their efforts pay off.

Seamless, hassle-free experiences like the ones above are benchmarks of the future of retail. It’s vital to take the necessary time to integrate these changes into your retailer’s existing approach. 

To avoid getting left behind from the future of tomorrow, it’s time to optimize, stretch, and innovate to meet the needs of your newest demographic: Generation Z.

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