How Small Businesses Can Cater to Generation Z

The fastest-growing generation could fundamentally change the retail industry. Here’s how to stay ahead to satisfy them.
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(Photo: Vikki Olds/Shutterstock)

When most people talk about new generations changing the world we live in, the way we shop and how we use technology, the focus is on millennials. Few are thinking, who comes next? The answer is Generation Z, aka iGen or Centennials.

It’s already the most influential group using technology and setting trends — and it’s going to influence business, according to the latest research paper from Center for Generational Kinetics.

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“Breakthroughs for millennials are status quo for Generation Z, even as retailers are still struggling to understand millennials.” -Jason Dorsey (Photo: Jason Dorsey)

“Breakthroughs for millennials are status quo for Generation Z, even as retailers are still struggling to understand millennials,” said Jason Dorsey, co-founder of the center.

Here’s what small businesses need to know about this upcoming generation and what they want from retailers.

Who they are

Generation Z comprises people who are age 21 or younger and born after 1995, according to Dorsey. He said the defining historical marker for this group is September 11th. “If you can’t remember 9/11 you’re not a millennial,” he said. “For Gen Z, 9/11 has always been history.”

Gen Zers can’t remember a time before mobile phones and social media, Dorsey said, which explains why they believe they should have smartphones by age 13 (millennials say age 18).

According to Dorsey’s research, Gen Z is also more diverse than previous generations, and more pessimistic about the economy and politics. They’re more affected by social media when it comes to their self-esteem, too.

How they shop

Gen Z will fundamentally change the retail industry, according to Dorsey.

Having witnessed the Great Recession (the oldest members were in middle school), they’re thriftier and more pragmatic. They say they don’t want to end up like millennials, saddled with debt. “Millennials have had to change their spending because of the recession and debt,” Dorsey said. “Gen Z saw that.” They’re also less interested in logos and showing off.

Gen Z doesn’t remember a time before Amazon.com and online retail. Like millennials, they comparison shop more than other generations. About half of Gen Zers look for better prices on their phones while shopping in store (56 percent of millennials do the same, but only 45 percent of Gen Xers and 34 percent of baby boomers).

“Shopping for them is comparison shopping,” Dorsey said. “They’re the first group to come up when the consumer has all the power.”

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Generation Z – people under 21 – have different shopping habits than millennials. (Photo: Solomia Malovana/Shutterstock)

How to cater to them

The research on this generation is in its early stages, but Dorsey said there are a few lessons retailers can learn to attract Gen Z members to their stores.

Because they have incredible power when it comes to shopping around and spending their money elsewhere — and because they have never had to pay full price — Dorsey said Gen Zers expect low prices that are transparent and want to know they’re getting a good value.

They want flexibility to return and exchange products, and they believe strongly in warranties. Dorsey said they also care about whether goods are sourced ethically.

Like millennials, they’re interested in the stories behind products. “They like to know there’s a strong local connection,” Dorsey said. This is a boon for small businesses. “Local retailers can tell a story that national brands can’t,” he said.

Another big trait of Gen Z, according to Dorsey, is that shopping for them is more of a pastime, since they can order anything they want online and get it delivered. Gen Z goes out to stores to test products out, and they’re slower to buy overall. Dorsey predicts that for this group, shopping will become more of a social and recreational experience.

In part because of this, the industry is trending more toward experiential retail. For example, stores such as Apple are adding places to linger and hosting events, becoming more like public meeting spots.

“Retailers are adding to the shopping experience,” Dorsey said. “We’ll see more and more of that. The more they connect with the local community, the better off they’ll be with Gen Z.”

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