WindowOn Spotlight on Generation Z (Issue 27)

This 27th edition of WindowOn is based on: Time spent gathering opinions and experiences from a community of 20 Gen Z shoppers over a period of 3 months 1040 online interviews in the UK: 512 among Gen Z, and 528 among the older shopper population.

Fieldwork carried out in September 2016 by Populus.

ISSUE ISSUE

27 27 NOV2016

NOV2016

PUBLISHED BY: Shoppercentric EDITOR: Lisa Hutchinson DESIGN: Mike Higgs

e: mikehiggs@mac.com We welcome ideas for future articles and reports. Guidelines on our preferred format and style are available from Lisa Hutchinson: e: Lisa.Hutchinson@shoppercentric.com

Š Shoppercentric 2016 All copyright is vested in Shoppercentric unless expressly stated otherwise. No permission is granted for reproduction, use or adaptation of the material, save as to provide for under Statute, and any such use must be accompanied by the appropriate accreditation.

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We show you how to turn shoppers into buyers.

Welcome...

Trends Research...

They know they matter

2

Digital in the DNA

4

Gen Z are the high spenders of the future

Danielle Pinnington,

Founder & Owner, Shoppercentric

Welcome to our 27th edition of WindowOn...

For this latest edition of our WindowOn shopper trends report we felt it was time to take a closer look at this cohort of shoppers called Gen Z. They are a fascinating bunch, growing up in a truly connected world, and starting to access the kind of money that means they can flex their spending power.

A lot has already been written about who they are as consumers, but as some of them still live at home they haven’t yet been a particular focus for those interested in shoppers. So we wanted to go some way to plug that gap or trigger some consideration – after all Gen Z is growing up quickly, and it is likely their expectations and needs will shape retail of the future.

We hope you find the articles here helpful as a start point for understanding shopping from their perspective. As always, there is more information than we have shared here, so do get in touch if you are after more detail.

How online shopping compares with older shoppers

Inspiring a Generation

6

Social media plays a huge role for Gen Z

Same old same old?

10

Price, Quality and Choice.

Top factors when shopping whatever your age!

Extra... Extra...

Gen Z Voices

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A taster of what our Gen Z panel have to say

THOUGHT PIECE

In-Store Matters

12

In-store research delivers opportunities that may not be seen in sales data.

Regular Features...

The BIG Picture...

An Experts Own View Shopper Talk...

Out and About & In The Press

www.shoppercentric.com

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FEATURE

By Claire Pearson

They know they matter References to ‘Gen Z’ (defined as 15-24yrs) are everywhere these days as brands and retailers seek to demystify these new kids on the block. Gone are the old stereotypes of sulky, uncommunicative Kevin-The-Teenager characters.

In their place we find a fascinating cohort, complex and cynical, confident and communicative, (albeit in ways we could only have imagined as teens ourselves) and surprisingly worldly. They can be a difficult bunch to market to.

Yet market to them we must, and that means shopper marketing just as much as it means above the line marketing, because these are the high spenders of the future.

Fig.1 Perception of retailers/brands % total (1040)

Key

I think retailers and brands understand my age group

7

45

Gen Z

6

28

UK Shoppers

I don’t think retailers think my age group is particularly important

2

4 15

8 22

Gen Z

UK Shoppers

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Strongly Agree

Agree

Some things don’t change of course. Gen Z are still easily bored – so capturing and holding their interest for any length of time can be a challenge. They can still seem lazy – so providing the easiest ways for them to shop will play well. And they can still be selfcentred – so attempts to gain their custom must pass the ‘what’s in it for me’ test.

But the most striking thing about this new generation is their confidence. They have a great support system provided by social media which helps them to manage risk when they’re choosing what to do and what to buy. And they know we’re all interested in them! In our survey fewer than 1 in 5 of Gen Z felt that retailers don’t think their age group is important, compared with nearly 1 in 3 of the general shopping population (Fig1). And half of them believe that retailers and brands understand their age group, compared with just a third of the rest of us. This demonstrates a recognition of their attractiveness as a prime target for retailers and brands, worth getting to know – in stark contrast to how many older shoppers feel. They know they’re being courted, and so it stands to reason that they can expect to be impressed before they part with their cash.

They also seem quite an optimistic lot, many expressing a real sense of personal empowerment: 23% strongly agree that “we can make a difference to our future” vs 17% of shoppers in general. And many claim that their happiness runs deeper than material possessions alone: 34% strongly agree they “want to feel I’m getting good experiences – life isn’t all about what I own” vs 28% of older shoppers.

This apparent self-assurance is important because it will set a high bar against which retailers and brands will be judged.

This is also a generation that enjoys shopping, so they’re open to persuasion. They shop (in-store / online) at least 7 times a month. This rises to 8 times a month amongst the men in this age group, blowing another stereotype out of the water! Going to physical shops and malls is as much a social pursuit as it is about buying things: 52% of Gen Z agree that “going out shopping is a fun way to spend time with friends / family” vs 44% of adult shoppers at large.

If shops and malls are a choice motivated by entertainment and sociability the spaces need to deliver to that brief and make shopping fun.

And ecommerce can also offer welcome distractions to a generation with a low boredom threshold: 62% of Gen Z agree that online shopping is ”a great way to stop getting bored” – vs 53% older shoppers – and 70% of Gen Z shoppers agree that they “often browse online with no intention of buying vs 63% of older shoppers. Shopping opportunities are ubiquitous for these youngsters, always available to lighten a dull moment.

As we learn more about this group across the remaining articles, we think you’ll see there is a real need to look at the path ahead for retail from the perspective of these important spenders of the future.

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FEATURE

By Sharon Hodgson

Digital in the DNA This is the generation that is doing much of its growing up online:

97% 96% 63%

have a laptop/PC

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have a smartphone

have a tablet

Those of us with Gen Z children know how screen focused they are, so they aren’t just able to get online, they are online for a fair amount of their time, which means they are very comfortable with online shopping: l

They don’t worry about payment security the way older shoppers do

l

They have no problem buying more items than they want, and returning what they don’t want

l

And they seem quite satisfied that online shopping doesn’t need to be made any easier or quicker

As a result they seem more impulsive and willing to take risks with an order, knowing they can easily send anything back that they don’t like: l

44% Gen Z agree “I often buy things on the internet I hadn’t planned to buy vs 32% older shoppers

l

28% Gen Z agree “I buy lots of things online knowing I’m going to send most back vs 10% older shoppers

Of course this is great for securing sales online. But getting a product in the basket is only half the story for the Gen Z shopper who is so comfortable with online returns.

Speedy fulfilment of the order and products that don’t disappoint on arrival are also crucial to ensure that items don’t end up back where they started.

This is a generation used to instant gratification – so speedy delivery is more important to them than to older shoppers.

A click for them needs to be swiftly followed by a parcel at the door or the moment may well have passed. This is a generation that sees the world around them operating at a fast pace and they appear to see little point in waiting too long for what they want: 1 in 5 put same day/next day delivery in their top 3 most important factors for shopping online vs 1 in 10 older shoppers.

Interestingly, as the chart below demonstrates, re-sellers such as eBay are used less frequently

by Gen Z than older shoppers, which might reflect their preference for speed. Why sit and wait for the process to play out, not knowing you’ll get the item at the end of it?

1 in 10 shoppers buy or sell with re-sellers eg. eBay at least once a month

Key

Gen Z

UK Shoppers

Frequency interact with re-sellers – times per month

1.4 1.1

0.9

0.8

Buy from re-sellers

Sell at re-sellers

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FEATURE

By Kristen Campbell Davis

Inspiring a generation Since Social Media first emerged in the early Noughties, it has scared parents and tempted businesses in equal measure. Schools still spend time coaching students and parents alike on the risks involved in social media, but it’s easy to forget that there is a positive impact emerging amongst Gen Z because of the connection it gives them to the wider world and the confidence it provides as part of a sharing, mostly supportive community.

Social media truly is a communication channel that plays a huge role for Gen Z, and they are more likely than older shoppers to be connecting beyond their social groups of family and friends or even like-minded groups, to retailers or brands: 79% of Gen Z use Facebook vs 66% of older shoppers. Of those 24% regularly use it to contact retailers or brands 50% of Gen Z use Instagram vs 17% of older shoppers. Of those 41% regularly use it to contact retailers or brands 49% of Gen Z use YouTube vs 27% of older shoppers. Of those 32% regularly use it to contact retailers or brands 41% of Gen Z use Twitter vs 26% of older shoppers. Of those 48% regularly use it to contact retailers or brands

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So more than ever it is a channel that businesses are keen to get involved in, and it seems Gen Z are more open to this than the early social media adopters of 10 years ago. “I follow a lot of brands on social media which I find very helpful because I like seeing different styles of either clothes or make up on a model or somebody else which will influence me on whether I like to buy it as I can see what it looks like on someone.” Gen Z Voice. Of course, as this quote demonstrates, social media isn’t just about communication. Importantly it’s also about inspiration.

For those looking for direction, social media delivers continual access to ideas and stimulation. And Gen Z is a generation that has grown up in a world crammed with stimulus: they flick between multiple screens, constantly have their smartphone to hand, or keep their earphone in place to get an ever present sound-

extra... extra... track for life. This is a generation for whom sifting through a plethora of information and inspiration is second nature.

No surprise then that our survey reveals this generation as more receptive to inspiration than older shoppers. In fact, we could conclude that they simply demand it: 28% of Gen Z shoppers agree that they “spend lots of time on YouTube getting ideas and recommendations” vs 13% of older shoppers Gen Z shoppers are also twice as likely than other shoppers to cite product displays as important when shopping in-store, and 49% agree that “I use the displays in-store / online to give me ideas ”vs 41% of the broader shopping population They are also using their smartphones in-store more often with 53% agreeing their ‘smartphone means I can get better information to help me decide what to buy when I’m in-store’ vs 38% of older shoppers These young shoppers are on the start of their consumer journey, still forming early relationships with retailers and brands and deciding which of them fit their needs and values best. It stands to reason then that they adopt a more open and inquisitive approach to shopping than those shoppers with greater experience who have become entrenched in their choices.

So there are great opportunities to use both digital platforms and store-based visual merchandising as a way to inspire and persuade Gen Z shoppers. It’s just as critical to recognise social media as a powerful means of validating choices and building shopper confidence, whether through peer to peer recommendation or other forms of advocacy. This is a generation that doesn’t need to buy blind. They may be impulsive at times but they don’t need to take uncalculated risks - they have too much information at their finger-tips!

Gen Z voices A taster of what our Gen Z panel have to say:

Teens spend but they also save: “ I went shopping yesterday with my birthday money and saw it (Topshop coat)... I just need to save £20 more” “ It was my birthday recently too and I’m saving up for a new pair of shoes because I am a shoe addict” “ I’m not saving for anything in particular but I am saving a bit of money to the side for when we go on holiday... in case I see anything I like in duty free (which I usually do!!!)”

They feel the urge to splurge just like the rest of us though: “ I spend it as soon as I get it...

I can’t save money to save my life” “ I always think about what I am going to spend my allowance on … how can I make it last the whole month without blowing it all at once”

Value still means value – just maybe in a lower price bracket for most: “ I don’t think I’ve ever bought my own clothes for more than £20” “ I like Topshop jeans as they are really good quality, but since they are so expensive, I make sure I really like them before I spend” “ I don’t mind spending a bit more on things I know I’ll wear all the time, like jeans, or items I know are good quality”

It’s not all impulse – teens can be pragmatic too: “ I have a lot of plain dresses and stuff from H&M, which are smart but really nice and “ I just wear £5 New Look shoes as they are super comfy… I spotted them with my friends and I’ve had them a year now”

When teens fall in love with a store or brand, they fall hard! “ Asos!!! It literally has everything from clothes to beauty to gifts and its delivery is really fast – I love it!!” “ I love Converse, I have worn mine so much that I have a hole at the bottom of them … I feel like could walk around the whole of London in them” “ I LOVE CROCS” “ I think brands matter – it’s a way of looking ‘cool’... but I also think you should have your own individual style”

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thebigpicture

By Lisa Hutchinson

Topshop Topshop was an overwhelming favourite when speaking to some Gen Z voices about where they shop. The British success story has 499 stores, including 164 international. The flagship store in Oxford Circus attracts around 500,000 visitors each week. It’s not surprising that in 2012 Topshop opened its flagship store in Las Vegas, closely followed in LA in 2013 and Fifth Avenue in 2014.

November 2016 sees Topshop open its first store in Germany with further expansion scheduled across the country in 2017.

www.topshop.com

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FEATURE

By Susie Spencer

Same old Same old?

So far we’ve talked about the differences between Gen Z and the UK shopping population at large. What is just as striking, however, are the similarities: Frequency use different channels – Times per month 5.1

Supermarkets Convenience Stores

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4.7 4.5 3.6

Newsagents

Gen Z

UK Shoppers

6.5

5

3 2.9

3.2

2.2 2.1

Department Stores

1.9 1.7

Retail Parks

1.7 1.9

Forecourt Stores

1.4 1.7

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2.8

Gen Z UK Shoppers

Given Gen Z spans the ages of 15-24 years and includes fulltime students living at home it is perhaps surprising how much commonality there seems to be in terms of how often and where they shop. No doubt their shopper missions differ from those of older shoppers responsible for the household groceries,

10

7

3.1 3.1

Indie Stores High Street Stores Shopping Malls

Frequency use online – Times per month

Browse

Buy

but they are still experiencing the same spaces and websites. So maybe it’s no wonder that just as with older shoppers, they also put price, quality, the choice of products available and convenient location at the top of the factors impacting on where they shop.

...discovering the smaller killer products is a sport for some of these young ones.

Gen Z love a bargain just as much as anyone else. While many may be spending pocket money rather than hard-earned wages, they still appear keen to make it stretch as far as they can. As the chart below shows, 48% of our young shoppers admitted “I tend to buy the cheapest I can so I can buy more things I really like”, compared to just 29% of their older counterparts.

Attitudes to spending Gen Z

% Strongly Agree % Agree

UK Shoppers

36

44

34

49

I love finding the best bargains for the things I want

12

50

11

44

I’m always tempted to buy if it’s on promotion

12

36

7 22

I tend to buy the cheapest I can so I can buy more things I really like

10

42

12

42

I always have a set budget in mind when I shop

6 31

9

39

I always buy the best I can afford, even if it’s not the cheapest

What this tells us is that we all share some fundamentals – but treating Gen Z shoppers like everyone else has the potential to be a big mistake. The differences described in the earlier articles in terms of attitudes and context should be red flags to alert retailers and brands. This generation is experiencing the world in a very different way to those of us in decision making roles in business. Their confidence, their connectivity, their desire for inspiration mean that they will seek out and find those retail experiences that truly deliver to their expectations, and to their budgets.

And being a conventional ‘big brand’ is not necessarily the answer either. These shoppers know they have power to turn ‘the little guy’ into a household name, in fact discovering the smaller killer products is a sport for some of these young ones. So, they also know their vote counts – on social media, in their peer group and in the stores.

Retailers and brands who are happy with the status quo could quickly find themselves significantly out of step with the shoppers of the future. As The Who warned in their teenage anthem ‘My Generation’ as long ago as 1965, the choice is to keep up or fade away.

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In-store Matters

In a recent meeting a client was sharing with us their frustrations about store loyalty data, and how grocery retailers are increasingly pushing brands to buy into that data in order to understand their shoppers. In some respect you can see the logic. In a world where differentiation is going to be the key to survival, retailers are looking to brands to deliver shopper marketing and category solutions that fit their shoppers needs, and their positioning as a retailer.

So no wonder they want those solutions to be based on a real understanding of their shoppers – not just a generic picture pulled from household panel data.

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THOUGHT PIECE

Written by Iona Carter

The problem with that argument, however, is three-fold:

1

Even the vast Dunnhumby data is only a view of a proportion of Tesco shoppers – those who regularly use their loyalty cards

2

The data collected is about what is bought so it reflects the status quo – it gives no insight into what isn’t bought and why not, or what might have been bought if the experience instore had been different

3

Shoppers aren’t loyal to one retailer in the way they were when Dunnhumby was set up. Today’s shoppers will have shopped on average 4 different retailers in the last fortnight.

They are increasingly picking and choosing the best places to buy particular categories or to fulfil particular missions. So is their loyalty data a true reflection of their whole shopping potential in that store?

These are the factors that highlight how important it is to complement big data needs with the reality of what happens in-store, and that can only be truly measured by observing and interviewing shoppers as they go about their business. Shoppers are not rational beings, and yet if we only look at their purchasing data (panel or loyalty) we can only take decisions based on what they have done, with no clear view of why they have done it.

Years ago Sainsbury’s Red Label tea was highly successful. The brands in the market were struggling to understand how they could compete on taste and appeal. But when you talked to shoppers in the main they weren’t grabbing a box of Red Label because it had superior taste or appeal. They were choosing it because for them tea is tea is tea, and it was such a big block of red at the fixture that it made it easy to grab and go! They didn’t have any particular affinity or loyalty to the brand, it just made life easier in a category that didn’t particularly matter to them.

It was about that time that some branded teabags went round and some became pyramids – both were launched with marketing that stressed the flavour delivery of these new bag formats. Somewhere it had been realised that to beat the own label challenge the brands needed to truly differentiate in a way that even tea drinkers who treated tea as a commodity could buy into.

These kinds of step changes in thinking don’t come from pouring over spreadsheets. They come from a closeness to the end consumer/ shopper at the point at which decisions are made. Researching in-store can deliver the perspective which uncovers the opportunities that can’t be seen in sales data.

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An Experts Own View Researching Gen Z by Lesley Salem Owner of Cookie Research Ltd.

There’s never been a more exciting time to work in research. Mobile technology and the internet are adapting the way we recruit, design research studies and observe Gen Z shoppers which is a necessity for the future success of our industry.

Recruiting Gen Z This plugged-in generation are easily accessible to reach through social media. In recent years, we’ve switched to FaceBook to recruit Gen Z’s. It’s not only faster and cheaper than traditional database calling but creates a more egalitarian relationship where potential participants are the ones to instigate contact, reflecting a genuine interest in the study. Posting ads on social media sites like FaceBook and Twitter can reach large numbers of individuals and also generate a good source of referrals when shared in friendship circles.

However, the challenge for recruiting in this way is not to give too much away in the post, in order to protect the client’s confidentiality and avoid attracting research groupies who like to adapt their interests and attitudes to earn some cash.

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Encouraging Gen Z to participate in studies should reflect some of the principles we’ve read about in earlier articles. l Make them feel important and that their ideas and points of view shared in the research will have impact and influence l Be transparent in communication – you are more likely to have to reveal who the study is being conducted for and what’s involved in terms of activities, time commitments which need to be honoured l Demonstrate the study will be interesting and fun to participate in l Reassure them about privacy and how their information will be used In addition, when recruiting under 16’s, parental / guardian consent will need to be obtained amongst other ethical codes advised by MRS Code of Conduct and Codeline. When it comes to incentives, Gen Z’s are more likely than previous generations to want to donate it to a selected charity. By offering this up, it also reflects well on the organisation conducting the study to promote their social conscience.

An Experts Own View

Research Design Engaging Gen Z in research studies is best achieved with mixed methods and modes of tasks. Digital and mobile research lends itself well to this generation but there is still much value in observing live behaviour and meeting face to face.

Gen Z love capturing their daily habits and exchanges with apps like SnapChat, Whatsapp and Instagram and sharing these on YouTube.

This makes auto-ethnography a perfect match for this generation but ensuring the truth is captured is important, as Gen Z’s often like to enhance their lifestyle to what they think has greater social currency. Mobile platforms and apps, such as Revelation, Ethos and Liveminds help shoppers capture live behaviour and response, making insights more robust and relevant. Mobile research is also a good way of getting to know Gen Z participants when used as a pre-task which can then be used for analysis and feed into later stages of research.

Whilst there has been some discussion around attention spans of Gen Z, when it comes to research, it’s best to keep tasks focused, easy to do and take up no more than 5 minutes to complete, to keep them interested.

Introduce exercises in a fun way, where participants become the hero, referencing popular culture examples to reflect the activity being asked of them.

Gen Z are used to sharing their point of view, ideas and thoughts with others, so if appropriate, consider ways of communicating these amongst the sample community and allowing for them to exchange Likes and comments.

This generation is highly visual, so limit the amount of text you use – both to communicate with them and the way you expect them to share feedback.

Create exercises that can be shared in a visual way – such as a picture-based Story or Pinterest board and encourage them to develop their own ideas to solve the research brief.

Finally, Gen Z see brands and retailers as social citizens and what they expect from these relationships is the same as if the organisation was human. This means that each touch point of the research study needs to be a positive experience that reflects the brands’ tone of voice and values.

Lesley Salem

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Shopper Talk...

Real words from the high street.

Brought to you from the keen ears of the Shoppercentric team...

Oh it’s Starbucks, I never go in there, they don’t pay their taxes On reasons why it’s ok to buy and eat a chocolate bar...

Oh it’s alright because I’m in B&Q and I’m going to do some manual labour (later on).

Everyone binges at the weekend don’t they?

When there’s a great sea of them [cooked meats] you end up just buying what you normally buy.

I don’t know why I don’t make a list, it would be a lot easier but when I’ve done it in the past I’ve either left it in the car or at home!

I see my friends buying expensive things just for the brand name, but I think if you are happy, the brand doesn’t matter (unless it’s crocs!!! )

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Out & About and in the Press We’ve been blogging…

We now have two monthly blogs. We regularly contribute to the FMCG blog and our own LinkedIn Blog. Follow us on the links below: fmcgnews: goo.gl/Xy2F4J linkedin: goo.gl/7CwIzE

VISITOR clair pearson

SHOP ECCENTRIC

We are tweeting…

When Visitor

Passes go wrong.

We’re thinking of rebranding.... what do you reckon?

We were quoted in…

The Times in October on their article on ‘Predictive analytics are valuable if interpreted with care’ Read the full article here: rcnt.eu/o2l

We’ve been speaking at…

Danielle spoke at the IPM Shopper Marketing conference in September and was also involved in the IPM Effectiveness Series on The Effective Relationship: Exploring Shopper earlier this month.

We’ve been talking...

On BBC radio. Iona and Danielle like to share their views and expertise on BBC local radio. Last month Iona spoke to Elliot Webb on Christmas shopping, when to start and what fad toys are in this year!

We show you how to turn shoppers into buyers We believe in delivering tailored, fit-for-purpose research, dictated by the brief... not our desire to sell a particular technique.

IN STORE/ POINT OF PURCHASE

OUT OF STORE

ASTs/online surfs Qualitative intercepts Vox-pops Filming Eye Tracking Quant observations & interviews/exits

Focus Groups Online surveys Semiotics Virtual reality/ Shelf mock ups Desk research

STAKEHOLDER IMMERSION

NEW TECHNIQUES

Shopper Workshops Client Workshops

Working with industry experts to utilise developments

Keep up to date with our industry views throughout the year by following us on Twitter & Pinterest or joining us on LinkedIn.

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shoppercentric

shoppercentric-ltd

Please visit shoppercentric.com for the full story WO Issue 27, November 2016

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thelastword...

We thought we’d let our clients have the last word by telling you what they think of us...

Really useful – not just for now but I know that in the future we’ll keep saying ‘oh, we’ve got a slide on that.

Manufacturer It will change the way we think about our in-store marketing but also our whole marketing strategy.

Did you enjoy this magazine?

Scan this code to be taken to more trends research from Shoppercentric.

Retailer This is a great piece of work, really bringing us to a new level of understanding.

Manufacturer That’s brilliant, thank you very much for the rapid turnaround.

Senior Marketing and Customer Manager- Insight - Retailer I just wanted to send you a quick note to say a HUGE thank you for all of your work and for turning the research around quickly.

The research has been received extremely positively internally and externally, so thank you.

Head of Marketing – Manufacturer We were all listening attentively, it was so interesting, and we really appreciate the extra miles you went through to give clear recommendations. We now have the toolbox, and we have in our hands the key decisions we need to take European Insight Manager Manufacturer

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