Physical retail will be long gone by 2050. That’s in our lifetime! Legacy institutions such as high retail rents and the operational cost of running stores will certainly play their part in this demise, but the instrumental blow will be the future generations’ interest in real shops and shopping. It is very possible that the next two generations, Alpha and Beta, will be the last of their kind before an explosion in artificial intelligence and virtual experience that rapidly reduce interest in physical stores and products. But just as profoundly, Boomers, Gen X, Y and Z, might well be the last consumer generations to place any value on real shops and stores.
Generations that shop is a series of six short articles that aim to explore and consider what opportunities remain for brands and retailers to maximise the shopping landscape now and for the relatively short-term future.
The ‘experience’ generation.
The ‘apple in the eye’ of most marketeers, GenY have certainly taken the lion’s share of marketing focus in recent years. But, with only a fraction of the disposable income compared to previous generations, will they ever be the shopper we want them to be?
Previous generations, the boomers and Gen X, experienced austerity, political uncertainty, conflicts and the birth of the digital age. Y-ers however, are the first truly digital native generation. Y-ers are the first generation to grow up online, face unprecedented personal social pressures and are the first to play the influencer and the influenced.
Y-ers make up on average 25% of the world’s population, making them the largest modern generation. This alone has undoubtedly put the marketing spotlight on them. But, with their average income and savings being some 20% less than their previous generations, they offer lucrative new opportunities ‘beyond fiscal’ currency in advocacy and engagement.
Gen Y, just like Gen X are incredibly brand loyal, but it isn’t just product that makes them stay. In fact, well over 60% measure their affinity with a brand on service, experience and trust. This generation do not have the deep pockets that Gen X offer, but they have through advocacy and digital engagement, contributed significant brand wealth and health in propelling the ‘experience revolution’.
Y-ers are the first generation to demonstrate a dislike for some of the more traditional media channels. Outdoor appears to be the exception with over 75% of Y-ers reacting positively to this media channel. An underlying sentiment from our panel is trust and provenance. Y-ers, given their digital upbringing are incredibly sensitive to marketing, authorities and news. They have grown up amidst the proliferation of ‘fake’ news and often misleading communications from large global corporations. Their response has been to adopt a much smaller group of influencers around them that include peers, friends and family. 85% told us that when considering a purchase (particularly online) they seek advice from peers and will often ignore online reviews.
Given their digital dependency - with 92% owning a smartphone and over 65% using it to shop, Y-ers are the least likely to choose a physical store to shop. Only 32% selected a physical store as their first choice for search and shop. A 10% drop in the past two years.
Value and values are by far the most significant triggers for Y-ers. 65% place their own wellness and health as a priority and 55% look to brands that demonstrate provenance in this area. They look for this whether that provenance has a direct effect on their own consumption, or has a positive effect on others or the environment. Y-ers are incredibly price sensitive but are 3 x more likely to pay for quality of experience, longevity and contribution to other’s lives and livelihood.
Perhaps Y-ers most significant contribution to shopping so far is mobile first. Not only do 65% tell us they use their smartphone to make purchases, but over 80% are using their mobile when in-store to check prices and information. Their mobile device is not only their wallet, but their personal shopping assistant too.
Y-ers are by far the most sought-after consumer by marketeers. It’s their large numbers, valuable screen time and evolved currency of advocacy and engagement that drives the experience economy. Y-ers have transformed how brands act, service and think about consumers, helping marketeers innovate and evolve, often co-creating with their consumers along the way.
Yes, Y-ers are opinionated, self-assured and informed. They tend to ignore marketing communications in favour of peer to peer influence and have ditched ‘obtainability’ in favour of sustainability. But they are innovators, instant adaptors to newness and hold values in consumerism that will benefit a better place to live in the future.
Perhaps, in the context of shopping, we will remember them as the ‘FOMO’ generation. They are the generation that crafted experience over product and togetherness over capitalism. They continue to transform the economy through ‘likes’ and participation and have ditched the credit card for loyalty cards instead.
By Martin Fawcett, Managing Director, The Shopper Agency