How the Consumer & Retail Industry is Adapting to Generation Z and Millennial Shoppers

Javier Frausto & Jeeho Yun

Throughout generational gaps, industries across the board witness changing consumer habits that force companies to either adapt, or fall by the wayside. The discrepancies between Millennials and Generation Z shoppers are no different, and analysts at Cowen delved into the subsequent effects on the consumer and retail industry in their "third annual proprietary Gen Z and Millennial survey."

For one, as the commonality of online shopping becomes more prevalent, the demographics in the 18-24 and 25-34 age cohorts “~74% and 72% respectively cited Amazon as their most preferred channel.” Conversely, those who grew up shopping in brick and mortar retailers (such as millennials) prefer their online counterpart less so, as only “60% of those 35-44 and 56% of those 45-54 indicated that they prefer shopping on Amazon ahead of both physical stores and brand /retailer’s websites,” according to a survey.

Especially with the new coronavirus pandemic, the digital presence has received more usage on all fronts of human interaction. Because of social distancing measures, both companies and consumers are forced to utilize online channels as opposed to more traditional methods. In fact, the use of online commerce has seen the “highest penetration rates among Gen Z and Millennials at 72% for August 2020 YTD,” marking a historic shift to the digital world among both age cohorts.

This transition to online shopping has challenged big companies like Nike, Adidas, VFC, Puma, DECK, and YETI to adapt and shift their focus to the digital channel.

Two companies that saw great improvements in this pandemic were Nike and Adidas. Nike is shifting to a more DTC approach in the coming years going from 29.4% in 2018 to an expected 49.8% in 2024. Adidas showed creativity by their improved segmentation and allocation (e.g. Yeezy), which saw both digital and in-store experiences resonate with their customers. 

Social impact & sustainability practices are also aligning great brands with the values of Gen Z and Millennial buyers. Companies will mention that their pants are now made with “At Least 50% Recycled Polyester Fabric” or that the company will “only use recycled polyester in all Adidas products across the business”. 

A more greenhouse approach gives the consumers that feel-good feeling after making their purchases, this leads to greater customer satisfaction and a continued customer that will keep on shopping with your company. Additionally, there’s a booming industry growing rapidly right before our eyes, the resale marketplace as “second hand” items have also seen favor among Gen Z and Millennials.

Simply put, the consumer and retail industry is undergoing a vast transformation in terms of delivery systems, as many now turn to online outlets instead of their traditional in-person stores. Companies on all fronts have exhibited that they’re either ready to adapt, or anxiously awaiting an unfortunate fate. We’ll see how the landscape alters in the coming months, but it seems that the likes of Amazon and other online retailers will surely take the cake.

Disclosure: At the time of publication, we have no positions in any of the securities mentioned in this article. We wrote this article ourselves, and it expresses our own opinions. We are not receiving compensation for creating this article (other than from TheStreet) and have no business relationship with any company whose stock is mentioned in this article.

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Comments (4)
No. 1-3
kperkins2
kperkins2

i mean personally, i could barely find good clothes or shoes in stores so transitioning online might not be a bad move

Nikhil Gunderia
Nikhil Gunderia

Nike > Adidas

AlexM5
AlexM5

E-commerce is the move