The Centennials Are Coming: Young Consumers Demand Retailers Do Things Differently
If you don't know what #stanning and #extra mean, you might think these are just the gibberish and insider slang of the teen and tween generation, but you could be missing out on crucial customer sentiment and feedback on social media.
Centennials, or Gen Z (some even call them "iGen"), are the 70-million strong population of individuals born between 1996 and 2011 approximately, according to Aptos marketing director David Bruno, speaking at the retail software company's annual Engage conference. Practically born with smartphone in hand, Centennials are even more social-media addicted than the rest of us, communicating in hashtags (stanning = obsessive fan behavior; extra = over the top, often derogatory) that could give you useful insights into how they feel about your brand, your products and your store.
With spending power that's projected to reach $200 billion by 2018, these young consumers exhibit behavior that perhaps is influenced by the generations that come before them. They save more than they spend and are cautious with credit cards, for example, which could be the result of seeing just how burdened Millennials are by crippling student loans and credit card debt. "College-age Centennials maintain less than half the debt of Millennials," Bruno says.
This generation also reflects changing habits in apparel shopping and an evolving affinity for fashion. In 1995, 67 percent of teens said they "care a lot" about fashion; that figure dropped to just 47 percent by 2014. What's more, apparel's share of the teenage wallet has fallen 15 percent over the past decade, as technology has risen in importance and as a measure of status. For example, 71 percent — still a healthy figure — say having to buy fewer clothes would upset them, though that's lower than the percentage of Centennials who'd be up in arms over forgoing their omnipresent tech devices and Internet access.
For now, Centennials prefer (46 percent) shopping in store, though that's likely due to the need to purchase with cash; many are too young to have a bank account and credit or debit cards. Every single Centennial polled for Aptos' research reported using smartphones in store to search for better prices, pointing to the need for retailers to ensure they're implementing the proper incentives to save the sale if need be.
Is your e-comm Centennial-ready?
Centennials with access to digital payment options show a strong pattern of transacting through their portable devices; 34 percent prefer purchasing via mobile wherever and whenever, edging out desktop transactions (32 percent). True Religion, the denim-centric fashion brand that caters to a young, hip consumer, generates 62 percent of its online revenue from "true mobile" — i.e., smartphones, reports senior vice president of direct to consumer and omnichannel John Hazen. As such, the company embraces a "mobile-first mentality" with web design; the e-commerce team follows an "edict," Hazen says, that forbids looking at the website on a desktop. Indeed, Tim Ash, CEO of website optimization firm SiteTuners, says that 70 percent of all marketing promo emails are opened on a smartphone (by consumers of all ages). "Websites are almost never designed based on the user's perspective," he explains. "Retailers create product categories but don't pay attention to [the site] visitor's intentions."
Personalization is a "trend" in retail that's here to stay. Communications that are tailored to each individual user can be "staged as a sequence of mini-conversions," says Ash, that nudge consumers along the path to purchase, encouraging them toward the Holy Grail: clicking on the buy button or completing a transaction in store. Ash also suggests that retailers design their websites to respond to the way in which visitors interact with them. For example, when users click on a photo or video on your site, that same kind of content should be "amplified" to continue to attract their attention and engagement on whichever pages they click on next. Hide or minimize content, such as lengthy blocks of product information and other text, if the visitor isn't really engaging with it. "Pages should respond to user behavior and promote page content accordingly," Ash says.
With the growth in retail currently focused in e-commerce as traffic to stores and shopping centers declines, retailers are rushing to transform into omnichannel businesses. Still, RSR managing partner and top retail analyst Paula Rosenblum says research shows that leading retailers believe there's a major opportunity to improve channel profitability, citing top challenges as the rising tide of customer returns, unpredictable customer demand — where to allocate inventory to ensure it sells through — and the pressure to ship quickly and cheaply (thanks, Amazon). True Religion, for example, made a brand committment to ship every order free, explains Hazen, and has "tried to walk back from that" but found that it can't. Doing so would risk alienating customers.
Device addiction is real; YouTube outweighs TV
With each new generation, device addiction seems to grow. Whereas Millennials jump between 2.5 devices on average, Bruno notes, Centennials multitask on five different screens: phone, tablet, TV, video game player, etc. The preference for social networks is changing as well. Just 14 percent report Facebook as their favorite platform. By contrast, 77 percent of college-age Centennials are on Snapchat every day, adding dog ears and flower crowns to silly videos shared with friends and followers.
It should come as no surprise that Centennials live their truest lives online, devouring (and creating) hours of content on YouTube and other video platforms. In fact, users consumed a whopping 60 million hours of unboxing footage on YouTube last year, watching high-profile celebs and everyday citizens alike opening up their latest e-commerce deliveries of fashion, gadgets and more.
Even more telling, followers of the top five YouTube personalities outweigh the number of cable TV subscribers in the United States by a factor of two. PewDiePie, a Swedish comedian and video producer, has been the most-subscribed YouTube star since August 2013, with a staggering 48 million followers as of September 2016. The influence that he and other YouTube celebrities wield among Centennials and other young consumers outweighs many of the usual suspects brands use to promote their products, which explains why teen retailer Aeropostale teamed up with YouTube standout Bethany Mota (4.8 million followers; 2.2 million on Instagram) for a series of fashion collaborations in recent years, earning the mall-staple retailer a Top Innovator award in 2014.
—Jessica Binns is a freelance writer based in New York City.