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Millennial and (Gen Z) consumers and their influence on the retail industry

Posted by Sureswipe on 6 June 2018


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Contrary to popular belief, younger generations of shoppers actually prefer visiting brick-and-mortar retail outlets.  To entice them to spend with you, why not try a loyalty programme?

Robert Klara, a senior business desk editor at Adweek, spends most of his time writing about shopping. Klara says that entrepreneurs and business leaders have been hearing about the demise of retail for years and that mall-based businesses in particular face the bleakest future.

Fashion giant, Urban Outfitters’ CEO Richard Hayne agrees. He believes the retail bubble has burst and says: “We are seeing the results—doors shuttering and rents retreating.” He explains that this trend will continue for the foreseeable future and may even accelerate.

“It doesn’t take an MBA to understand why this is happening. Online shopping is taking the place of the time-honoured trip to the store and Millennials are at the root of it.”  Robert Klara, Adweek

THE RISING POWER OF YOUNGER GENERATIONS OF SHOPPERS

Millennials have surpassed Baby Boomers in terms of population numbers and spenders. Newcomers, Generation Z, are also gaining prominence in the ranks – poised for consumer retail domination with USD44 billion in spending power, according to research by CrowdTwist. It’s expected that Generation Z will comprise 40% of consumers by 2020.

There are similarities and differences between Millennials and Generation Z when it comes to consumer spending; how they engage with businesses, their shopping habits, their business loyalty and their attitudes towards loyalty programmes.  

  • Millennial shopper snapshot

Studies show that Millennials are more loyal to particular brands than any other age group, while by contrast, Generation Z are widely perceived to lack brand loyalty. A recent survey recently found that 31.62% of Millennial respondents ‘sometimes buy a brand but would consider other alternatives at a lower price’.

 

  • Generation Z shopper snapshot

A high percentage of Generation Z, 38.02%, said they would also consider other alternatives that offer a lower price, compared to a lower 26.72% who are truly brand loyal. This indicates that younger generations are a little more price driven rather than ‘brand-name’ driven.

 

It’s proven across both generations that a loyalty programme can serve as an effective tool to retain customers because shoppers of all ages still appreciate good value. Sureswipe’s deep reach into the South African retail sector, as a leading supplier of merchant solutions, shows that loyalty programmes are boosting revenue by 24% a year in particular retail niches.

FACTORS THAT INFLUENCE LOYALTY PROGRAMME PARTICIPATION

Both Millennials and Generation Z prefer to engage with businesses in-store. In fact, 64% of them say they could be persuaded to shop with a retailer if there was a loyalty programme in place.

But, what do young shoppers find most valuable in a loyalty programme?

  • According to the research, 33.72% of Millennials want access to exclusive ‘member-only’ coupons or discounts followed by member-only perks such as free shipping and free samples of new goods.

 

  • Generation Z want personalised promotions and milestone rewards. This isn’t surprising according to retail experts, considering Gen Z is more ‘willing’ to share personal information to receive personalised experiences. They are also more interested in tiered loyalty programmes where they can move up the ranks to different levels.

HOW TO OPTIMISE YOUR APPROACH TO RUN A SUCCESSFUL LOYALTY PROGRAMME FOR MILLENNIALS AND GENERATION Z

KEY CONSIDERATIONS WHEN LAUNCHING YOUR OWN LOYALTY REWARDS PROGRAMME

By launching a loyalty programme, you gain the power to communicate directly with Millennial and Generation Z customers (via SMS and email).

But, simply signing up for a loyalty solution won’t make an impact on revenue. It’s advised that you refine the following key components of your business tactics when deploying a customer loyalty and rewards programme:

  1. Be where the youngsters are

    Generation Z are active on all channels: digital, social and in-store. They expect to be able to check the availability of in-store items online and vice versa. Because they have grown up in the information age, they are more likely to research a product before purchasing.

    This means visiting your website, interacting on your social media channels, engaging on mobile and shopping at your store locations. A cohesive presence from your side, across channels, is needed if your loyalty programme is going to attract young shoppers.

  2. Offer a variety of different rewards, perks and incentives

Generation Z want slightly different rewards from a loyalty programme compared to Millennials. This might require investment in a programme for each generation or a single programme that takes both generations needs into account.

 

However, ‘similar’ benefits that you can offer younger generations of shoppers include unique member-only discounts and coupons, and perks such as free shipping for bulky items or free samples of new goods. Business experts say if you’re able to offer instant rewards through your programme, you’ll be able to demonstrate value to both consumer groups and keep loyalty programme engagement high.

If you’re interested in boosting customer loyalty, driving up repeat purchases and making your store stand out from the competition, talk to us about a tailored Sureswipe loyalty programme. Click here and we’ll call you back in the next hour to discuss your needs.

Topics: gift cards, loyalty, retail, tips, Growing Your Retail Business, Mastering Marketing and Promotions