The Gen Z glow up: How retailers must adapt to the next generation of shoppers

Gen Z are today’s and tomorrow’s retail consumers. This new buyer generation is quickly emerging as an economic powerhouse and is on track to contribute 39% of retailer spending in the UK by 2030. As this generation’s purchasing power continues to increase, the retail industry’s future hinges on capturing the market for Gen Z. Those that fail to adapt to the new buying behaviours and customer expectations will compromise their future success. Retailers need to act and adapt now to the new Gen Z buyer argues Rupert Firmstone, and here he identifies the three key areas where retailers can transform their appeal to Gen Z buyers…

Gen Z is expected to command a staggering $9tn in global spending power by 2034 – more than any other generation. This brings a new power dynamic to the retail market that can’t be ignored. Their consumer behaviour is already influencing retail strategies, impacting everything from online and in-store experiences to marketing and sustainability practices. Inaction to engage with this younger generation risks alienating a key and growing customer demographic. For retailers, the cost of complacency is not just lost revenue, it’s brand irrelevance.

 

• The rise of conscious consumerism

British consumers, particularly Gen Z, are demonstrating a tendency towards value-driven purchasing, and a brand’s values are now just as important as its products. Research shows that 62% of Gen Z prefer to buy from sustainable brands, while 72% are likely to make purchases based on personal, social and environmental principles and values.

Gen Z want to engage with brands that not only take a stand on the issues that are important to them but also proactively engage in authentic Corporate Social Responsibility (CSR) initiatives. Yet they are not willing to pay more for it. Inflationary costs are severely affecting consumer decision-making, and while ethics play a key part in purchasing choices, this can’t come at the expense of increased cost. So how can retailers realign their ecommerce strategies to address the new consumer demands?

 

Retailers must be ready to walk the talk

It’s important that retailers can communicate their ESG intentions clearly though marketing, packaging and customer service. But it’s more than just lip-service as retailers need to be able to walk the talk. Gen Z value authenticity, so retailers able to implement and track measurable ESG goals that demonstrate their genuine commitment to improving sustainability practices will earn greater respect from this more socially-conscious generation. Brands such as Tony’s Chocolonely for instance, have earned praise for their focus on ethical sourcing and fair trade, proving that purpose-driven strategies resonate deeply with modern Gen Z shoppers.

Retailers are also seeing success through incentives that collaborate with customers to recycle, repair or reuse products. UK retail giant Marks and Spencer has made strides with their Plan A sustainability programme, which focuses on cutting waste, using sustainable materials and supporting ethical sourcing.

 

• Meet customers where they are

Online marketplaces continue to dominate…

Marketplaces such as Amazon and eBay continue to account for a significant portion of sales globally. Over the past 10 years, the percentage of online sales has tripled and they now make up nearly 30% of all retail sales. Today, online marketplaces remain an impactful channel for retailers as they offer scalability, reach and cross-sector applicability. But can retailers do more to make marketplaces attractive to Gen Z buyers?

The most important consideration for a retailer is marketplace optimisation. This includes pricing, visibility and logistics to maximise sales in both B2B and B2C sectors. Particularly in the B2B world, the days of sales representatives talking directly to potential buyers from the get-go are long gone as there’s a new wave of Gen Z buyers who favour conducting their own research. This is why it’s important for retailers to understand how they can effectively position their brands to be recognised by new potential buyers.

 

…but don’t forget social media

Social commerce on the other hand, while still niche, is an evolving online channel for targeted demographics and has already made strong inroads with Gen Z. In fact, more than half of Gen Z consumers make monthly or weekly spontaneous purchases because of something they saw on social media, which is significantly more than any other generation. TikTok Shop for example, has quickly become a major player in the eCommerce space. In 2024 alone, it generated $33.2 billion in global sales. But how can more retailers benefit from taking the social plunge?

Retailers can’t overstate the importance of the “digital native” label for Gen Z. This smartphone generation interacts with social media in a completely different way to previous generations and as such, retail strategies need to reflect their buying behaviours. Businesses can start by experimenting with social commerce on a smaller scale and use platforms strategically. Liberty London for instance, reports ongoing success with using Instagram to influence Gen Z buying decisions. It’s all about finding the right channels that can help retailers better connect and improve brand awareness with Gen Z audiences.

 

• Payment flexibility is a new make-or-break for checkout decisions

British consumers are increasingly adopting flexible payment options such as Klarna and PayPay Pay in 3, with Buy Now Pay Later (BNPL) usage growing by 47% year-on-year. This option is particularly popular with Gen Z, who prefer digital wallets and BNPL over classic methods such as credit and debit. A recent survey found that 56% of Gen Z shoppers have failed to complete a purchase because their ideal payment method wasn’t an option during checkout.

It’s important that retailers can offer payment flexibility or risk Gen Z buyers going to competitors that can. This applies from the moment they review their online basket. Retailers will lower the risk of abandoned purchases by optimising online checkouts with flexible, multi-function payment apps and enabling one-click payment methods.

 

It’s time for retailers to tap into Gen Z’s spending power

Gen Z is the newest consumer generation, so retailers that overlook this key demographic risk becoming irrelevant and losing their market value. Given their future spending power, adapting to Gen Z’s habits should now be central to retailers’ long-term strategy. Successful businesses will be those that can understand Gen Z’s unique values, preferences and nuanced behaviour and adapt their retail offerings to suit these key considerations.