GenZ and Retail: identity affirmation through purchasing habits

By examining the retail industry to identify its possible future directions, we came across a complex world that seeks a balance between the preservation of its traditional forms and the drive to capitalise on new opportunities, above all generated by digital technologies.

We have found an interpretative key and a design principle in people’s experiences, behaviour, and motivations influencing them. Understanding their needs has allowed us to highlight which combination among the emerging service models is best suited to respond effectively.

GenZ and purchasing habits: false contradictions

Let’s take, for example, the controversial case of GenZ and purchases’ relationship: an almost infinite potential offered by digital and virtual worlds lives aside the need for human contact in physical spaces, with a desire for authenticity, individuality and a strong drive for values, especially towards environmental sustainability. The picture that emerges may appear contradictory.

We talked, studied, and collected insights from research activities and defined how GenZ’s purchasing behaviour is strongly influenced by the context in which they live and act - and often exhibit - to affirm one’s generational identity in open conflict with the previous one and its faults.

It's a positional consumption, to take up the concept - a bit old-fashioned, but no less acute - of Thorstein Veblen’s economic theory: consumption is not the mechanical result of supply and demand, in which the consumer plays a passive role addicted to induced needs, but it is a cultural and social phenomenon and as such must be investigated.

In other words, GenZ consumption is an expression of the values of a generation that experiences the world without separation between physical and digital, in which each of these spheres is complementary to the other, which criticises wild and homogenising consumerism, which lives its future with uncertainty and fear as individuals and as a species, and which experiences a profound alienation towards of technological means.

Retail and GenZ service models

To succeed with Generation Z, retailers must adopt different strategies to satisfy their needs and expectations. Those are some trends in their consumer behaviour:

Digital is for shopping, physical for human relationships

The new generations experience reality along a hybrid continuity that oscillates between virtual, physical and digital contexts without interruption. Contexts and opportunities define the tools and environments in their lives.

Regarding purchasing behaviour, digital spaces fulfil the need for information, inspiration - also thanks to peers’ and influencers’ testimonies - and the purchase of commodities or goods of little perceived value (like Shein, to understand). They can discover trends online, discuss product quality, and buy specific things or exclusive goods distributed only on digital channels.

The physical world has other purposes, more aimed at relationships than purchases: you go to stores to get in touch with the brand and its identity, of course, but also to have unique experiences and, above all, to be with other people.

Hyperphysical shops to live unique experiences (and share them on social networks)

GenZ needs personal relationships experienced in the physical world, where they can touch, smell, and feel things and get in contact with other human beings.

Some brands understood this need for concreteness and relationships and created not hybrid shops but hyper-physical ones, in which the sensory element dominates—offering its customers a unique, engaging experience that can be lived exclusively in that space, sometimes going beyond a simple transaction, including aspects of entertainment, such as events, artistic performances or workshops.

The new generations seek socialising store spaces to share experiences and connect with other enthusiasts. These experiences nourish their identity that is shared and commented on social networks or other virtual spaces.

Goods personalisation contributes to affirming someone’s identity

GenZ shows the desire to live experiences in which they recognise themselves, where their individuality can find space in a world that pushes towards homologation. This value was instead significant for previous generations.

So in any commercial transaction, they look for personalisation, the “tailor-made”, but also a flash, a detail, an element capable of differentiating them from others and saying something about themselves.

Young consumers value individual attention, expert advice, the ability to tailor products to their preferences, and craftsmanship.

Better if the goods purchased are ethical, sustainable and iconic

GenZ is deeply invested in the uncertainty and precariousness of the present. In particular, they consider climate change a certainty and, consequently, a risk to the very existence of the human race. 

They are perfectly aware that the cause of this situation is industrialisation, which depletes resources and the wild consumerism that has characterised society from the post-war period to today. 

Also, for this reason, the vintage and second-hand goods market has taken off, and GenZ customers are willing to pay high prices for sustainable or used goods as long as they are iconic in some way.

New opportunities for retailers

To seize new opportunities and keep up with competitors, retailers must adapt to new consumer habits that are more varied and conflicting every day and, therefore, better understand GenZ and its identity needs.

Only in this way can it be possible to build an offer to which potential young customers can recognise themselves, choose and remain loyal; that creates a sense of community and enhances physical spaces and shops.

The shopping experience in physical stores remains a strong point for the new generations. It’s a unique opportunity that differs from the online experience. Digital is considered the normality for the new generations. At the same time, the exclusivity of going to the store is the authentic experience that young people are looking for. 

This in-store experience must be memorable and worthy of being shared on social media, not becoming a simple virtual interaction but a social and engaging experience. Real life becomes the heart of a new luxury, a way of living in the moment, appreciating the personalisation of interactions to the max. 

It is, therefore, essential to distinguish between the online experience, which must be integrated, fast and precise, and the in-store experience, which must be a real WOW, something unique.

However, cross-channel integration remains essential to meet basic consumer expectations: offering services such as online purchases with in-store pickup, booking products online to try them in-store or accessing product-related digital content can foster a smooth and seamless shopping experience. You cannot be exempt from these services.

It is equally evident that this represents only a segment of their target. The demographic composition of the population pushes brands to have to serve up to three generations at the same time. The retail strategy must be specific and modular to generate value for each.

Design for the next retail strategy

The future of retail is compelling and engaging and can be designed and structured through a design journey. This creative approach allows us to imagine a world in which physical stores are transformed into extraordinary places, transfigured by new technologies, capable of meeting the expectations of the new generations.

User research is the essential starting point for understanding Generation Z’s needs, behaviours and expectations towards retail. Interviews, surveys and field observations allow you to gain a broad perspective of young consumers’ preferences, including their digital and physical brand interactions. Based on the research results, design can help define a new value proposition dedicated to Generation Z.

A critical analysis of the current retail strategy is crucial to understanding where the gaps and opportunities for improvement lie, exploiting the information and perspectives derived from a speculative design-driven approach. Redefining retail’s value proposition becomes essential to respond to the future needs of young consumers. Focus on items that resonate with Generation Z.

Get more insights into retail’s transformations and ask our experts how to build your next and unique retail strategy.