There is a new retail sheriff in town, and she is mobile, connected, informed, medicated and wielding a $44 billion mobile wallet. Generation Z, ranging in age from 8-22 years old, makes up close to 26% of the US population, and by 2020, account for 1/3 of the US population. Not only are they a large group, they are extremely segmented, but not demographically as previous generations have been, causing advertisers to cringe at how to effectively reach them.
Marketers can no longer rely on demographics like age, gender, and race to target with their messaging. To reach Gen Z, marketers are going to have to focus on behaviors and interests as teens do not identify racially and sexually as their generational predecessors. In fact, 85% of Gen Z are less occupied with gender orientation and 77% think differently about race than their parents. Great for the US, not so much for Madison Ave.
While Gen Z is segmented and loves to have a personalized experience, one commonality is they all hang out at the same place…. mobile. As this article so beautifully states, Generation Z has learned to swipe before they wipe. Gen Z shoppers are twice as likely to convert on mobile, spend two hours a day on YouTube, and thanks to tons of information at their fingertips, most are well educated on consumer products. So informed in fact that teens are now helping make family purchase decisions. My 8-year-old already has a Top 5 cars he wants, with pricing, when he turns 16. He doesn’t have a favorite movie star, or sport personality, he looks up to Jake Paul and dudes that perform trick shots.
Traditional methods, channels, and demographics aren’t going to work moving forward, but if authentic, Gen Z will listen. They are smart. They want information. And, they are going to be carrying a big stick, so companies will have to figure them out.
In the age of Scan and Go, Self-Checkout, and the ambitious Amazon Go, Best Buy is kicking it old school with one of the slowest checkout experiences I have had since Donnie T was just a real estate mogul.
I ran into the local Best Buy on Sunday to grab an adaptor for my kids headphones to use on the iPhone 7 (thanks Apple!). Asked the greeter where to find the product I needed, was whisked to the mobile device department, found the $10 adaptors (3 of them) and was off to the register in record time (strangely, not many shoppers in store). Once at the checkout, the quick trip was derailed by a Quick Bowl moderator behind the counter.
"Are you a Reward Zone member?" ...."No"
"Want to be one? “...”No"
"How about a phone number?"...No
"Go ahead and punch in your Zip for me."...Sure
"Want that receipt emailed to you?"...No
"Everything look right on the screen?".... No
"How about a bag today?"...Noooooooo!!!!!
My quick trip had turned into an interrogation only rivaled by my kids playing "I am Thinking of an Animal". It wasn’t just the questions, it seemed like the card processor was using the same dial-up as an ATM at a Stuckey’s in the middle of Oklahoma.
I get this is not the young man behind the counters fault. I understand Best Buy is trying to gather information on their declining number of in-store customers and provide them with life-changing savings and e-mailable offers. Time, money and convenience is the name of the game today. Be like every other retailer and retarget me online, follow me around the internet, hound me with hyper-targeted display ads on my phone, litter my social feed, creep me out by serving me ads when I am thinking about electronics.
But if I do come in the store to pick up a few items, please have it in stock, let me find it quickly, and then let me get out of the store and back to my kids and important stuff like continuing the roundtable discussion on Jake or Logan Paul…who is cooler?
Dont put the toe tag on brick and mortar retailers just yet. According to a great article in the USA TODAY, retailers are opening 1,326 more locations than they planned to close in 2017. The article is quoting a 2017 report from IHL Group, a global research firm in the retail and hospitality industry, called "Debunking the Retail Apocalypse."
"The negative narrative that has been out there about the death of retail is patently false," said IHL President Greg Buzek, "The so-called 'retail apocalypse makes for a great headline, but is simply not true."
Encouraging words for retailers and weekend warrior shoppers, but malls across the country are definately feeling the pinch of specialty retailers closing their doors. Brick and mortar shopping will never really go away. Just like in any other industry, the tides change and either companies adapt, or they die out. There are infinately more options for "entertaining" Americans today than in the mid 80's when there were approximately 30,000 shopping malls in the US alone, accounting for close to 50% of all retail dollars spent. Online shopping, mobile devices, and families binge watching Netflix or, heaven forbid, getting outside and exercising, have all taken the place of loading up the family truckster and heading to the mall for a slice of Sbarro and getting ears pierced at Claire's.
Retailers are going to have to change their game to compete moving forward if they are going to have a presence in brick and mortar. And no, that doesn't mean they have to entertain, or retailtain, to stay relevant. Provide unique and professional customer service. Have products in stock and ready to roll with the customer. Create "in-store" promotional pricing. Utilize the time to truly engage the customer and become a trusted adviser. Or, just make it easy to get in, get out, and back on the couch for another episode of Peaky Blinders.
Amazon's new return policy rolls out October 2nd and Amazon customers should be celebrating. Forgive the sellers if they are not twerking along. According to an article by CNBC, if an Amazon customer is unsatisfied with their order for any reason, they can print out a return shipping label, and return the product on the seller's dime. Naturally, this is a win for the customer if something is truly wrong with the product, saving them time, money and gaining confidence in their purchases. Buuuuut, what does this mean for the mom and pop seller on Amazon? No verification on damage, no communication with customer, no offer for discount to customer, just taking it in the shorts for return, refund and shipping.
Amazon will argue that this will add to the customer's experience and confidence in shopping on Amazon either directly through products Fulfilled by Amazon or through third party sellers. In Amazon's mind, the customer is always, always, always, right. I agree if Amazon is going to pick up the tab for the return. But, to not allow the small businesses to have a say in it doesn't past the smell test. Is this an attempt to encourage more sellers to use the Fulfill by Amazon option? Or maybe, Amazon wants to squeeze out the very businesses that helped to build Amazon to what it is today.
This new policy certainly gives the Amazon customer less to think about than a customer on Walmart.com. In store, no retailer has a more lax and accommodating return policy than Walmart. You can return parachute pants purchased from the Merry Go Round to a local Walmart and they will accept without a word. On Walmart.com though, the policy is returns can be made in store or on .com for all items purchased directly from Walmart. If purchased through a Marketplace Seller, the individual seller's return policy is in effect. One would have to think that Walmart will see how this plays out on Amazon and may tinker with their policies moving forward.
With these moves and hints of others, one could reasonably assume that maybe Amazon doesn't hold its third party sellers in the highest regard and may be looking for ways to bring more "in house". While the model has certainly worked to date, Team Bezos doesn't seem to have anything that they can't directly control. Time will tell, but for now, looks like Customers 1, Mom and Pop 0.
Big props to Walmart and the Walmart Foundation for again stepping up to the plate and leading retailer relief efforts for Texas and Florida communities. Walmart has pledged $30 million in aid to affected areas, as well as, 1,700 full truckloads of supplies. Whereas Amazon and Target, both have donated $1 million to the cause. Certainly nothing to turn your nose up at, and everything helps, but Walmart consistently outpaces its competitors in charitable giving.
In 2016 alone, Walmart and the Walmart Foundation pledged $1.4 billion to organization around the world, not to mention 1.25 million of associate man hours in their communities. In a world where most companies, and individuals for that matter, want their good deeds screamed out from the mountain tops, it seems Walmart takes the more humble approach, which is something to be admired. When Walmart is in the cross-hairs of public scrutany for not paying a living wage, or driving small businesses out of communities, it would be easy for them to tout all of their good deeds, but you often don't hear about all the good they collectively do in the world.
Listen, I am not drinking the kool-aid and proclaiming everything the retail giant does is pure gold, but it is nice to see Walmart, Walmart Foundation and Walton Family Foundation give so much, and seemingly not wanting a pat on the back. Bezos and team may be in a race long term race with Walmart for world domination, but they are certainly falling behind when it comes to philanthropy.
Store of the Future. Personalized Experience. Making the Store Fun Again. It seems we are hearing more and more ideas about what the retail experience of the future will hold. Suggestions of making the in-store experience "more personalized" and incorporating more 'retailtainment" are rampant. Is that what the customer really wants? Is today's shopper so starved for something to do they are turning to Walmart and Target for their entertainment? Should brick and mortar stores increase their footprint and add play zones, Slip and Slides, and more free samples of cereal bars and smoothies?
The opportunities for personal and family entertainment are more numerous now than any time in history. We can now have what we want, when we want it, and when it fits into our schedules. Growing up, Thursday night's on NBC was "Must See". No matter what was going on in the world, time stopped at 7pm for Cosby, Family Ties, Cheer's, maybe a little Night Court. Today, Mom and Dad are covering more road than a street sweeper, going from school, to soccer, to dance, grabbing a bite, doing some homework, then finally relaxing with a glass of vino and Netflix, ready to do it all again tomorrow. People are not looking for more ways to be entertained, they are looking for more time and convenience. Even attendance at NFL and College Football games are down as the convenience and cost savings of watching at home is winning over dropping a smooth thousand on tickets, parking and $9 Cokes. Time and money usually always win out.
But if we do go down the path of increased in-store experience, who picks up the tab? With retailers focused on winning the pricing game, they are pushing suppliers to lower prices. At the same time, they are asking for more from suppliers in terms of in-store activity to keep the shopper engaged. In a perfect world, there would be enough margins built in to offer the shopper a high-quality product, at a value price, plus a free pony ride at the store, and everyone could be happy. Unfortunately, that isn't going to happen any time soon. Today's legacy brands aren't built to get super low on price, and increase in-store promotional dollars, for any length of time any way. We could see the continued rise of challenger brands whose pricing and promotional efforts are more suited to today's retailer needs. Which also feeds into younger shoppers not being so brand focued and looking for value.
Retailers need to keep their eye on the ball and concentrate on what is important today. Quick and easy checkout, YES. More focus on mobile shopping and in-store pickup, WINNER. More variety and low prices, YOU BET. Give shoppers more of what they really need, time and money, and leave the "entertainment" out of the equation.
Pencils are sharpened, the coffee is on, and we are officialy open for business. Our team has been killing it in a variety of verticals for years. Now, we are combining forces, and bringing together over 100 years of experience to assist other companies in selling their product at nation-wide scale. LIFT provides manufacturers, inventors, and consumer brands everything they need to be successful in selling their products to the masses. Our headquarters sales team has deep relationships at many of the nation's top retailers. The data team can take huge blocks of store-level data, combine them with shopper insights, and produce comprehensive sales and promotional strategies. We have some of the most talented designers and brand strategist in the industry and we all understand how to go to market in the stores and online.
"Let's Talk Retail" is going to be our forum to discuss current industry trends and news, pass along some insights to help our readers grow their business, and anything else our team might find interesting. Going to be a fun ride, glad you are on board.