How Gen Z is redefining retail

Episode transcript, edited for clarity

Bill Thorne: Welcome to Retail Gets Real, where we hear from retail's most fascinating leaders about the industry that impacts everyone, everywhere, every day. I'm Bill Thorne from the National Retail Federation, and on today's episode, we're talking to Rachel Bonsignore. She's the vice president at NIQ Consumer Life. We're going to talk to Rachel about the Gen Z consumer, how they differ from other generations, and what retailers can do to connect with this group. 

Rachel Bonsignore. Welcome back (again and again and again) to Retail Gets Real.

Rachel Bonsignore: Thanks. Bill, it's such a pleasure to be back. I always love chatting with you guys.

Thorne: Well, you are a font of knowledge, and every time that we have the opportunity to talk to you, we learn something new and that's what it's all about. And that's why we love having you on Retail Gets Real and it's one of our more popular episodes because we're learning something, and you never stop learning when you're a retailer.

So, let's figure out first though, what is NIQ, and what is your role?

Bonsignore: Sure. Absolutely. So NIQ is the world's leading consumer intelligence company. We deliver a complete understanding of consumer buying behavior. It helps reveal new pathways for brands and retailers to grow. So, currently we operate in more than 95 countries, which covers 97% of global GDP, and really pride ourselves on delivering what we call the full view. It's a holistic retail read and the most comprehensive consumer insights to back those up that are also delivered with advanced analytics through various platforms.

I work for a division of NIQ called Consumer Life, and we are really unique. We have been around for quite some time, so we are the longest standing consumer trend study of our kind. We have been in the field in the U. S. since 1973, and globally since 1997. And what we do is we track shifts in consumers, values, attitudes, aspirations and lifestyles to help brands uncover emerging movements, and also plan for the future.

And so, a lot of what we're going to talk about today is really informed by all those decades of tracking, not just Gen Z, but millennials when they were the age that Gen Z is now and so on. By looking at these cohorts over time, we can tell a lot about what's distinctive about a certain group.

Thorne: You know, before we started recording, we were talking about the different generations, and I think I mentioned how thrilled I am not to be talking about millennials. So, this is like a whole new day. Let's start with — who is Gen Z?

Bonsignore: Yep, absolutely. So, Gen Z, the way we kind of define them to start off is, they are the group of people born between 1998 and 2012. So currently they are, 12 [years old], 13, up to age 26, which certainly encompasses a lot of formative experiences.

You might say that they are maybe the first truly global generation. As some earlier generations, like boomers, we're really defined by U. S. birth rates and other sort of economic trends, this is much more globally universal. Here in the U.S., there are just under 65 million of them, and they are really the most diverse generation of Americans yet.

They're also really uniquely defined by the world that they were born to — quite a bit of volatility in major world events with 9/11 and the ensuing global conflicts, as well as the Great Recession of 2008 and 2009 present in their lives before really, truly developing a strong adult awareness of it.

Another thing that's really unique about them is that technology has always been a given, whether it's smartphones or social networking or streaming media. You know, they have just grown up in a much more on-demand connected world, and so, this will really become clear as we see they're not just younger millennials. So, we could really not talk about millennials. They're not just sort of the younger iteration and their younger siblings. They have pretty unique characteristics.

Thorne: It's so interesting to me. I was … the other day one of my colleagues mentioned, she said, “I was born the day after 9/11.” I was like, wow, that is absolutely astounding to me. But, you know, 9/11 is such a big part of my life and it's been such a big part of our history. And to think that I'm working with somebody that was born the day after 9/11 is … it's part of getting old.

So, Gen Z, how did they compare to what millennials were like at this same point in their lives, specifically in terms of how they view traditional values like career, success or relationships?

Bonsignore: Yeah. So work is really interesting. So, they certainly diverge from millennials in a number of ways, and obviously, as young people growing up in this modern world, they are certainly not the first generation to say, “I want work/life balance,” or “I want a more fulfilling career.” The way they sort of go about it and focus on is going to be different as they continue on this path. You know, many of them are still quite early, if not already on a career path.

So, what we see is that values like working hard and power and status are really going to appeal less to them than they do to millennials. Millennials were really defined as being this sort of foolish, hungry, confident audience that's full of go-getters and workaholics to some extent.

What they've really narrowed in on — likely because of the world they grew up in — is the need for stability. So, values like material security are really distinctive for them. But they're not, you know, not confident and not hungry, right? So, they're not shy or unaware of what it takes to get there. So today, for example, Gen Z leads all generations on values like wealth and ambition because they are at that early stage of their life. So, it's really interesting, the nuances of all of that.

Thorne: It's so true. I mean, that's like a horoscope. I mean, it's just like, you're exactly right. I work with enough of them that, wow, you've really pegged it. Phenomenal.

Bonsignore: They, they know that times were not easy. They probably saw some of their Gen X parents go through really tough times in their careers during the financial crisis, and they understand also how competitive things are. The educational environment they grew up in was a lot more intense even than millennials did, so they want to get there. But the end goal is not necessarily being in charge or being the richest person in the world. It’s more about being able to live and have some stability during volatile times.

Thorne: You kind of think, it's something where I look at what their interests are. I look at what motivates them, and there are always shared values across generations, but they seem to get more and more diverse, and part of that is issues that are important to each generation. You look at a Gen Zer, what are the issues that kind of drive them?

Bonsignore: Yeah, absolutely. There's, like I said, there's still some of them are still kind of young, like early [unintelligible] and so on, so many of them are not necessarily old enough to vote, but that absolutely doesn't stop them, right? They live in such a hyper-connected world, so politics does have a significant influence on their priorities.

So, we think, partially because of the world they've grown up in. Often, we see them leading on, disillusionment with where the country is headed and some skepticism about whether some critical issues like quality of life or health care can really be turned around. And so, this really just makes them sort of a little more diverse politically, as you were alluding to. They're not necessarily going to fall into binary political affiliations. They may sort of have really nuanced views about things that don't always agree with each other.

But the overall sort of thing to remember is that they're still activists. There's still things that really matter to them. So right now, we see them as the generation most likely to participate in a civil protest for an issue they feel strongly about. They're also more likely than millennials were 15 years ago (so around the same age) to feel like they feel some connection to an activism or volunteer group, so there is hope for them.

And the other thing I want to talk about a little bit that gets into a little more nuance, too, with how they view the world is sustainability. So, I always think growing up with the constant factor of pollution, and climate change, and massive weather events — this has a major impact on them. A lot of them are really frustrated with the state of the environment that older generations seem to be leaving behind to them. So, in our data, we see that a value like “being in tune with nature” is really fast rising with Gen Z in just the last couple of years.

But because again, they are still young and they're not fully realized yet in a lot of their behaviors, they're still trailing their elders on things like recycling or conserving resources or avoiding wasteful consumption, and I think there are a lot of reasons for that. Sustainable products tend to be a little more expensive. Some of them still have limited autonomy to make certain decisions if they're still living in their parents’ homes or don't have enough sort of their own freedom.

But what's also really present for Gen Z is this conviction that their daily actions will not necessarily make a big enough difference in the world. They're really … again, that goes back to the disillusionment, that, “I'm not really sure if, you know, this country is on the right track. I'm not really sure if they can turn around some important issues.”

So, that's a little different from previous generations that were really gung-ho on recycling going mainstream and other things. You know, eating organic or whatever it is, or eating plant-based. But this is a little different for Gen Z. I think the one thing that is important to remember on top of all of that is that they also repeatedly tell us that more knowledge will help them make smarter decisions in the future. So really, education is key. It sounds sort of obvious, but a lot of them still don't really understand the nuances of these things, but the motivation and the frustration is certainly there.

Thorne: Would you say this generation was most impacted by the pandemic?

Bonsignore: Absolutely.

Thorne: I mean, in terms of how they think, how they act, how they view the future.

Bonsignore: Yeah. Absolutely. I mean, one area that has had a huge impact on it from COVID —because they were at such important formative years, right? Whether they were 13 [years old] or 19 or 21 or whatever it was — is personal relationships. That's been a big sort of shift, and some of that I think was happening before COVID, but it absolutely got accelerated.

So, we see, on a macro level, there are different perspectives that younger generations have towards romantic and personal relationships — so delaying marriage, delaying parenthood, not pursuing those milestones at all — and all of these things come out in shifting values with Gen Z. So, we see things like not just sex, romance and enduring love, but stable personal relationships have declined over time for Gen Z, where they really enjoyed very high placement for millennials when they were at that same early age. So, millennials were very relationship-focused, very, just closely tied to people. Not everything was done through technology.

It's really not an accident that we're hearing more about this loneliness crisis for Gen Z. Some of that was exacerbated by issues beyond their control, like COVID isolation, dependence on technology and social media at really formative times, but I do think there's also something to be said for just who they are being really different, too. They're much more serious. We see that over and over again. More hedonistic values are less common with this group. They're just have matured much more quickly, so there's just a lot more … they just have a lot on their minds, and often that gets in the way, I think, of them investing beyond themselves into all sorts of relationships.

Thorne: That's so interesting. It was tough on … it doesn't matter how old you were during that time, it was tough. But I can't imagine at a formative age the lasting impact that would have on you as an individual and as a cohort. It’s amazing that we all got through it, period.

Bonsignore: Relatively. Yeah.

Thorne: So, you know, are consumers, they do have money now, they're working. What do they like about shopping?

Bonsignore: They're super interesting with shopping, even though — yes, some of them have purchasing power, right — those who are maybe in their early twenties or late teens, and beyond. There's a couple of things that are really important to know about them as shoppers. They want it to be fun and rewarding.

So, Gen Z actually, there's — I'm sure there were some assumptions over the years that they would be much more heavily online-only shoppers, everything's, just through their phone or whatever — but they play a big role in the continued popularity of physical stores. They repeatedly tell us, “I'll maybe go out of my way to see a store I want to go to,” or “I just like to wander around and relax.” They want that sort of in-person thing.

I think a lot of it is a reaction to that COVID isolation, but it's more than that, you know. It's other … it really aligns with other things that are distinctive about them. Despite being more kind of serious and stressed out (I think it may be because of that), they're more likely to say that little treats or indulgences are part of their regular routine, and that is something that comes out through retail.

They are also very easily influenced, too, so regardless of whether it is online or in-store, you know, influencers carry a lot of weight. They get a lot of recommendations and, just, awareness from there.

They do like sort of instant gratification of shoppable posts, and buy buttons or things in-store that really involve technology. But generally, stores are really important to them, and even the relationships with retailers. I mean, we've seen them lead on excitement about private label. Some of that is an economic decision, but some of that is just them feeling like they identify with certain retail brands, and going along with that.

Thorne: Actually, I was just mulling this around, thinking — I was curious as to whether they have a loyalty. Growing up, we had stores that we went to in the South. We always went to Belk. I mean, that was the store. Does this generation have that same kind of a loyalty to a brand?

Bonsignore: They do and they don't. I think there are brands that they might have grown up with that they feel really comfortable with, and might have some inherent trust that isn't based on much more than familiarity. But they also sort of have flipped around a lot of the purchase journey, too. So, they're not necessarily as likely to do a ton of research, and then choose a brand, and then feel good in their research and keep going back to that brand. They might be more impulse shoppers, trying random things, things they see on TikTok or whatever, and then figuring out what they like.

So, there may be a lot of trial going on across brands before they come with something they like. They also have strong values. We talked about social consciousness and sustainability earlier. If they do see brands or retailers that do something that is against their values, that may change their decision. So, I think loyalty is still up for grabs with Gen Z. Their relationship with it, I do think is a lot more fragmented, and not as … the roles are just really different than they were for previous generations of shoppers.

Thorne: One of these days, I'm going to do an episode of Retail Gets Real where we don't use the two letters of the alphabet, A and I.

Bonsignore: Oh, no.

Thorne: However, we're going to use A and I, because this is a group that has been … now A and I (you know, artificial intelligence) AI has really taken off. This is a group that is probably more tech-savvy, more knowledgeable about how to use these technologies to make their lives easier or better. What are they? I mean is that something that they're doing? Their adoption and use — is that kind of bigger and better than anybody else?

Bonsignore: Potentially, but not necessarily yet. I don't think that logic necessarily holds that the younger you are, the more sort of AI savvy you're going to be without exception. There’s some interesting nuances to Gen Z's relationship with technology that we love talking about. In some ways they are much more digitally savvy, and they're much more connected because they just [unintelligible]. But in other ways, there's less that they really grasp about technology because things have always just worked. They didn't live through massive innovations and new types of products in the ways that millennials and younger Gen Xers did.

So, by the time they were born, cell phones already existed, computers at home already existed, internet access, if they're a little younger, like tablets, streaming music, streaming movies — all of that, all of that stuff just has always kind of been available to that.

As millennials started with pagers and an email account they check at school only, and then they had a cell phone, and then they had a smartphone, and then they got an iPod and … You know, it's sort of like they got to see all these new innovations and that's one of the reasons they tend to be more bullish and interested in it. Whereas Gen Z doesn't have that context.

So, what that also means is that they never really had to do a lot of troubleshooting or customization. They just sort of assume that everything is very seamless, and so, I think where that gets closer to answering your question is that they do love the promise of AI because it makes their lives easier. It shortens the time it takes to do things. It outsources some administrative tasks, (whatever those may be) in shopping, or work, or your personal life, to streamline it. So, I do think there is excitement and appeal to Gen Z. I think it remains to be seen what they do with it, and sometimes it may not even be about explaining how it works, it's sort of just using it kind of undercover to improve their experience.

Thorne: I'm so intrigued. Of course, I'm intrigued by AI. I'm intrigued by its impact on the industry that we represent and work with every single day. I have used it. I think it's actually amazing. I know that there's a generation coming that will just … this is the way they operate. But to me, it is something that is really exciting, extraordinary in its value and what it means for the future. Same time, it scares the crap out of me. But how do retailers, now we're talking about AI, how do retailers best reach out or connect with this group of Gen Zers?

Bonsignore: I think at their core (this goes back to a couple of the things we talked about) is they're much more interested right now in establishing their own identity before defining themselves by other roles like family member or partner or worker or even shopper. So, thinking about ways to empower that is really important and keeping them in the equation as the primary focus.

And at a more tactical level when it comes to sort of shopping and patronizing different stores and brands, the experience has to be escapist and enjoyable, and offer comfort from their really serious intense lives. But it also has to be really seamless, and it has to stand for something. I would say those are kind of the three tenets there.

And, just understand that they still do research, but they're also really easily influenced and they are likely to make impulse purchases, and maybe not think through certain things as much as you might be assuming they are because they were still young. I mean, I made a lot of very dumb purchases when I was 23, and I'm sure it was not representative of who I am today as a consumer.

Thorne: Well, I continue to make them. What does that make me?  So, a group of our listeners, as you know, they are Gen Zers. A lot of students listen to this show. What is the best career advice that you would want to share with them?

Bonsignore: So, I think … I answered this question when I was on the podcast last year, and I said [unintelligible] One thing I said last year is, try a lot of things. Just do things. Try things. You never know.

What I want to add to that (separately) is — as important as it is to have bosses who are really good to you, mentors and advocates and sponsors that are above you that can help you out, that can give you advice and perspective — your cohort is just as important. Your peers, the people you do internships with, the people you do group projects with, or have your first job together with, are ideally going to be with you as you go along, and you can help each other out, and you can be the most valuable sounding boards and places for perspective. It's not just about people who can be more senior, and get you somewhere. The people who are your age can provide you with endless value as well.

Thorne: So interesting that you say that, Rachel, because we just finished our internship program for the summer at the National Retail Federation, and as I looked at this particular group of interns, it seemed to me that they really counted on each other a lot in terms of asking the right questions or looking to each other for advice or, you know, what they're going to do, or where they're going to eat.

I mean, it was just, you always see it, but it just seemed to me it was a lot more (this is, it sounds like it's demeaning, but it's not) they were like ducklings. I mean, they just, they just ran around in a pack, but they were having fun, and they were laughing, and they were joking, and they really, really bonded incredibly well, so I think you're exactly right.

I mean, everybody always says, “Oh, get yourself a great mentor” and “listen,” and … but I do agree with you that I think it's incredibly important to draw knowledge, experience and kind of a sense of worth from your cohort, from your friends, from the people that are your age that are going through the same things that you are. You can learn a lot from it.

Bonsignore: Absolutely.

Thorne: Rachel Bonsignore, it has been such a pleasure talking with you, and I would say, until next time. But I know there's going to be a next time, so I'll see you next time. Thank you for joining us today on Retail Gets Real.

Bonsignore: Thank you so much for having me.

Thorne: And thank you all for listening to another episode of Retail Gets Real. You can find more information about this episode at retail gets real dot com. I'm Bill Thorn. This is Retail Gets Real. Until next time.