Dive Brief:

• Generation Z could have an estimated $143 billion in spending power, and their spending habits, which are driven by mobile and experiential shopping, have major implications for retailers, according to research from market intelligence firm Numerator.  
• When it comes to advertising, members of Gen Z are more engaged with mobile devices and social media than millennials, but Numerator, drawing on data from its omnichannel shopper panel of more than 500,000 consumers, found that retailers such as Amazon, Kroger, Target and Sam's Club are relying on online display advertising and overlooking mobile and social. Brands that are resonating with Gen Z include Kit Kat, Cheetos and Powerade.
• With 4 million members of Gen Z entering adulthood each year, retailers should start considering them in marketing efforts, Numerator said. Key social media platforms to target include Tumblr, Snapchat and Twitter, while Facebook and Reddit have shown a decline in popularity for this demographic.

Dive Insight:

For the past several years, retailers have buzzed about millennials and how to capture their dollars and win their loyalty. But Gen Z is coming of age, and they hold major buying power.

As smartphone natives, Gen Z relies on mobile devices to research products, engage with brands, discover new items and make purchases. For retailers, the key to capturing their dollars will be through social media marketing and mobile apps.

But mobile shopping isn't the only way to go for Gen Z. Findings from Numerator show that e-commerce only accounts for 7.4% of Gen Z spending, and many still shop in stores. While they may be spending more time on smartphones, they are looking to build relationships and find interesting experiences, too.

Tactics such as influencer marketing and mobile apps that aid in-store experiences could be smart approaches to attract Gen Z attention in stores and via mobile. Numerator also noted that Gen Z shoppers are more likely to make impulse purchases, which makes in-store experience and well-placed mobile advertisements an important marketing component to capture sales.

Another notable finding from the report is that members of Gen Z are 43% less likely to be concerned about healthy eating than their millennial counterparts. This could be eye-opening news for grocers that have been scrambling in recent years to revamp their offerings to focus on healthy, natural foods. Many grocers have invested in rolling out private label lines that are organic and lack artificial ingredients, and others have upped their fresh assortment.  

Gen Z tends to prefer value-focused retailers such as Food4Less, and are less likely to shop at natural and organic retailers like Whole Foods and Sprouts Farmers Market compared to millennials. Interestingly, though they seek value grocers, Gen Z is also less likely to shop at private label retailers including Aldi’s and Trader Joe’s that often provide lower prices. Overall, Numerator found that Gen Z shops less frequently, spending less per trip on smaller baskets than millennials.

Fortunately, mobile apps have become a strong component of many retailers’ marketing efforts, which should help them reach Gen Z shoppers. Roughly 18 million adults are already using Walmart’s grocery app, reflecting a 50% jump from 2017. Kroger launched mobile offerings back in 2010, and Albertsons unveiled its Just For U app in 2016. A number of other retailers have launched mobile apps and are regularly updating them for better performance and quicker adoption among shoppers. 

Grocers have improvements to make if they want to capture spending from Gen Z, especially as the generation gains more purchasing power. The challenge for companies will be striking the right balance to meet the demands and preferences of multiple generations of shoppers.