Critical and decisive consumers such as Generations Z and Alpha with their heightened technology and drive for advocacy are seeking business enterprises that are creating strategies that focus on value orientation.
These two next-in-line generations are also the future workforce and as such, businesses especially retailers, should be prepared to future-proof their operations, products and services for the purpose-filled Gen Zs and the open-minded Gen Alphas.
During her talk at the 29th National Retail Conference and Expo on Aug. 11, Pauline Gatera-Fermin, president and chief executive officer (CEO) of Acumen Strategy Consultants, explained the relationship of technology among the two generations wherein the internet has existed from the moment they were born.
Gen Z encompasses people who were born from 1996 to 2010 or ages 14 to 27 years old, and are currently in high school, college, or entering the workforce. Meanwhile, Gen Alpha includes children born from 2011 to present day, ages 13 years old and below.
According to Acumen's Decoding Division Generation Study, 100 percent of Gen Z use the internet daily, with 59 percent using it for four hours or more every day. About 45 percent have said they are easily bored when they are not online.
For Gen Alpha, 57 percent in developed markets own tablets while 72 percent of them use the internet for more than an hour, and 32 percent use it for three or more hours.
Gatera-Fermin said the omnipresence of wifi, digitalization, social media, and devices in their personal lives continue to influence their behaviors, how they interact with the world, and how they approach commerce and businesses.
"Relative to all of us here, Gen Z and Gen Alpha are young, but important for us to plan for as we think about the future of our businesses," she said.
Value-oriented business
Among the similarities between the generations, Gatera-Fermin noted that both Gen Z and Alpha have experienced the internet as an indispensable tool for acquiring information, learning, and sharing insights. The interconnective aspect of the internet and technology have exposed these generations to a myriad of perspectives and issues globally.
Aside from the internet as a primary accessible and connective platform, the internet experience for Gen Z has driven a passion among them to "enact change and pursue social impact careers," especially influenced by social media.
Gatera-Fermin explained that this indicates Gen Z's "sensitivity to deception and false appearances."
"Gen Z critically values authenticity. They are skilled at detecting when content and games seem too good to be true, or when actions are just for show. Gen Z wants to leave the pretenses behind the door," she said.
In order to attract this demographic, Gatera-Fermin advised retailers to "clearly establish what your business stands for; seize opportunities to innovate new merchandising and digital solutions to achieve deeper storytelling in stores and online; and ensure flexibility and responsiveness of assortment and offerings using the right mix of brands and products aligned with Gen Z's current interests."
"Gen Z needs businesses to be real. This means that businesses should think critically about which issues they will or will not engage with, and establishing a clear stance that is consistent with their brand and business story," she added.
By 2025, 27 percent or about one-fourth of the global workforce will be Gen Z, which makes it equally important for businesses to consider how to position themselves as employers for future generations.
"Gen Z is powered by purpose. As such they are attracted to businesses that share similar values, and clearly demonstrate how we do so," Fermin said.
On the other hand, Gen Alpha's usage of the internet is "anchored in education, exploration and world building," wherein technology serves a clearer and more purposeful role.
Gen Alpha are not the main decision-makers in consuming products and services, but they are influenced by their Gen X or "Millennial" parents who have taken a more "empowering approach" towards their children in developing their autonomy and critical thinking.
Gatera-Fermin noted that while Gen Alpha's identities are still developing, early signs indicate an open minded trait among them, particularly since parents are actively engaging with children in conversations about the benefits and risks of the internet, along with social issues like mental health, race/racism, and climate change.
For Gatera-Fermin, retailers should "develop products and services that align with parents' attitudes and goals since Gen Alpha's parents are important gatekeepers that businesses need to engage when it comes to delivering experiences and communication with children."
'Critical' Gen Z
Aside from the value aspect where Gen Z are seen to take a more principled approach in choosing to engage with businesses, Gen Z were noted to be more conscious spenders.
"Hand in hand with being more calculated in their purchases, Gen Zs are very conscious of their spending. In developed markets, credit card ownership by Gen Zs is currently at par with other generations, however, less than 1/3rd of Gen Z credit card owners have credit card debt," said Gatera-Fermin.
"Gen Z spends more time thinking about their purchases than other adults. But they are also enthusiastic about trying new brands, topping other adults, in nearly every category except for home purchases and personal electronics," she added.
Retailers were urged to "develop rich touchpoints that enable seamless hand-offs throughout Gen Z's prolonged purchase decision journey; and showcase the unrivaled benefits of your product or service to capture a share of Gen Z's intentional spending."
Gatera-Fermin explained that Gen Z are the types of shoppers that have mulled over decisions on what to buy before they even enter the store.
Thus, "businesses need to make that final push to convince themselves of what they want and need," she said.
This includes optimizing their layouts and redesigning their spaces to be inviting and allow shoppers to dwell in greater depth and discernment.
'Decisive' Gen Alpha
According to Gatera-Fermin, the focus of the internet on world building and collaboration may lead Gen Alpha to "emerge as decisive fields with a clear perspective of what they like and desire."
During their free time, children have been engaging with online games that emphasize design and interaction. About 43 percent of children worldwide have played Roblox in the past month, and 58 percent have played Minecraft.
Moreover, in a recent study of Gen Alpha parents, 67 percent of parents with children five to seven years old have discussed the topic of spending; 60 percent have talked about savings and budgeting; and 49 percent have discussed how to make payment transactions in store with children.
Gen Alpha will also expect higher speed information, businesses to be present across multiple platforms, and have consistent experiences across all devices.
To prepare for this, retailers must invest in digital transformation and increase technological capabilities and infrastructure, Gatera-Fermin stressed.
She added that business can also build brand recognition and relationships early in the spaces that Gen Alpha occupy, particularly online, such as utilizing "kidfluencers," collaborating with games, apparel, and food items among others.
Retailers are also encouraged to create engaging experiences in-store, while ensuring that their digital content inspires parents and children to visit and explore the store together in order to intensify Gen Alpha's influence and power.
Gatera-Fermin said that a balance of the "phygital" or the combination of the physical and digital worlds is essential for businesses and retailers to thrive in the future, and to continue catering to the future generations.
"Future proofing our businesses as two generations mature into a new wave of consumers and employees will require change and purposive effort," she remarked.
"However, we believe that all businesses and brands can effectively capture their attention, loyalty, and love with the right moves and initiatives," Gatera-Fermin added.