Born between the mid-1990s and the early 2010s, Gen Zs are digital natives with spending clout. They are children of the Great Recession and have come of age glued to social media and gripped by a world in turmoil, deeply aware of social justice and environmental issues, and the impact of the global pandemic. They also build communities around what’s most important to them.
And that’s the key. For brands and retailers who want to tap into this generational cohort, community building, having aligned values and being “purpose-driven” are essential. Donna Dozier Gordon, head of inclusion and diversity at H&M USA, said younger consumers “are incredibly engaged about the issues that matter to them. They weigh decisions about companies they engage with based on alignment with their own values.”
David Sykes, head of North America at Klarna, the leading global payments and shopping service, said Gen Z “has grown up in the shadow of the Great Recession and confronted climate change-related catastrophes and a global health crisis.”
“So, it’s no wonder this group is looking to join like-minded communities to drive meaningful change not only for themselves, but for future generations,” Sykes said, adding that Gen Z has been in various stages of a pandemic-induced lockdown for over a year and, as a result, have had “plenty of time to evaluate and consider what’s important to them.”
“When it comes to their shopping preferences, they’re interested in supporting companies and brands that share their values and vision,” Sykes said. “In Klarna’s 2021 Reopening Report, we found that 70 percent of U.S. consumers within this demographic said they shop more sustainably now compared to pre-pandemic. In fact, sustainability is the top shopping consideration for nearly one out of two (48 percent) of Gen Z consumers when they’re shopping for outdoor items.”
Sykes said these young shoppers are also “prioritizing their health and the environment and prefer to support brands that use natural and nontoxic ingredients. Companies looking to engage with this audience need to not only offer value in their products, but they also need to define their values and prove that they’re walking the walk, not just talking the talk.”
Jill Standish, senior managing director and global lead of Accenture’s Retail industry group, echoed the sentiment of Sykes and Dozier Gordon. Standish said the pandemic “has very much reinforced Gen Z’s mission to drive positive change in their communities. Our research over the past year showed that 50 percent of Gen Z will buy from brands that put purpose before profit and do the right thing for its customers and employees, while 66 percent of survey respondents said that they believe that COVID-19 will increase societal focus on the environment.”
Standish said research showed that 62 percent of respondents indicated that the pandemic “will increase personal focus on climate change and how individual (my) actions impact the planet — suggesting a link — they think about their health in tandem with the health of the planet.”
Peter Semple, chief brand officer for DePop, said Gen Z “has a set of incredible challenges facing them — several of which are directly related to social and environmental issues.” But they may be more adaptable at addressing these issues as compared to other generational cohorts. Semple said the company’s Gen Z research report with Bain & Co. “determined that through growing up in an era of ubiquitous digital technology and an unmatched rate of change, their generation has developed an interconnected and fluid way of processing the world, rather than digesting it through a binary framework.”
“In fact, 70 percent of Gen Z believe they can be part of a social movement even if they participate only through social media and, therefore, their personas on social media tend to stand out for being more authentic and spontaneous — and less filtered and curated,” Semple said.
So, as a merchant or brand, how do you market to and engage Gen Z? As previously noted, a good place to start is aligning with their values. That takes commitment, and hard work, and, as Dozier Gordon said, requires “taking action in the community.”
Sykes said with a collective spending power estimated to be up to $323 billion, “Gen Z is investing its dollars in brands that back the causes and initiatives that matter most to them.”
“They’re looking to connect with brands that create communities based on their shared passions and interests, Sykes explained. “Because Gen Z’s path to purchase begins online — most commonly on social media — brand storytelling is essential. Retailers need to let Gen Z consumers know that their values are aligned.”
Flexibility and agility should also underpin your brand’s merchandising and marketing strategy with Gen Z shoppers. Sykes said Klarna’s recent Reopening Report found that 80 percent of shoppers “say they now have a greater preference toward shopping online,” which underscores the importance “of offering a truly omnichannel experience.” There are nuances, though, with Gen Z preferences.
“While browsing and buying digitally once felt like a solo act, Gen Z is interested in making it more of a group activity,” Sykes said. “Platforms like livestream shopping are of interest to this group. With that in mind, and aligning with Gen Z’s penchant for health and self-care, Klarna and its retail partner Beautycounter, the leader in safer skin care and cleaner cosmetics, just launched a four-episode livestream series to offer insights, tips, tricks and techniques for a cleaner and better beauty routine.”
Natasha Fishman, chief communications officer and executive vice president of marketing at Authentic Brands Group, said for its Forever 21 and Aéropostale brands, it is important to cater to “trend-driven consumers, particularly Gen Z. Each brand is intentional with its focus on supporting organizations and movements that resonate with and relate to their respective audiences.”
For example, Fishman said Aéropostale is committed to its ethos, Aero Oneness, “which inspires young people to come together to build a brighter, more inclusive future.” The teen brand understands that mental health can be daunting, “particularly for young adults, who are facing intense life challenges,” Fishman said.
Subsequently, Aéropostale partnered with The Jed Foundation to support and safeguard the emotional well-being of the community. “Collaboratively, we guide meaningful conversations, share real-life experiences from our #AeroWorld ambassadors on social media and offer self-care tips and tools to help young adults confidently cope with challenges,” Fishman explained. “Jed ensures young adults and teens have the resources needed for a better future through the relationship, Aéro nurtures positive emotional and mental health.”
Aéropostale has been partnering with The Ali Forney Center, which is dedicated to protecting homeless youth in the LGBTQ community, Fishman added. At Forever 21, the brand is positioned as an inclusive, optimistic and empowering brand “that celebrates the individuality of its shoppers and associates.”
“With a commitment to diversity and inclusion, Forever 21 has partnered with Boys & Girls Clubs of America,” Fishman said. “The partnership was established in 2017, Forever 21 has worked hand-in-hand with Boys & Girls Clubs of America to support programs that drive equity and opportunity for underserved youth. The brand recently announced that its latest back-to-school campaign, which encouraged shoppers to round up their purchases to the nearest dollar, raised over $2 million.”
Gen Z looks to brands to foster community and connection.
At H&M, Dozier Gordon said the retailer has been “actively engaging with our communities in various ways, such as our support of the Voting Rights Advancement Act as well as the HRC and ACLU in opposing anti-LGBTQ and anti-trans legislation, to name just a few.”
“Our ongoing partnerships with groups like the Marsha P. Johnson Institute, the Trevor Project and Buy From a Black Woman allow us to not only support these groups, but use our stores and footprint to amplify the work being done by these organizations and communities,” Dozier Gordon said. “A perfect example is our sponsorship of the Buy From a Black Woman Inspire Tour this past July, where we hosted pop-up shops in our stores for Black Women-owned businesses across the country. Empowering our communities brings H&M’s values to life and shapes the legacy we will leave.”
DePop’s Semple said since Gen Z makes up a significant percentage of active DePop users and sellers, “it’s vital for our teams to maintain a strong sense of connectivity to their perspectives and values.”
“That way we can actively find ways to communicate with our community by celebrating them, helping them to grow and develop their DePop shops and businesses, and generally speaking, just being in conversation with each other,” Semple said. “We have an entire seller team at DePop dedicated to interacting with the seller community to better understand and service their needs.”
Semple noted that Gen Z is also passionate “about a lot of the same things we are: individuality, creativity, diversity and sustainability. They will determine the future of fashion and change the entire industry — therefore, constant dialogue, activity and conversation is vital to keeping our community engaged and excited by all the possibilities on DePop.”
Marcie Merriman, EY Americas Cultural Insights & Customer Strategy leader, stressed the importance of building trust while brands engage in community building. “Humans look for support and community in times of crisis,” Merriman said. “While Gen Z is hungry for this, rising distrust has made it increasingly difficult for them to make the connections. Brands can win by focusing on enabling and building trust, which is a prerequisite for community and connection.”
For example, just talking about what a brand stands for does not build trust. “Gen Z expects brands to show what you stand for through your actions,” Merriman said. “How are you actively improving the lives of others? This level of transparency is the expectation of Gen Z and a baseline requirement for any level of trust that can build community. Anything short of it can actually be net-negative.”
Merriman said authenticity is critical to connecting with Gen Z. “They want to be recognized for who they are — and want others to have this same freedom,” she said. “Brands can foster community by living up to this same standard. Gen Z can smell a fake a mile away. Success requires a deep connection with your brand’s mission and purpose and relentlessly pursuing it internally and externally.”
Joel Bines, global coleader of the retail practice at AlixPartners, agreed with the need for authenticity. “Retailers win when they build an authentic community around a set of values, a spirit or a lifestyle – not just around products,” Bines said. “And that’s especially true for Gen Z consumers, probably the most digitally connected generation ever. Enabling consumers to connect with others who share a similar ethos — either digitally or in-store, or both — can empower consumers to share their stories and tie them closer to the brand.”
Bines cited Postmark’s Posh Stories as an example, which “creates a digital community where users can post videos, photos and text about their ‘finds,’ and weave in and out of other community members’ stories.”
“Creating community is a winning formula when retailers do it authentically and empower consumers to feel a part of something bigger than their selves,” Bines said.