Generation Z is coming of age. They're entering the workforce and becoming part of the economy. And that's driving many retailers to change their focus to meet their expectations. Generation Z has grown up with eCommerce, and they expect certain things to be on-demand. They also expect more of their retailers, in terms of sustainability and ethical production.
Here's what you need to know.
Who Are Gen Z?
Gen Z encompasses consumers who were born between 1995 and 2015. As of 2019, Gen Z is anywhere from 4 to 24 years old, and 18 to 24-year-olds represent a powerful consumer demographic. Gen Z is distinct from the millennial era, which in turn was distinct from Gen X. As a consequence, consumer shopping habits are changing, and new supply chain trends are emerging with them.
Online Shopping and On-Demand Products
Gen Z has grown up with two-day and same-day shipping. Most of Gen Z is used to purchasing things online — even local goods. Gen Z is able to order food from their phone, or even order a taxi through an app. Thus, this generation is far more accustomed to on-demand purchasing. Products need to be delivered fast, and without any type of human interaction. Going into brick-and-mortar stores is becoming rare.
This has driven many companies to engage in last mile shipping services: rather than shipping to stores, more companies are having to ship directly to consumers. For many, this radically changes and complicates the company supply chain. Many companies have started using resources such as Amazon FBA (Fulfillment-by-Amazon) as a way to offload these last mile shipping needs.
For many companies, the need for faster, on-demand shipping, and direct-to-consumer shipping means that the supply chain needs to be managed with even more care.
Ethical and Sustainable Spending
Generation Z is more likely to purchase items based on how ethical, environmentally-friendly, and sustainable the company is. That's driving many changes within the consumer market, particularly when it comes to the way that things are shipped.
Many products are being shipped in more sustainable ways, with some products being shipped without an exterior box, and companies such as Amazon trying to reduce the amount of packaging materials that they use. In general, Gen Z doesn't like to see a significant amount of packaging.
Plastic is also out of favor, with an emphasis on renewable, sustainable, and biodegradable materials. All of this has changed the supply chain market considerably, as companies work to find better and more sustainable methods of shipping and creating their products.
Individual and Unique: The Trends Driving the Consumer Market
In general, Gen Z tends to look for items that are more unique and individualized, and this is creating issues with the consumer market as a whole. Gen Z looks for items that don't define them, but instead, looks to define their items by themselves. This is increasing purchasing of bespoke, ethically sourced goods rather than generic mass market products.
Understandably, this also complicates the supply chain, because a wider breadth of product needs to be procured and distributed. Rather than being able to purchase large amounts of single SKU, companies now need to devote themselves to a larger inventory of SKUs. This, again, requires improvement and optimization. Managing more products naturally complicates the entire supply chain, end-to-end.
The Inherent Contrast and Conflict of Gen Z
So, we see that Gen Z is interested in unique and undefinable products, but Gen Z is also interested in being able to purchase these products quickly and on-demand. This often leads to companies creating bespoke or unique products that nevertheless need to ship very quickly, transitioning small businesses and local businesses into on-demand e-tailers.
For larger companies, the issues are more direct: Gen Z isn't interested in operating with unsustainable, big box retailers. Large stores are seeing failing metrics for this reason. Companies are going to need to find ways to ethically source and ship their products if they're going to continue to sell to this more aware, environmentally-conscious generation.
Of course, retailers want to attract Gen Z, but also can't risk losing the other generations. There's still a market for mass-produced goods, even if that market is aging. Thus, many retailers need to focus on multiple demographics at once and need to split their focus between them. These new supply chain trends require superior supply chain management: the ability to easily track supply and demand through vastly different audiences and produce accurate forecasts and projections.
Gen Z is steadily gaining buying power, and retailers will ignore these consumers at their own peril. At the same time, such a youthful generation is also likely to change and evolve. Retailers will need to remain agile, creating flexible systems that can adapt swiftly to changing demand.
About Michael Wilson
Michael Wilson is AFFLINK'S Vice President of Marketing and Communications. He has been with the organization since 2005 and provides strategic leadership for the entire supply chain team. In his free time, Michael enjoys working with the Wounded Warrior Project, fishing, and improving his cooking skills.