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Generation Z: capturing a £16.5bn market


Young shoppers demand authenticity and constant newness – and the brands that deliver it are reaping the rewards.

Fickle, demanding and welded to their phones – the stereotypical view of young consumers is not a flattering one. An Accenture survey published in March found that Generation Z shoppers, which it defined as those aged 20 and under, do not have strong brand loyalty, so competition for these digital natives is fierce. Nevertheless, retailers such as Asos, Missguided and Boohoo, and footwear brands Public Desire and Ego, are riding high with customers in their teens and early twenties, building vast social media followings and posting soaring sales.

Appealing to the youth market is no guarantee of success, however. Although analyst Mintel reported that it grew by 1.8% to £16.5bn in 2016, that growth is expected to slow as younger consumers spend less on fashion and expect more discounts. And last month, Abercrombie & Fitch announced a fifth consecutive quarter of falling sales, while American Apparel entered administration in the UK late last year. Nonetheless, as the fast fashion pureplays have proved, the sector can deliver huge results.

You have to show this demographic something new

James Gold, Skinnydip

“Our ability to react to trends has been a key reason for our growth,” says James Gold, co-founder of accessories brand Skinnydip, whose demographic is aged 16 to 24. “If something goes viral online, we have to capitalise on it – for example, when Beyoncé dropped her Lemonade album [in April 2016], everyone wanted Lemonade products and we got them out three and a half weeks later. Our customer wants things now, not in 12 to 14 weeks.”

Retailers in many sectors are constantly battling to keep their customers interested, but Gold argues ongoing stimulation is particularly important for younger shoppers.

“Today’s 21-year-olds check their phones hundreds of times a day, and they don’t want to see the same thing, so we post three or four images online a day. You have to show this demographic something new. We only repeat 10% of our staple lines. The ‘New in’ page on our website is the most popular by a country mile – it gets three times the number of clicks [of the next most popular page].”

Herschel supply spring 17

Herschel supply spring 17

Herschel supply spring 17

Another brand that aims to appeal to consumers in their late teens and early twenties is fellow accessories label Herschel Supply Co, which concentrates on the 15-to-25 market.

“This segment of consumers is the most important to us, because we feel that they are the most connected,” explains global marketing manager Mikey Scott. “Consumers in this age bracket grew up inside a changing media landscape and are receiving information faster than ever before.”

He argues that younger consumers are looking beyond product for “authentic” brands and experiences that chime with their own interests or values: “These consumers are looking for authentic brands that stand for something they can relate to. The times when brands could just make a product and succeed are long gone. Today’s consumers gravitate towards story-telling and exciting ideas that companies bring to life, in addition to product.”

Gold agrees: “There’s a misconception that when you’re young, you aren’t brand loyal. These customers are always looking for the next trend, so I can see there is an element of that. But if you can provide great product and engaging content, this sector can be loyal – you need to give them something worth being loyal to.”

This need for authentic experiences stretches into how brands and retailers talk to young consumers across social media platforms, Scott argues: “[Herschel] waited to join social media until we felt that we had a strategy where we could deliver something new that would represent our brand. We were successful with user-generated content through our #welltravelled campaign.

“As influencer marketing becomes more popular, it’s getting harder for consumers to spot which [influencer content] is authentic.”

We had to think – does this sound like somebody a teen would take advice from?

Sotos Georgalli, Moss Bros

Retailers are changing the ways in which they communicate with younger shoppers. Moss Bros upped its focus on younger shoppers aged 15 to 18 with its new “Prom Father” campaign earlier this year. Designed to speak to shoppers who may never have bought or hired a suit before, the Prom Father offers advice on everything from what to wear, to styling, and even how to iron a shirt.

Moss bros prom father

Moss bros prom father

Moss Bros

“We’ve seen the prom market grow year on year,” says Moss Bros brand and creative director Sotos Georgalli. “We wanted to create a character that would appeal to that generation. We created WhatsApp groups so we could have input from teens on everything from casting the campaign to the script.

“Our point of difference is that we have tailoring experts in store, so we wanted to take that expertise and create a persona a 15-year-old would understand. We had to think about how he would speak, whether he sounded relevant – does this sound like somebody a teen would take advice from?”

The way younger consumers shop is changing, too. Accenture’s research has found that Generation Z have distinct shopping habits, even compared with their older millennial counterparts. More than half of Generation Z respondents in the UK are either already using or willing to try voice-activated ordering; more than two-thirds are interested in purchasing via social media; and three-quarters would use subscription fashion services, compared with 45% of older millennials.

“We’ve seen huge developments in voice-activated technology, such as Amazon’s Alexa and Apple’s Siri,” says Jill Ross, managing director in Accenture’s customer and channels practice for retail. “To some young consumers, the concept of texting is quite alien – it’s more about talking to your friends over Snapchat and using the power of voice for a frictionless experience.”

Staying relevant to consumers from their tweens to early twenties is no mean feat. Retailers and brands who communicate well, produce authentic stories, seize change and capitalise on the demand for newness are the ones who will come out on top.

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