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A Generation Without Borders Us
A Generation Without Borders Us
without borders
Embracing Generation Z
In partnership with
uncommon sense
03 Introduction
08 Think global
12 Focus on experience
16 A
ppeal to sustainability and
social justice
18 What next?
THE GENERATIONS
Silent Gen Baby Boomers Gen X Gen Y/Millennials Gen Z Alpha Gen?
Broadly defined as those born in 1998 and after, this But what does this mean for retailers? In little over a
group already makes up 30% of the global population decade, Generation Z will account for a third of all
and circa 50% in parts of Africa. consumers worldwide – presenting vast opportunities
for businesses. Spending ~$450B, this group already
Members of this demographic grew up, or were born into, accounts for almost 4% of total household spend in the
an era defined by political and economic turmoil. And US, even though the vast majority are teenagers or even
while the US and the rest of the Western world struggled, younger. At the moment, Gen Z’s spend over-indexes
this generation also witnessed the rapid development in technology (e.g. their mobile phones and media
of the BRIC nations and, more specifically, China’s subscriptions) and clothing, with Gen Z in China, Brazil
transformation from ‘third world’ to the next potential and Turkey accounting for more household spend than
superpower. their Western peers.
Turkey 8%
Welcome to Generation Z. 6% 2%
Poland 5%
3% 2%
Italy 5%
3% 2%
France 4%
3% 1%
Germany 4%
3% 1%
USA 3%
2% 1%
UK 3%
2% 1%
1.
Direct spend: Gen Z spending their own money (either earned or money received
from parents/guardians/relatives, e.g. allowance/pocket money)
2.
Influenced spend: household spending where Gen Z influences either the amount
spent or the items bought (i.e. can be items not bought specifically for Gen Z)
WHY GEN Z ACCOUNT FOR MORE Source: UN; World Bank; CEIC; National Bureau of Statistics of China;
OC&C Gen Z Survey, August 2018
HOUSEHOLD SPEND IN DEVELOPING
ECONOMIES
Purchase Criteria
27%
20%
Example
Question
Which of the
17% following
elements are
most important
15% to you when
buying clothes?
STEP 1
CHOOSE YOUR AXES OF SEGMENTATION
Traditional segmentation axes – usually along lines of
geography, age, purchase behaviors and affluence –
are increasingly less relevant for this global generation.
New axes, fueled by the internet and social media – value
sets, influence groups, experience types or even celebrity
following – cut through the traditional axes. Though as with
traditional segmentation, the ‘global segmentation’ should
reveal consumer groups with distinctive purchasing habits
and brand preferences to make them actionable.
STEP 2
ADJUST YOUR OFFER FOR YOUR CHOSEN
SEGMENTS
Understanding and defining the right segmentation for
your industry can prove critical in developing and nurturing
your brand, but the real power of the global segmentation is
in adjusting your products and messaging to make them
most relevant for your chosen segments. Retailers such
as Nike and H&M are able to respond to different ‘tribes’
around the world through rapid reactive production as they
identify consumer requests at the global level, as well as
adjusting their tone of voice as they seek to engage those
different tribes.
STEP 3
REVISIT YOUR SEGMENTATION REGULARLY
Given the fluid nature of global segmentation dimensions,
it is important to review and update your segmentation
regularly, much more so than for the traditional axes.
The desire to feel unique informs what Gen Z want from This is not to say that Gen Z are less willing to support
retailers, with high demand for bespoke and limited edition mainstream brands, but rather that they will support them
compared to prior generations. When it comes to choosing for different reasons. Whereas prior generations might
products and brands, Gen Z consumers look for clothing, gravitate toward major brands due to trust and reputation
accessories and even groceries that are unique or unusual. alone, Gen Z expect brands to also provide an outlet to
broadcast their individual identities and values.
One way in which US Gen Zers differ from the global
cohort is in their view of mainstream brands. Globally,
Gen Z express a stronger preference for well-known
brands than prior generations, while in the
US Gen Z report less of a preference than Millennials or
even Gen X. This may reflect a US-specific trend wherein
Gen Zers seek to express their individuality by identifying
with more niche brand-names.
ACTION POINTS
STEP 1 STEP 2
IDENTIFY WHAT YOU AIM TO CHOOSE YOUR ‘UNIQUENESS’
ACHIEVE BY DIFFERENTIATING MODEL
YOUR BRAND(S) There are a number of different models to
The benefits from investing in ‘just unique consider, including:
enough’ are not just attractive, they’re ‘One of a kind’ – Genuinely individual, ‘one-
• • C
ollaborations / limited editions –
critical: off’ products and services allow consumers Through limited edition ranges and
• Increase consumer loyalty through to feel truly unique. There are different partnerships, mainstream brands
products that speak more clearly to individuality dimensions that brands can can appeal to the Gen Z desire for
consumers consider when delivering ‘one of a kind’ at independent, unique products with less
scale – from changes to fit or color through radical changes to their proposition.
• Decrease price competition, as products to packaging and even customer support. Clothing brands such as H&M have
have reduced comparability made collaborations a cornerstone of
• P
ersonalization – Letting the consumer
• Power your online business, as their product strategies. In particular,
guide the product aesthetic or specifications
websites and mobile apps are natural luxury collaborations (Moschino, Erdem,
makes them feel more individual while
personalization tools Kenzo and Balmain have all collaborated
delivering a more intimate brand
with H&M in recent years) allow
• Gain better consumer insights, as you experience. Nike, one of Gen Z’s favorite
consumers to access not only limited
understand the degrees of uniqueness brands, allows consumers to customize their
edition products but covetable designs
that consumers want. own sneakers through their NikeiD offering.
that they might not normally be able to
The online customization tool has been a
afford.
key element in growing their D2C channel.
of brands I love!
% identifying the statement as “Very important”
my style.”
Male, 16, US Creating unique content (video, photo, blog, other writing or art)
+12%
7% 13% 15% 19%
+7%
11% 17% 14% 18%
+10%
5% 12% 14% 15%
STEP 3
MODIFY YOUR OPERATING MODEL
Across your value chain, there are a series of questions to address in order to ensure you deliver scale
customization without damaging your underlying economics.
• How will you design • How will you personalize • What is the right channel • How will you communicate
one-of-a-kind products? within traditional to sell to your consumers? ‘individualism’ to multiple
manufacturing consumers?
• How many choices will • What is the right inventory
processes?
your consumers want? strategy?
• How will you cope with
product returns?
Their predecessors may have coined the phrases FOMO and YOLO,
but Gen Z are even more intent on choosing experiences over
products than Millennials. 18% of Gen Z respondents strongly agree
that they “would rather spend money on experiences than products”
– amounting to an increase vs Millennials of 1-2 % pts in the US,
and as much as 4-5% shift in Germany.
of my comfort zone
have shaped my
character most.”
Female, 17, US
18%
Gen Zers who favor experiences…
Average number of channels used for research Gen Z vs average of three precedent generations (%pts)
# Sources (Online and offline channels)
Brand app 2
Online media2 1
Search engine 0
Brand offline -1
Brand website -3 1.
Thinking about your most recent clothing purchase,
what did you use to research the product or check prices?
Online multi-brand website -5 2.
Online news sites, magazines, blogs
3.
Newspapers and magazines
Baby Boomers Gen X Millennials Gen Z Source: OC&C Gen Z Survey, August 2018
ACTION POINTS
STEP 1 STEP 3
INVEST IN BRAND-SPECIFIC HARNESS DIGITIZED PEER-TO-
ENGAGEMENT PLATFORMS PEER SOCIAL SELLING
It’s no longer enough to get your product The new wave of peer-to-peer selling Beauty brand Glossier launched in 2014
on store shelves or in Amazon search results is fundamentally different and more as a spin-off to a successful beauty blog.
– to stand out from the crowd, you need to powerful than in the pre-social network era. They added a P2P sales rep program
develop digital content and spaces where Digitization has made this channel: in 2017, and plan to further emphasize
customers can interact and participate with social selling with a website that will blur
• M
ore efficient – Social sellers have instant
your brand, and share their opinions and the boundary between social media and
access to their entire on-line network,
experiences with each-other: ecommerce:
and are no longer limited by time and
• Hair and beauty retailer Sephora has geography • Rodan & Fields transitioned to an
succeeded with this strategy by building almost entirely peer-to-peer selling
• More two-way – Social selling activity
an active online community with sub- model in 2007 which it has since
is no longer just a way to reach a wider
groups for members to join conversations digitized: it now promotes before-
audience, but also an instrument to
relevant to their own interests (e.g. ‘acne- and-after posts from sellers on its
gauge customer needs and feedback,
prone skin’ or ‘frizz fighters’), share and social media, equips its sellers with
enabling faster and more dynamic
receive advice, and get inspired. e-commerce websites. This strategy has
product innovation
grown revenue to over $1.5B in 2017,
STEP 2 • More centralized – P2P selling no longer up from just $3M ten years earlier.
CULTIVATE INFLUENCER ALLIES TO entails surrendering the customer
ADVOCATE FOR YOUR BRAND relationship. Brands can now capture as
much or more customer data as could
Social media is a powerful tool for finding
be generated by more traditional, direct
the personalities that your customers look
channels, and can maintain contact even
to for inspiration and allying with them
as the peer-to-peer sales force changes
to promote your brand. “Super fans”
and evolves.
were always important, but their power
has been amplified through social media
platforms that give their message
a broader reach.
• Fashion Nova, considered by Google’s
Year in Search to be 2018’s top fashion
brand by number of searches, sells
almost entirely through social media:
its Instagram following exceeds
14 million, and it works with a network
of over 3,000 influencers.
Testing a range of ethical issues showed equality, human As socially conscious consumers, Gen Z have high
rights, animal welfare and diversity to be the most important expectations of brands to respect and even advocate the
to Gen Z overall. Our data also reveals national differences causes they identify with. Furthermore It’s increasingly
that appear to directly reflect the political climate of the easy for Gen Z to be informed consumers too: they are
country. In China, Gen Z are more concerned by human willing and able to research brands’ supply chains and
rights issues, while American Gen Zers (the most racially employment practices, as several brands have discovered
and ethnically diverse generation in the US) are more (to their detriment), so sincere support for social justice
committed to solving diversity issues. issues, backed up by real investment and action, is key.
Safety of my neighborhood 14 0
Purchasing products on basis
14 4
of sustainability/ethical concerns
Reducing amount of waste I create 11 -3
ACTION POINTS
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