When Gen-Zers go to physical stores, they leave their wallets at home. Smart marketers don’t care. Unlike their grandparents, Gen Zers—people born between 1997 and 2013—don’t view stores as the final stop in the sales process. And unlike their parents, they don’t consider stores merely places to discover and purchase products.
Instead, Gen Z gets its retail perspective from its nearest elders: millennials, who inspired marketers to use physical spaces to entertain consumers and earn their loyalty. Instead of shilling shoes, clothes and tchotchkes, brands are using in-person real estate to introduce extensions of themselves that consumers can touch, feel, experience … and maybe even buy.
Gen Z will finish what millennials started, solidifying the store’s role as consumers’ first meaningful interaction with a brand. If Gen Z is successful, physical stores will be equal parts showrooms, live product demo forums, experiential spaces, social gathering spots and sources of inspiration for customers’ social media photo shoots, stories and other content.
Because these in-person experiences influence the entire customer lifecycle—not just the here and now—they’re more important than ever. The basic rule of thumb is that if Gen Zers don’t want to hang with brands offline, they probably don’t want to shop from or engage with them online, either.
In late 2017, Apple underscored the trend of treating stores as experience spaces where people hang out, play with new technology, take classes, commune with like-minded “geniuses” or listen to music. The company announced that, going forward, its stores would be known as “town squares.”
The newly christened town squares have become de facto office spaces where citizens of the gig economy work in a laid-back environment. Sales have taken a back seat to interactions that deepen the consumer’s relationship with the brand, transitioning the store’s official role as a bottom-of-funnel revenue driver to a top-of-funnel marketing investment.
This reorientation has paid off: Post-visit discussions of what happens in Apple’s town squares are occurring online among thousands of brand loyalists.
Of course, Apple merely gave a formal name to what retailers have been facilitating for years. Ikea was an early precursor to this movement when it designed its warehouse-like stores to be as much playgrounds as shopping centers. American Girl Place provides doll salons, where girls and their dolls can receive matching cuts, colorings and perms before trotting off to a tea party-style meal, complete with special seating for the dolls. And some Casper mattress stores offer stations where potential customers can engage in the most un-shopping activity possible—a half-hour test nap.
The Casper test nap phenomenon highlights an essential aspect of Gen Z shopping. These consumers react well to artisanal offerings that have a “crafted fit and finish” mystique, and they trust products that are willing to prove their value by being examined and played with.
Online-first brands such as Refinery29 are also entering the in-person arena. During New York Fashion Week in 2017, the lifestyle publication set up its 29Rooms installation, where fans could experience 29 dimensions of the brand (and its advertisers) by walking through a series of interactive rooms.
Instead of focusing on the functional and pragmatic, 29Rooms catered to visitors’ sense of play, fantasy and discovery. Everyday beauty and fashion products were reimagined as larger-than-life interactive toys, digital installations and over-the-top social media backdrops. One of the results was a slew of social media coverage that created continuity between the online and offline, enabling a much larger audience to engage with the brands.
Experiences like this signal to Gen-Zers that a brand values them. They also act as social currency that buys them influence online. That cachet transforms each consumer into an active micro-influencer.
Unlike professional influencers—who have hundreds of thousands to millions of followers, and whose blessings can be purchased—micro-influencers endorse brands because they genuinely like them or because they want to align with them. Since most of their followers are real people they know, these influencers have high levels of engagement.
So where do sales come in? Sometimes, they happen in person, even if orders are placed digitally and products are shipped to customers’ homes. Gen-Z has no attachment to walking out of the store with an item in tow: As two-hour, same-day and two-day delivery become standard practices rather than differentiators, the lines between buying in person and online will blur, offering the same sense of instant gratification.
Under Gen Z’s regime, a transaction will no longer be the end of an interaction. It will mark the beginning of a new one, where a store can be a service center, a new products forum or a setting for classes on how to better use the products purchased online. Online and offline will reflect a continuous loop of customer engagement with a brand.
The changing roles of retail and marketing mean brands will have to reconsider the metrics that make a physical space “profitable.” In particular, they’ll need to quantify how experiences spur online sales. Metrics like revenue per square foot will be less important than the ability to measure purchase influence and brand equity.
The good news is that Gen Z will give marketers the push they need to fully commit to this new form of retail and all the accommodations they need to make to support it.
Whereas millennials had one foot in traditional retail and the other in the digital world, Gen-Zers are comfortable having these two worlds be fluid and symbiotic, with experiences and content acting as bridges that let them travel from one to the next.
Matthew Haber is co-founder and managing director of experiential design studio BeSide Digital.