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July 11, 2017

Generation Z Prefers In-Store Shopping – Could This be True?

Shoppers belonging to Generation Z (whose oldest members were born in the middle 1990s) prefer to get their goods through the internet – right?

Not necessarily, according to a new survey by IBM and the National Retail Foundation, in addition to data from Kidder Mathews. While Gen Z shoppers tend to have easy access to devices including smartphones, tablets, and laptops, they continue to have a soft spot in their hearts and wallets for the in-store shopping experience.

For example, Kidder Mathews found that the retail market is strong in the core markets on the West Coast, including Seattle, San Francisco, and Los Angeles, with positive absorption, new construction, and a promising investment climate for single-tenant net-leased properties as well as stabilized centers. If these statistics may be extrapolated, it points to a positive environment for in-store retail conditions.

The IBM-National Retail Federation study found that the nearly 2.6 billion members of Generation Z (projected as of 2020) actively prefer shopping at brick-and-mortar retailers as opposed to going online. That said, this buying group has its own set of demands for its chosen retail outlets.

“Generation Z expects technology to be intuitive, relevant, and engaging – their last great experience is their new expectation,” IBM general manager of global consumer industries Steve Laughlin said in the press release announcing the survey results. “This presents a significant challenge for retailers and brands to create a personalized, interactive experience with the latest digital advances or risk falling behind. This kind of innovation is not linear or a one-time project – it is a new way of thinking, operating, and behaving.”

With two-thirds of Generation Z members spending most of their shopping time in physical stores and another 31 percent spending at least some time in-store, nearly all of the generation’s members find themselves in stores from time to time.

However, retailers must also be aware that this generation spends significant amounts of time online, with the survey finding that three-quarters of respondents spent their free time online and a quarter of respondents spent five hours or more online on a daily basis.

However, according to National Retail Foundation CEO Matthew Shay, this does not mean retailers lack the power to win these shoppers over.

“They appreciate the hands-on experience of shopping in a store,” Shay told The Motley Fool. “With technology constantly evolving but some shopping habits remaining the same, retailers need to be agile enough to serve both needs.”

That said, according to Kidder Mathews data, there are indeed retailers who, feeling the pressure from the e-commerce side of the equation, find that they cannot keep pace.

“Labor costs are increasing, and labor-intensive industries are feeling that impact,” Kidder Mathews’ Real Estate Market Review for Q1 2017 reads. “Also, interest-rate increases are starting to affect cap rates.”

Retailers hoping to lure Generation Z shoppers will find most success if their brand’s quality is up to par, readily available, and considered a good value, according to the IBM-National Retail Foundation study. More than half of those surveyed said they would switch brands if these conditions were not met.