The Who, What And Why Of Zillennials, Retail’s Next Opportunity
By: Jenn McMillen
A large, sub-group of consumers who straddle millennials and Gen Z are getting more retail attention due to a few unique shopping behaviors. Now they have a name, zillennials. Here’s how their attitudes about money and data sharing matter a lot for the future of retail marketing.
They’re 30 million strong, they live at home and they are willing to tell you all about their spending habits. Retailers, how geared is your marketing strategy for the zillennial micro-gen?
This is the name for that hybrid population born between 1990 and 2000 (that’s 23- to 33-year-olds), which bridges millennials and Generation Z. Retailers may think they’ve got this – the industry has been following how millennials and Gen Zers shop for years. But zillennials are just unique enough, and numerous enough, to earn their own powerhouse status in retail marketing.
Two key factors in particular explain why:
- They’re in the sweet spot of spending power. As many as 48% of adult zillennials live with their parents, Business Insider reports, so they likely don’t pay a mortgage or rent, let alone utilities. All that money is instead being spent on experiences and stuff, and retailers and brands would do well to keep tabs on that. Which leads to the second key factor.
- They are increasingly more willing to share their data. 70% of millennials and 65% of Gen Zers are more willing now to trade their personal data for discounts and perks than they were a year ago, according to new research from Tata Consulting Services. This indicates that nearly 70% of zillennials can be convinced to trade their data if it’s a fair swap.
What Makes Zillennials Special?
Beyond their mere size and spending power, zillennials embody other traits that earn them the status of a focused retail marketing segment. Take, for example, that 54% are fully employed, according to research by PYMNTS.
This is how they want to spend their money:
Young consumers are now the driving force behind luxury market sales, the consultant Bain & Co. reports. Members of Gen Z, who comprise a lot of zillennials, are buying luxe three to five years earlier than their millennials cohorts had. This marks a significant shift: In 2019, Gen Z and millennial consumers represented 44% of global luxury buyers, Quartz reported. By 2025, they are predicted to represent 70%. This may explain why brands such as Gucci are investing in youth social channels, including the metaverse.
Doing good – even for a price.
Based on Tata’s recent research results, 84% of Gen Z shoppers and 73% of millennials (of which zillennials is the middle subset) choose to spend more on sustainably produced and ethically sourced goods. Based on that range, an estimated 78% to 80% of zillennials are prioritizing do-good brands like Reformation, Lush and Everlane. In fact, sustainability outshines big brand names among these generations, with 75% rating sustainability as more important than the brand name, according to the World Economic Forum. Keep in mind that doing good includes healthy options, which may be why Chipotle targets Gen Z (and therefore a chunk of zillennials) with its wellness menu.
They’re situationally frugal.
Zillennials appear to be willing to spend more on goods that align with specific values, but they still spend their money thoughtfully. Many in this group have witnessed economic struggles at home due to the pandemic and inflation, and those memories appear to guide their choices. So when considering luxury, for example, many zillennials opt for secondhand glamour. This trend has contributed to a sharp gain in the clothing resale market, which has tripled in size since 2020 thanks in part to players such as ThredUp, Poshmark and The RealReal.
Now mix in the fact that these new young consumers are more willing to share personal data in return for perks, and retailers can lock in a big lifetime customer base at a crucial point. Here’s how.
5 Ways To Tailor Data Use For Zillennials
- Sweeten mobile perks. In the third quarter of 2022, 15% of all consumers used mobile devices for non-grocery shopping, according to research by PYMNTS. But thanks to the gaining buying power of zillennials, that figure is expanding. Plan Z: A retailer can offer weekly bonus perks for those who download its app – 48-hour coupons and that sort of thing – and gain useful insights based on what offers its customers accept, such as sustainable goods. For an example, look to the T-Mobile Tuesdays app.
- Don’t downplay the store. 86% of zillennials make grocery purchases in the store, compared with 79.4% of Gen Z, PYMNTS also reports. Zillennials also are more likely to request curbside pickup. Plan Z: Zillennials awaiting curbside pickups might be more receptive to completing quick surveys about their order experiences (think three questions). In return, the retailers can give them a selection of coupons to choose from to get them in the store next time.
- But do play up livestreams. 85% of zillennials engage with social media platforms, research shows. Among those platforms: Livestream videos, in which hosts demonstrate products available for purchase in real time. Retail Insights (citing Coresight Research) predicts these events will generate $32 billion in sales in 2023. Plan Z: Retailers like Ulta, Dick’s and Amazon host livestream events. These merchants present partnership opportunities for brands and other retailers to encourage more shopper interactions, and therefore insights, for both parties.
- Watch and one-up the competition. A lot of retailers and brands will join the horse race for the discretionary zillennial dollar. Marketers and retail leaders should keep an eye out for them and gauge how their own communications and offers differ. Plan Z: If all competing offers and communications look the same, then none looks necessarily better than the other. The messaging and perks that generate higher buy-in, in terms of data sharing, will reveal when the retailer is getting warm to its zillennial customers.
- Audit your analytics to ensure accuracy. Zillennials won’t suffer misfired communications for long. Retailers and brands can perform regular audits, in which marketing staff members are tagged as decoy customers and followed throughout various engagement points. Plan Z: Data audits can detect if essential information, such as customer addresses, is being misdirected or lost. Not all companies have the platforms for this exercise, but there are experts who do.
But Remember, Zillennials Will Change, Too
There are a couple of likelihoods retailers and brands should factor in to take on this young market of 30 million.
First, that their needs and preferences will change as they move out on their own and take on debt (that may mean less luxe, for example). But second, they are leaving an influential trail of behavioral practices for their younger cohorts to follow.
Retailers and brands should keep up with these insightful morsels. Zillennials might want secondhand Gucci, but will the population of teens bridging Gen Z and Generation Alpha prefer basics from the Gap?
We shouldn’t assume the oldest of any generation is the same as the youngest. This is why continuous analytics of shopper data, that which delivers value, is so important.
This article originally appeared in Forbes.
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Forbes.com retail contributor Jenn McMillen is nationally renowned as the architect of GameStop’s PowerUp Rewards, and is Founder and Chief Accelerant of Incendio, a firm that builds and fixes marketing, consumer engagement, loyalty and CRM programs. Incendio provides a nimble, flexible and technology-agnostic approach without the big-agency cost structure and is a trusted partner of some of the biggest brands in the U.S.