Trends Retailers Should Prepare for as Generations Alpha and Z Make Their Mark

The retail world is set for yet another period of accelerated change as the digitally native generations start to make their mark on the world. Generations Alpha (born post 2012) and Z (born between 1997 – 2012) bring new perspectives to the world, with their outlook heavily shaped by growing up with the Internet, and coming of age during the pandemic.

That’s according to Steven Heilbron, CEO of Capital Connect, a fintech that offers fast and flexible business funding to South African retailers. Steven says that the pace of change in the retail world is not only due to the impact of digital technology, but also due to ever-evolving consumer behaviours. He warns that retailers that are not watching the shift, could easily get left behind.

Dion Chang, founder of Flux trends and one of South Africa’s top consumer trend watchers, says these two cohorts represent the next generation of shoppers. As the children of Millennials, they seem to have inherited their parents’ liberal values and social conscience. “These generations will be South Africa’s most educated and technologically-connected group to date,” he adds.

“These generations cannot be ignored. Not only are they the customers of tomorrow, they have profound influence over what their parents buy today. Retailers should take heed of their conservative attitude to spending, their focus on understanding how companies contribute to society, and the way they are steering the world to new media consumption habits and buying behaviours.”

Here are some trends to watch out for:

Putting the planet first

With headlines dominated by extreme weather events and alarming predictions about climate change, Generations Alpha and Z are worried about the future of the planet. As a result, they are careful to consume in a more sustainable way and are influencing their parents to also become more environmentally aware.

 What it means for retailers

  • Younger generations are eating less meat, even in the land of the braai. The global plant-based meat market is projected to reach $24.8 billion by 2030, according to a report by Grand View Research. General dealers, food specialist shops and restaurants should certainly be strengthening their vegan and vegetarian offerings. Even KFC in the US is starting to offer vegan ‘chicken’.
  • Consumers are trying to get as much life out of each product they buy via recycling, repairing and second-hand trading. Less clothing and electronic goods ending up in landfills is good news for the environment, but it could harm the retail bottom line. Forward-thinking retailers should look to expand into the repair business and offer second-hand goods or exchanges as new revenue streams.
  • Consumers who are worried about emissions will want to know where their products come from. Sourcing more locally manufactured goods is a potential way to cut carbon, while supporting local jobs and economic growth.

A new lens on what really matters in life

The experiences of the pandemic have reshaped many people’s values and their ideas about what matters in life. Many young people emerged with a deeper appreciation for their own communities, and an understanding of the challenges in their neighbourhood. They expect compassion and ethical behaviour from the companies they interact with.

Furthermore, many consumers are focusing on self-care – eating healthily, being physically fit and mentally resilient. There is also a growing cohort that values experiences over possessions. They are on the lookout for novel adventures on which to spend their money and are less interested in accumulating material items.

 What it means for retailers

  • ‘Shopping local’ is gaining traction as people look to support small businesses in their own backyard rather than mega-corporations. Retailers can respond by getting active in the community and sourcing goods from local producers where possible.
  • Support young consumers with products and services that help them enhance their health. This isn’t just about selling food, supplements and exercise equipment—consider products such as air-fryers and weighted blankets, which are sold off their health benefits.
  • With many customers looking to simplify their lives by owning less, short-term rentals and long-term leasing of everything in life from computers and TVs, to cars and lawnmowers, is becoming a new business opportunity.

Born digital

For Generations Alpha and Z, there is no distinction between digital and ‘real’ life. Technology is woven deeply into the ways they learn, shop, socialise and consume media. Retailers need to have a digital component to their offering, or risk losing younger customers to more digitally savvy competitors. The experience needs to be trustworthy and seamless.

 What it means for retailers

  • Digital isn’t just about pure online shopping. Gartner talks about ‘unified retail commerce’—giving customers a consistent experience across all channels. Winning retailers will offer flexible purchase and fulfilment options—from a range of delivery choices to buy online-instore collection, curb-side pickup and in-store shopping.
  • Younger generations are consuming media in new ways, with short-term video really taking off via TikTok and YouTube shorts. Retailers should consider ways to reach them in partnership with local influencers. These don’t necessarily need to be well-known celebrities—they can be a local fitness instructor or restaurant owner with a well-curated Instagram feed or TikTok channel.
  • A retailer’s own TikTok or Instagram account can be a great way to curate content such as quick cooking lessons or DIY tips, or a livestream of the arrival and unboxing of a new product.
  • People don’t necessarily want to leave social media to buy something. Social commerce—letting them buy within the social app or website they are using—is a great way to drive sales.

“From improving in-store shopper-tainment to creating revenue streams such as ecommerce, there is no shortage of great ways to grow a retail business,” says  Heilbron. “But retailers need affordable and convenient finance to capitalise on these opportunities. With Capital Connect, retailers can apply for a flexible short-term business loan of up to R5 million from our app and the funds will be in their bank account within 24 hours or less, so they never miss an opportunity.”

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