By 2020, Gen Z will account for 40 percent of all shoppers and influence nearly $4 billion in discretionary spending. Brands across the globe are beginning to wake up to the idea that Gen Z will increasingly determine their brands’ success over the next decade, and many are stumped on just how to capture this newest wave of consumers. 

To start, marketers must keep in mind that Gen Z is the world's first generation that is 100% digital natives, with technology basically embedded into their DNA. This group reports spending more than 10 hours online per day and 45 percent being online “almost constantly.”

And while it can be easy to lump Millennials and Gen Z into one group -- both appear to be smartphone-obsessed, right? -- that would be a rookie move for a brand to make as Gen Z shoppers have some key differences from their Millennial predecessors. 

Brands can’t “fake it” with Gen Z

Unlike Millennials, Gen Z'ers are more cautious shoppers, having grown up during the 2008 recession. Whereas Millennials are perceived as more idealistic, Gen Z'ers are more pragmatic; they are more thrifty with money, generally more skeptical than Millennials, and it takes more for brands to win their trust. They have learned the risks of digital footprints from the previous generation, and are averse to traditional digital advertisements. In fact, because of just how well this group understands the digital sphere, Gen Z’ers want to curate a meaningful digital presence, and therefore are highly selective about the programs or brands they engage with online. To engage with Gen Z online, marketers have to do more than offer a 10% off coupon in exchange for an Instagram follow. 

Also more so than Millennials, this generation places a great deal of emphasis on authenticity in brands, such as featuring social media micro influencers versus major celebrities, or using real-time, at-home photos of real people enjoying the products versus glossy photo shoots. This group will only engage with the brands that truly resonate and they believe in. 

Gen Z strategies #FTW

While retailers such as American Eagle and Forever 21’s Riley Rose are starting to earn their way into Gen Z hearts, most brands still have a lot to learn. Below are some strategies we’ve seen go over successfully with this mobile-obsessed, yet highly skeptical group of shoppers:  

• Give Gen Z creative control. A recent study found that 84 percent of Gen Z'ers trust a company more if they use actual customers in their ads, and 79 percent will trust a company more if images are not photoshopped. Retailers are taking note. In January, American Eagle invited 10 teens they selected from social media to creatively direct its new #AExME campaign. Instead of modeling American Eagle clothing on some set or photo shoot with hired professional photographers and stylists, 10 teens photographed themselves with their smartphones in their own environments wearing the clothes. The approach was considered more down-to-earth, communicating to Gen Z'ers that they were in control of their individual style. Posts were shared on American Eagle’s social media and Google Preferred videos. First quarter sales rose 6 percent with total revenues increasing 8 percent.

• Have a purpose. Gen Z is not into marketing hype and prefers substance over novelty. As such, social justice issues are deeply important to this group, and they want the companies that sell products they like to stand for something. According to the National Retail Foundation, 60 percent of Gen Z said it’s important for brands to value their opinions and 69 percent report they’re more likely to buy from a company that supports social causes. A recent example is Nike’s 2018 “Just Do It” ad featuring National Football League player Colin Kaepernick who kneeled during the national anthem to raise awareness about racial injustices.

• Create an in-store shopping experience that can be shared. Forever 21’s new Riley Rose beauty and lifestyle store is banking on customers sharing their in-store experience on social media. Taking a page out of the Museum of Ice Cream’s playbook, the brand has a hot pink logo on the outside and inside, resembling a brightly-lit candy shop and making this all highly Instagrammable. When customers tag Riley Rose, their images come through a live feed shown on screen in the store.

• Cash back is king. When it comes to building customer loyalty for Gen Z'ers, money matters. And given this group’s skepticism toward marketing hype, they’re unlikely to buy into complicated reward or points systems. Gen Z'ers also watch what they spend, and overall, a growing number of shoppers say they’re willing to switch retailers to those who offered card-linked cash back offers on purchases. Sixty-seven percent of Gen Z shoppers use smartphone apps to get cash back on purchases made in the previous month. 

While brands are still perfecting the secret sauce to resonating with what is perhaps our most finicky group of shoppers to date, authenticity, purpose and no-strings attached value like cash back on purchases will continue to be key ingredients to winning over Gen Z.