For a long time, brand marketers have focused their efforts on attracting millennial consumers, a tech-savvy generation who tend to be driven by the entire experience of buying a product. Gen Z, motivated by purchases that stretch the value of money spent, hold the highest lifetime value of any consumer segment.
Tech-native, they are the first generation to be raised with the iPhone, Netflix and Snapchat, which may lead you to believe that the best way to engage this notoriously finicky generation is via their screens. But not so fast. Let’s explore why a ‘phygital’ approach – blending the physical and digital to create an ecosystem between the brand and consumer across the two worlds – is the real answer to your Gen Z marketing prayers.
Bricks and clicks
With popular ecommerce companies like Missguided and Casper opening up bricks-and-mortar stores, and traditional retailers like Nike and H&M investing more and more in their digital footprint, there’s no denying that phygital retail is trending. And for good reason – a recent report by Accenture found that 60% of Gen Z shoppers prefer purchasing in physical stores.
And a study conducted by UNiDAYS and Ad Age found that nearly two-thirds of Gen Z consumers use their smartphones for browsing, with 59% using mobile for price comparisons, and 58% to look up product reviews on their screens. Yet another reminder that brands can’t afford to ignore the digital or the physical when appealing to Gen Z.
Zara has been doing a great job of getting phygital, having introduced augmented reality (AR) displays across 120 of its flagship stores earlier this year. After downloading the Zara app, shoppers can tap into a well of interactive content that lets them view products, purchase items, and bring in-store displays to life. One of the most noteworthy features of the app is the ‘virtual model’, which users can dress from head to toe.
It will be interesting to see how other bricks-and-mortar and online retailers will transform and bridge the phygital divide, to appeal more to the generation with up to $143bn (£108bn) in spending power in the US alone.
Paperbacks and apps
One of the most surprising findings in a recent UNiDAYS study is that 77% of the 22,723 student-age members of Gen Z surveyed read printed books. For a generation that’s grown up immersed in screens, they truly value their time away from them, curling up with a good book away from the pings and posts. It all goes to show that brands can’t forget providing a physical experience in our increasingly digital-centric world.
With more and more augmented reality-powered books coming out these days (which blend reading with Pokemon Go-style technology), it will be fascinating to see if AR books are the ultimate jackpot for a generation that is all about phygital.
But don’t get too stuck on the physical. Gen Z aren’t just spending their money on paperbacks. With 89% of UNiDAYS’ survey respondents saying they use one to 10 apps per day, they’re also spending a hefty chunk of change on apps. The question is which ones they’re willing to shell out for. One answer is music to Apple’s or Spotify’s ears: that’s right, 66% of Gen Z are willing to pay for music apps.
Music app providers focus on providing additional content and perks for youth to stay on one platform, by tapping into Gen Z consumers’ desire to connect not only digitally but also physically, offering features that recommend local concerts to users based upon their music preferences. Spotify’s partnership with Songkick and Pandora’s acquisition of Ticketfly provide additional evidence of how important analog experiences remain in today’s digital age.
To Gen Z, physical and digital aren’t separate – they work together. Brands that can seamlessly bridge the physical and digital divide with truly phygital solutions that incentivise Gen Z to shop will receive all the ‘likes’ and ‘hearts’ they can possibly handle.
Alex Gallagher is CMO at UNiDAYS.
Explore more retail trends that are being driven by Gen Z in the UNiDAYS Retail Trend Report, and get ahead of the competition.