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Centennial consumers on path to wield US$200bn in purchasing power by 2018

With spending power projected to reach US$200bn by 2018, Centennial shoppers are a target market merchants can’t afford to dismiss.

The social-media aficionados born between 1996 and 2011 present a new worldview and different expectations as customers. Whether you refer to them as Gen-Z, Centennials, Founders, or “iGen”, this generation’s use of online tools and methods to find, consider, and buy products reveals behaviors older generations will eventually adopt, and provides a preview of how retailers will engage in the future.

Why woe Centennials
While many view the generation after Millennial only as kids, the reality is that the oldest members of Centennials are in their late teens or entering their 20s. They are the newest entrants to the workplace and voting booth and will soon become the fastest growing group of customers, accounting for as much as 40% of all consumers by 2020.

They're already the most influential group of technology trendsetters and they offer the best preview of future trends in technology usage and shopping patterns. They’re an important target market that already wields US$70bn in purchasing power, and that leverage is expected to grow to US$200bn+ by 2018.

Spend thrift shoppers
This hyper connected generation prefers to save rather than spend money, making it increasingly difficult to crack open the wallets of thrifty Centennials who have already influenced a significant drop in teen spending.

Connected 10-plus hours a day online, they receive an average of 3,000 text messages a month, and posses a critical eight-second filter, which makes capturing their attention challenging at best.

Prepare to engage
Developing an effective customer engagement strategy will be crucial to making successful connections with this new breed of consumers. Doing so requires retailers:

Create engaging in-store experiences: For now, in-store shopping still matters to Centennials, with 46% of them preferring to shop in-store, compared to 36% of Millennials. But while Centennials still prefer shopping in-store, a study from the Center of General Kinetics shows 100% of centennials polled used their smartphones looking for better prices or product information when in a retail store or speaking face to face with sales reps.

This coupled with Centennial’s eight-second filter requires retailers to increasingly use in-store technology to help engage consumers in addition to streamlining operations. That means finding ways to slow down customers to help them spend more time in the store engaging with merchandise, branding, and store personnel to heighten the chances of closing a sale and fostering greater brand affinity.

Take a mobile first approach: Centennials aren’t just digital natives, they’re mobile digital natives with more than a third of those with access to digital payment preferring to make purchases via mobile where and whenever they can.

Innovative business like True Religion, the denim-centric fashion brand that caters to a young, hip consumers actively pursue a "mobile-first mentality" with web design that has helped drive 62% of its online reveneue through "true mobile" — i.e., smartphones, reports senior vice president of direct to consumer and omnichannel John Hazen.

Personalize through use of analytics: In addition a mobile-first approach, retailers are also moving fast to adopt highly differentiated experiences that incorporate mobile and digital in both in-store and online environments.

True Religion also introduced an endless aisle and next-gen clienteling concept earlier this year that leverages an Apple Watch app to allow store associates to adopt new ways of personalizing interactions with customers in-store. Additionally, Centennials’ prolific use of social media creates a cache of information that can be leveraged to better understand them via analytics.

Engage through social tools: The persistent role of social media in the lives of Centennials requires brands and retailers invest in building a presence on social communities. That doesn’t just mean Facebook. In fact, Facebook may well be falling out of grace with Centennials, given its absence from Centennials top 5 social media list. Instead, Centennials identified Vine as the top platform at 54% with Instagram a close 2nd at 52%. Twitter, Pinterest, and Pericsope rounded out the top 5 at 34%, 15%, and 11% respectively.

But regardless the platform, social media engagement becomes essential, because Centennials seem big on devouring and sharing hours of content.

Source: Apparel

Tags: Research, consumer experience

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