Gen Zers are rebelling against the cold efficiency of eCommerce

Generation Z and the Return to the Physical Store

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Introduction

Seeking different experiences, Gen Z leads a return to brick and-mortar

Run of the mill brick-and-mortar shopping is no longer sufficient

Agile brands set the new trend

Conclusion

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Contents

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Gen Z — those born between roughly 1994 and 2002

— currently makes up 25% of the population. They’re

coming of age, entering the workforce, and making

their mark on the economy.

They currently represent approximately $44 billion1 in

annual spending power. By 2020, they’re expected to

make up 40% of all US consumers. And, increasingly,

they prefer shopping in-store over online.

Silent Gen

Millenials

Introduction

BoomersBoomers

Gen XGen X

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Ecommerce has been on the rise for 25 years2, developing with the Millennial generation and catering to their instant gratification ethos. It also appeals to older Americans — Gen Xers and Baby Boomers do as much online shopping as Millennials do.

But today, Generation Z is breaking that trend — the first generation of true digital natives is throwing a wrench into the works.

Amazon’s new concept store, aisles stocked with products rated 4 stars and above

Though Gen Z shows a surprising preference for physical stores, they aren’t necessarily looking to shop in store so much as they’re looking for an in-store shopping experience

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While even the oldest Gen Zer has always known a world with the internet, with instant access to products of all sorts, as many as 80%3 of them not only shop in stores, they actually look forward to it. Thirty-eight percent say finding precisely the product they need online is difficult, and 35% don’t feel as comfortable with online transactions as older generations do.

Gen Z still shops online, but they’re being increasingly driven to physical store-fronts by their desire for personalization in shopping, preference for experiencing products, and an expectation that brands engage with them in a meaningful, authentic way. They also want to know what they’re buying before they shell out — just shy of two thirds of Gen Zers want to touch, feel, and experience products before making a purchase.

Seeking different experiences, Gen Z leads a return to brick and-mortar

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Further, 47%4 of Gen Zers are happy to wait up to 7 days for a delivery, and 53% are willing to travel up to 30 minutes from home to pick up a purchase from a physical location. The implication here is that the younger generation is perfectly happy to invest their time, and even their effort, when they believe the results will be worth it. This is in sharp contrast to Millennials, who prefer their gratification to be both instant and effortless.

In short, Gen Z is looking for more than just products when they shop — they’re looking for a fully realized shopping experience.

80% Shop in stores and look forward to it

Don’t feel as comfortable with online transactions as older generations do35%

Say finding precisely the product they need online is difficult38%

Are willing to wait up to 7 days for a delivery 47%

Are willing to travel up to 30 minutes from home to pick up a purchase from a physical location

53%

HOW DOES GENERATION Z SHOP?

Gen Z expects in-store experiences combined with the ease of online shopping — it’s the new era of brick-and-mortar shopping

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Run of the mill brick-and-mortar shopping is no longer sufficient

Gen Z was raised on the internet and, as such, still have certain expectations and habits. The digital realm trained them to expect a shopper journey that is both immersive and customized to their preferences. In-store, Gen Z shoppers are still looking for immersion and customization, and also for a third element — interaction.

Comparison shopping is a good example. Ecommerce and customer reviews make comparison shopping a breeze, but can’t offer the product experiences that physical stores can.

Gen Z combines both worlds, browsing and testing products in-store while comparing prices and checking reviews online on their mobile devices. If they find a better deal elsewhere — including the digital outlet of the physical store they’re in at the time — they’ll order it and have it shipped in just a few taps.

It’s this mentality — combining the reality of in-store experiences with the convenience of online shopping — that’s key to the new era of brick-and-mortar shopping.

Agile brands are setting the new trend

Outside Casper's first permanent store in NYC

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A number of bold and innovative brands are already shifting their strategies to meet the unique needs of this emerging generation.

Perhaps surprisingly, those leading the charge are eCommerce titans who made their bones in the digital shopping realm, and emerging digital native brands that, until recently, only had online presences.

They were all born on the internet with no physical presence whatsoever prior to Generation Z’s ascendance.

We used Ubimo’s Polaris to analyze four of these agile digital native com-panies — Amazon (specifically Amazon 4-Star stores), Casper, Everlane, and Warby Parker — to see how their physical locations are performing with Generation Z.

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AMAZON 4-STAR

WARBY PARKER

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Lift

Lift is the percentage of a demographic that visited a store compared to their percentage of the entire population

AVERAGE LIFT

37%

17%

110%

37%

45%

5%

-2%

-3%

2%

1%

CASPER

EVERLANE

Millennials Gen Z The analysis revealed a very com-pelling story. For lift, the percentage of a demographic that visited the store compared to their percentage of the entire population, Amazon’s 4-Star stores represent only a moderate draw for Millennials: compared to the national average, lift for Millennials is only 5%. Comparably, Gen Zers show a lift of 37%.

The new stores aren’t drawing tons of Millennials, but that’s fine for Amazon — they prefer online shopping anyway. In contrast, the stores are very effective at drawing Gen Zers.

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Source: Ubimo’s Polaris Data

Casper showcases their mattresses and other accessories in cozy cabins to draw visitors in

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Online mattress retailer Casper has recently entered the physical retail space as well with an aggressive brick-and-mortar strategy: They operate 20 locations with plans to open up to 200 in the coming years. They also operate The Dreamery in Manhattan, where visitors pay a modest fee for a 45 minute nap on a Casper mattress, plus refreshments and PJs. These moves come as Gen Z continues to matriculate into, and begins to graduate from, college and are looking for their first away-from-home living situations.

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Ubimo’s analysis revealed that while Casper locations do not attract Millennials at all (with a lift of -2%), Gen Z shows a lift of 17% compared to the national average. Where Casper really shines, however, is in store efficiency.

Efficiency, or the relative foot traffic a store manages to attract compared to other stores, is a way to measure a store’s performance. We analyzed the efficiency of long-time industry giant Mattress Firm compared to Casper. Today, Mattress Firm draws only 12% the amount of foot traffic per store that Casper stores do, vastly outperformed by the digital upstart on its own turf.

Efficiency

Efficiency is a relative measure of foot traffic a store manages to attract

Warby Parker Lenscrafters

100 80

Casper Mattress Firm

10012

Everlane Levi’s

10029

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Source: Ubimo’s Polaris Data*

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The fashion industry is rife with digital-born brands making forays into physical retail, not the least of which is Everlane. Everlane was founded in 2010 on principles that appeal to Gen Z shoppers — manufacturing ethics, sustainability, and business transpar-ency — and are doubling down on that audience targeting with their moves into the physical space.

And boy is it paying off. Looking at lift, Everlane ranks similarly to Casper for the Millennial demographic, with -3%. For the Gen Z demo, however, the lift is an astronomical 110%. Their perfor-mance is equally excellent in efficiency when compared to Levi’s, which draws only 29% the foot traffic per store that Everlane does.

Finally there is affinity, a measurement of stores that Everlane’s Gen Z shop-pers also visited. We discovered that Everlane shoppers also frequent Nike, Adidas, and H&M at notable rates.

The last retailer we looked at was Warby Parker. The online eyeglasses retailer was among the vanguard of what some call the clicks-to-bricks movement, opening their first physical pop-up locations5 in 2011 and their first permanent brick-and-mortar retail store in 2013. Today they boast almost 100 locations spread across the country.

An Everlane store tucked away on a busyblock in Soho, NYC

Inside a Warby Parker branch in Hoboken, NJ

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In terms of lift, Warby Parker continues the Gen Z trend we see across the direct-to-consumer brands we looked at, with Millennial lift of 2% and Gen Z lift of 37%. When we looked at affinity, we found that, similarly to Everlane, Warby Parker shoppers also like to visit H&M, Adidas, and Nike — retailers who are doing a fantastic job at attracting this generation.

One of the most actionable insights are the exclusivity metrics, which measures the amount of foot traffic at one store that does not also visit a competing brand’s location.

Exclusivity

87%9%

Lenscrafters Warby Parker

4% Intersection

Nationwide

New York DMA

69%21%

10% Intersection

Exclusivity measures the amount of foot traffic at one store that does not also visit a competing brand’s location

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Source: Ubimo’s Polaris Data

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When nationwide foot traffic was ana-lyzed, we found that 87% of shoppers exclusively visited a Lens-crafters, 9% only visited a Warby Parker, and just 4% visited both.

We then analyzed New York, where Warby Parker has a much higher density of storefronts, those numbers shifted dramatically: 69% exclusivity of Lenscrafters, 21% exclusivity for Warby Parker, and 10% intersection.

Warby Parker’s differing exclusivity scores could be influenced by two primary factors.

Gen Z shoppers threw a wrench in the works of retail — these brands anticipated the change and made a gamble that is paying off for them

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First, Lenscrafters has about 850 locations in the US, compared to Warby Parker’s 89 — Lenscrafters has more stores in California alone than Warby Parker has throughout the country. The second factor is eye exams. While every single Lenscrafters location offers eye exams, only 27 of Warby Parker’s locations do — and eye exams are not something you can perform on a website.

Overall this data shows us that these four brands, representing the larger direct to consumer trend, have taken innovative steps to change the very way their business functions in order to stay in the minds of Gen Z. Gen Z shoppers have drastically different shopping habits than generations before them, and these brand’s gambles to capture their elusive attention are paying off in spades.

They’re agile in their adaptation to Gen Z’s needs, and the adaptations have been demonstrably successful.

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Conclusion

We are entering a new era of retail, one in which the rising Gen Z is dictating not only how they’re sold to, but where. In search of more genuine shopping experiences — where they can expe-rience a brand fully, touch and test products before purchase, all without sacrificing the convenience of online shopping — they’re flipping the retail script. They’re deemphasizing the hard focus on digital shopping and eCom-merce of the past couple of decades, but they’re also deemphasizing retail as it has been.

Retailers that fail to recognize the importance of the Gen Z purchasing base and their unique shopping prefer-ences are unlikely to thrive.

The retail space has been plagued with over five dozen bankruptcies in the last five years6, including 17 in 2018 alone. A common thread among them is a dependence on the traditional retail experience and a slowness to change.

Though it may seem like it, retail isn’t dying. In fact, for brands that understand the connection between

the physical and digital worlds, it’s thriving. For brands that make smart use of digital data to under-stand the actions of their customers in real world locations, it’s thriving. For brands that use these insights to guide their sales, marketing, and business strategies, it’s thriving.

Digital alone won’t meet Generation Z’s demands, and neither will tradition-al brick-and-mortar retail practices. It’s a new era of retail, and brands will have to embrace a new era of mar-keting tactics and tools if they have a hope of surviving. That era is location intelligence and analytics.

Digital alone won’t meet Gen Z’s demands, and neither will traditional brick-and-mortar retail practices

RESOURCES1 Bryan Pearson, Forbes | 7 Ways Gen Z Shoppers Are Different From All Others2 Miva | The History Of Ecommerce: How Did It All Begin?3 Erica Sweeney, Marketing Dive | Study: 80% of Gen Z like shopping in-store, but turn to e-commerce for convenience4 Robert Klara, Adweek | Much of What You Thought You Knew About Gen Z’s Shopping Habits Is Probably Wrong5 Rip Empson, Techcrunch | Warby Parker Opens Retail Store In NYC, With Boston Up Next, Beats Google & Amazon To The Offline Punch6 CBinsights | Here’s A List Of 68 Bankruptcies In The Retail Apocalypse And Why They Failed

OTHERAnna Hibberd, PR Week | Stop Saying Millennials Have Short Attention SpansLauren Thomas, CNBC | Warby Parker aims to run nearly 100 stores this year, as other Web shops followNadjya Ghausi, Entrepreneur | Sorry, Goldfish: People's Attention Spans Aren't Shrinking, They're EvolvingBloomberg News, Digitalcommerce360 | Why Digitally Native Brands Keep Opening Physical Stores

GRAPHICSTwemoji © Twitter Creative Commons by 4.0

METHODOLOGY

We used Polaris, Ubimo’s location intelligence platform, to analyze twelve stores nationwide. Including six agile brands–Amazon 4-Star, Bonobos, Casper, Everlane, Glossier, and Warby Parker–and six traditional brands–Adidas, H&M, Lenscrafters, Levi’s, Nike, and Mattress Firm. The Millennial Generation is defined as those age 25 to 34. Gen Z is defined as those with age between 18 and 24. All data was collected during a 90-day period. Ubimo’s panel includes over 150 million monthly active devices.

DISCLAIMER

This independent analysis is based on Ubimo’s location intelligence platform. As such, Ubimo does not have any relationship with companies featured in this report, nor should the independent analysis be construed in any way to suggest otherwise. Ubimo data is always anonymized and aggregated.

Retail isn’t dying. In fact, for brands that understand the connection between the physical and digital worlds, it’s thriving.

Ubimo is a SaaS location intelligence company that empowers

businesses to understand and act on real-world behaviors, bridging the

knowledge gap between the digital and the physical worlds.

Using advanced AI technologies, we combine behavioral data on over 150 million

monthly active devices, with the most comprehensive geographic index in the US.

Ubimo’s platform enables businesses to embed strategic insights into decision-

making, improving performance across Shopper Marketing, Programmatic,

Publishers, Retail, and Out-of-Home.

info@ubimo.com www.ubimo.comFor more information, contact us:

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