Why does Gen Z like brick-and-mortar stores but not malls?

Discussion
Jan 18, 2017
Matthew Stern

Despite the widespread popularity of online shopping, a recent study suggests that preferring to buy online could be a generational thing. Generation Z would actually rather shop in stores, according to a study conducted by IBM and the National Retail Federation.

An international survey of customers between the ages of 13 to 21 found that 67 percent of Generation Z shoppers do most of their shopping in-store, and 31 percent do so occasionally, as reported by Racked. Surprisingly, while Generation Zers spend the majority of their free time online, very little of it is spent shopping. And though this should bode well for once-popular teen hangouts like malls and their anchor department stores, such struggling locations hardly draw the teenage demographic they once did.

The article attributes malls’ inability to draw teen shoppers primarily to a boring shopping experience contrasted against the bright, always-changing look and feel of dominant fast-fashion retailers. There is also the overlooked fact that teenagers may have limited access to personal credit cards, making online shopping difficult.

There are other elements of the shopping experience that may also play into Generation Z not making it out to the malls and department stores despite being fans of brick-and-mortar shopping. As cited in a Time article, parental supervision policies are now common in malls and markedly fewer teens work in mall retail than once did, meaning fewer teens hanging out and shopping when they get off of work.

A lack of fashionable product selection also plays into why Generation Zers don’t shop malls or department stores. But these locations may have something to offer this demographic if a report by Piper Jaffray reported on CNBC is correct.

The report, released in late 2016, indicated that the athleisure trend may be on its last lap around the track. Yoga pants and other athleisure offerings more likely to be sold in sportswear stores than department stores, are giving way to the old department store standby — denim. In fact, mall mainstay American Eagle is the top destination for denim among upper-income teenage girls.

DISCUSSION QUESTIONS: How can department stores, malls and other retailers make the most of Generation Z’s penchant for shopping in physical stores? Will we see a bigger swing back to brick-and-mortar shopping as Generation Z ages or is it more likely they will gravitate toward online shopping?

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18 Comments on "Why does Gen Z like brick-and-mortar stores but not malls?"


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Dick Seesel
BrainTrust

The appeal of malls (to Boomers, Generation Y or Generation Z) starts and ends with its tenant mix — in particular its anchors. The phenomenon of “zombie malls” is growing at a fast pace, as Sears, Macy’s and others announce store closures; many of the remaining stores lack compelling product or an exciting store experience.

Beyond the regional malls with key tenants like Apple, H&M or Forever 21, it’s hard to get excited about Chico’s or Ann Taylor when you’re a teenager. And it’s obvious that most teen-oriented stores (Aeropostale, Abercrombie) have failed to attract a new generation of younger shoppers. So teenagers may not be spending online but they are likely shopping somewhere … and off-pricers may be the first place to look.

Jeff Sward
BrainTrust

One of the great things about the age profile of Generation Z is that they are still exploring, learning and forming opinions. That learning is best done through seeing, feeling and experiencing product — REAL product, not pictures of product. Once they (anybody) have a baseline understanding of and comfort with a brand, shopping online becomes more comfortable. Any brand or retailer has to first establish a level of trust with the consumer. The consumer has to believe the brand promise is real. Maybe it’s a version of online dating — and I am totally guessing here. The pictures and attributes look good, but it’s not until the actual face-to-face meeting that you really know.

Tom Dougherty
BrainTrust

More bad news for department stores. They are, after all, mini-malls all by themselves.

What this Generation Z wants is specialness and focus. They will take it in any form, including online. As they mature, expect them to transition to seeking ease and access. Online is just a measure of convenience and will increase in importance.

Goodbye malls. Goodbye department stores. Generation Z rejects both. They are just joining the rest of the target audience. I wrote a piece on how department stores could make themselves relevant again on our website. Immediate and massive change is needed in the model. First mover, anyone?

Max Goldberg
Guest

Generation Z’s affinity for brick-and-mortar shopping will wane as they acquire credit cards, but while they are shopping in physical stores malls need to rack up all the sales they can. This can be accomplished by offering experiences that draw in shoppers, making the mall a fun place to shop. Mall operators need to attract fast fashion retailers as tenants. Food courts should provide offerings that appeal to teens and young adults. Making malls fit their lifestyle will attract younger shoppers.

Sterling Hawkins
BrainTrust

There’s an opportunity here for retailers (or malls themselves) to more effectively blend online and in-store as well. Endless aisles, augmented reality, mobile self checkout and more are all viable vehicles for a generation immersed in technology but still looking for a physical human connection. Done correctly it’s a path to create better experiences, more engaged shoppers and long term customers.

Zel Bianco
BrainTrust

What does not make sense is that most of the stores that can be found in malls are the same stores that are found outside of malls. It must be that malls are perceived as dated and no matter how many facelifts are applied to them they are still malls. You would think that the mall is much more practical for Generation Z shoppers because they can go from one store to the other without getting back in the car. Unless you live in an urban area most shopping centers seem to be built the same way wherever you are, Chicago or the New York suburbs or even in Rogers, Arkansas. Perhaps live music and free food would do the trick?

Lyle Bunn (Ph.D. Hon)
Guest

The shopping experience of hunting versus gathering offers key insights. In-store and in-mall is well suited to exploration, discovery and finding and purchasing the perfect product with immediate gratification. Gathering describes the refreshment of consumables such as food, cleaning and other household, workplace and school supplies. As this gathering moves to online ordering and even automatic refreshment, brands are challenged to assure and secure market share. In-store “gathering” is influential and so brands are well advised to use in-store media messaging, such as entrance, category, shelf and checkout digital display to their advantage.

Ryan Mathews
BrainTrust

First of all Generation Z is still a work in progress, so I am a little leery of shoving them into a box too soon. That said, preliminary indications are that they are a generation who prefers utility to possession, i.e., they don’t need to own things in the same way preceding generation have. They are also a generation that places added emphasis on values which — if it continues — will give them a generational bias toward individual entrepreneurial retailers over mall operators.

Now, as to the whole credit card thing, I think that’s a bit of a red herring. Many teenagers can access online shopping with their parents’ cards, so if credit card usage — again, not ownership — is the issue, online sales should be going through the roof. It’s hard for me to imagine online shopping declining over time, so I’d say it’s past time for mall operators to rethink their value propositions and evolve with the times.

Anne Howe
BrainTrust

I suspect part of Generation Z’s attraction to real-life shopping is that it’s inherently social and gets them out of the house. Plus, at the younger ages, they rarely make a move or a decision that isn’t part of a “group think” conversation.
Don’t get me wrong, I love the fact that they are gravitating to physical retail, but two things should be understood: 1.) they may well migrate to the web once they get more comfortable making decisions on their own and can get the credit cards, and 2.) retailers had better work very diligently on creating experiences in the stores that satisfy their need for entertainment, education and fun. Without more effort to cultivate relationships, these fickle and mobile shoppers will just move on to price and convenience, just like so many other generations of shoppers have done.

Paula Rosenblum
BrainTrust
There are some flaws in this report, as far as I can see. Are we seeing an upswing in the usage of cash? A parent can easily give his or her kid a debit card, or card with a daily limit. What the report seems to really be saying is that no market is infinite, and we may be starting to see a leveling out of online sales. Or it could be as simple as the fact that kids like to hang out and they’re not as time-starved as older folks. How many ways can the same story be said? Department stores are boring. Specialty stores (excluding fast fashion for now) aren’t much better. Products are very, very commoditized. It’s time for retailers to reinvent the store and maybe try to reinvent the mall. Strip centers are dying, malls are dying, so what does that tell us? It’s time to adapt and change. If malls are dying, by the way, why is it I can’t even drive through the Aventura Mall area all winter? I… Read more »
Meaghan Brophy
BrainTrust

The key to making the most of Generation Z’s affinity for physical stores lies in the product selection. Rather than just an errand or business transaction, Generation Z is looking at stores as destinations. Products have to be attractive and innovative. The problem with malls is that there is nothing new or exciting. It’s a very dependable experience, which is part of what other generations loved. However, Generation Z is interested in the discovery aspect of shopping. Off-price retailers, thrift stores and flea markets have that advantage. But Generation Z is also looking for the new and the now, not something recycled or last year’s model. Forever 21 and other fast-fashion stores are so successful with younger shoppers because of their ability to design and manufacture inexpensive, trendy clothing almost instantly, instead of seasonally like traditional retailers.

Tim Cote
Guest
2 years 7 months ago

Generation Z will not over-pay. They shy away from the overly upscale. Off-price is the key to the future success of malls, however off-price often comes with off-price rent. Something mall owners may not be ready for.

Lee Peterson
BrainTrust

Another classic case in which what is being said is different than what is being done. Footfalls in stores have been down at least 10 percent year-over-year for the last five years. If Generation Z prefers shopping in stores, where the heck are they? The young people we talk to don’t go to stores to actually buy much of anything — if they go at all, it’s to look around and hang out. So to us, therein lies the future of physical stores: a great place to hang out (see also: UO Spaces).

Camille P. Schuster, PhD.
BrainTrust

Where is the data? Generation Z consumers are purchasing products — What kind? Where? For what use? In addition, where do they spend their time? Doing what? Using the boxes and categories of previous generations of consumers is not the best way to understand a generation growing up in a completely digital world. We need new boxes to understand Generation Z.

Mark Price
BrainTrust
Mark Price
Managing Partner, Smart Data Solutions, ThreeBridge
2 years 7 months ago

Generation Z appears to crave strong customer experience and products that feel unique. Mall stores must move from a labor cost focus to a customer experience focus, while encouraging their merchants to experiment with limited-run unique items.

As this generation ages, it is inevitable that e-commerce will increase while the social value of shopping declines. How much is based on how ready retailers are to embrace this new paradigm.

Sky Rota
BrainTrust
2 years 7 months ago
[EDITOR’S NOTE: We usually edit for grammar and spelling, but opted to leave this one as-is.] Im a 12 yr old blogger/vlogger Generation Z consultant. GenZinsider.com No idea where IBM got thier info. We are not shopping in stores, first of all because there is no one working at the dept stores & we are not looking & waiting around for someone to take our money. to the football guy. I needed a new basketball pump on Saturday, my Mom wasnt taking me to Dicks to get one she would rather order online from Amazon than drive me, so its the parents who it is also easier for. plus when we go to a store we already know exactly what we want & when we get there they Never have our sizes/style in stock or the sneakers & stuff we want so we ONLY go to stores to try on for size then we go home to the huge selection online & make our purchase of exactly what we want. Do Not hope to get… Read more »
Craig Sundstrom
Guest

Isn’t it (still) true of every age group that MOST — i.e. >50% — of shopping is done in stores? The “facts” (anecdotes) seem to be all over in this piece, but the image I get is of a group with limited income, attention-spans and loyalty. I’m not sure any type of store can “make the most” of them … or should want to.

Dave Nixon
BrainTrust
Dave Nixon
Data Analytics Solutions Executive, Teradata
2 years 7 months ago

Many of those stores that are popular with GenZ are in the “new mall;” the outdoor lifestyle and walking “malls,” which do not seem to have a problem attracting the next generation of shoppers.

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