Blogger Kayla Fathers reaches 11,000 Instagram followers with posts on fashion and shopping tips. She has grown up with digital devices at her fingertips, but Fathers and her friends prefer heading to stores rather than shopping online.
“I like to try on things before I buy,” Fathers, 22, said. “Things are such different sizes nowadays.”
Fathers is among the Generation Z shoppers the retail industry is counting on to save brick-and-mortar stores. While 4,810 store closures have already been announced in 2019, a 2017 survey by the National Retail Federation found that Generation Z – people born between 1995 and 2015 – rather shop in physical than online stores. This is a stark difference from millennials, whose exposure to tech pushed them towards e-commerce. Generation Z could be the shoppers brick-and-mortar stores have been waiting for, as their preference for in-store shopping could drive up in-store sales and encourage previously online-only stores to open physical outlets.
Millennials are often blamed for the “retail apocalypse” – a term coined to describe the large number of store closures that began in 2008 and has continued. In 2017, there was the highest number of store closures ever, beating the previous high of 6,163 during the 2008 financial crisis, Fung Global Retail & Technology and Credit Suisse found. People were hoping millennials would take over the spending baton from baby boomers, but have been disappointed.
“They have a different set of values than the baby boomers,” said Bernard Baumohl, chief economist of the Economic Outlook Group. “They tend to be more risk averse, more careful, more conservative with their spending.”
When millennials shop, they tend to do so online because they spend more time in front of their computers than earlier generations. The percent of retail sales that is e-commerce has steadily grown over the last 20 years, from 0.6 percent in 1999 to 9.9 percent at the end of 2018, according to the U.S. Census Bureau.
Generation Z shoppers, on the other hand, spend more time on their cell phones than their computers, and they use those phones as a shopping tool.
“They do all their research online and narrow it down to where they want to go,” said Farla Efros, president of HRC Retail Advisory. “They like to try things on and make decisions there and not have to return them later.”
The National Retail Federation Survey found that 67 percent of Generation Z shoppers survey prefer shopping in a store most of the time and 31 percent of them prefer shopping in a store some of the time. Only 22 percent like shopping on a web browser and 13 percent prefer using an application most of the time.
Despite their preferences, however, it is possible that Generation Z shoppers like the in-store shopping experience because they see the mall as a social gathering place. If that is true, they are not necessarily driving up retail sales.
There was a huge rise in the number of apparel stores in shopping malls in the 1990s, but now there is a wide variety of experiential offerings in malls, including movie theaters, fitness centers and restaurants, the International Council of Shopping Centers (ICSC) found.
Still, online-only brands are seeing the benefit of opening physical stores. Manhattan’s new 18-million-square-feet shopping center Hudson Yards has dedicated an entire floor to previously online-only retailers, including Bonobos and Warby Parker.
“These brands are recognizing that consumers want to see and feel and touch products before they buy them,” said Stephanie Cegielksi, vice president of Public Relations at ICSC. “Stores definitely do act like a showroom.”
ThredUP, an online consignment store, expanded from online-only to brick-and-mortar in 2017. After being founded in 2009, the retailer now has four brick-and-mortar stores in California.
“We see customers of all ages interested in shopping for second hand in a space that is merchandised to feel like a traditional retail shop,” said Natalie Tomlin, marketing communications strategist at thredUP.
Luxury bedding retailer Boll & Branch, environmentally friendly footwear startup Allbirds and women’s intimates company Adore Me are also among the growing number of e-commerce companies that have turned to brick-and-mortar stores.
Fathers and other Generation Z shoppers are proving to these retailers that opening physical stores are the way to go.
“We like going to the store,” Fathers said. “We like trying on things. We like the experience.”