This deck was presented at Cosmoprof North America in Las Vegas on July 29, 2018. By 2020, today's teens will be the largest group of shoppers worldwide, accounting for 40% of the U.S., Europe and BRIC shopper base. The needs, behaviors and expectations of this group will influence the future of mainstream retail. Global design consultancy FITCH will share proprietary insights about Gen Z - the most culturally diverse, digitally connected generation to date and retail's biggest challenge yet. Learn what shopping attitudes, motivations and behaviors of Gen Z make them so different from other generational cohorts. Discover how retailers and brands engage with this new kind of shopper who pays less attention but has a sharper and hyper-informed eye. Explore the distinct strategies and tactics retailers can employ to attract Gen Z with seamless and highly commercial experiences.

1. GEN Z
THE FUTURE
OF RETAIL
Michelle Fenstermaker
Strategy Director
FITCH
@insightsgirl
@FITCHdesign

2. WHO WE ARE

3. WHAT WE DO

4. EXPERTS IN RETAIL

5. OBSESSED WITH THE FUTURE

6. WITH A GREAT INTEREST IN GEN Z

7. THE ONE CRITICAL QUESTION WE
GET ASKED BY BRANDS AND
RETAILERS:
HOW DO WE BECOME RELEVANT TO
THE NEXT GENERATION?

8. GENERATIONS 101
GEN Z AND THE GREATEST
GENERATION ARE
STRIKINGLY SIMILAR
YET, MANY PREDICT THAT
GENERATION Z WILL BE
THE “FINAL GENERATION”

9. BY 2020 GENERATION Z WILL MAKE
UP 25% OF THE U.S. POPULATION
IMPORTANT STATS & FACTS
$44 BILLION IN PURCHASING POWER
GEN Z IS NOT SIMPLY AN EXTENSION
OF GEN Y

10. GEN Y GEN Z

11. which is less than a goldfish.
Source: National Center for Biotechnology, US National Library of Medicine, The Associated Press.

12. Traditional Communication Hierarchy
ANNOUNCE
AMPLIFY
EXPLAIN
Macro Communications
Micro Communications
Mid-Range Communications

13. Gen Z navigates at eye level only.
ANNOUNCE
AMPLIFY
EXPLAIN
Macro Communications
Mid-Range Communications
Micro Communications

17. 44,000,000,000,000,000,000,000
DIGITAL DETOX WILL BE THE NEW THERAPY

30. ENTREPRENEURIAL

39. SHE HAS A MOSIAC
IDENTITY WITH
DIFFERENT LAYERS TO
HER PERSONALITY AND
SHE WANTS A CHANCE
TO EXPRESS THEM ALL

43. WHAT CAN SHE
BUY FROM YOU

44. WHAT CAN SHE
ACHIEVE WITH YOU
TO

47. SharedEconomyEcosystem

51. /CONSTANTLY INNOVATE
/ALWAYS BE UPDATING
/PROGRESS WITHOUT CEASING
/EVOLVE CONTINUALLY
GEN Z EXPECTS BRANDS TO…

52. SO WHAT DOES THIS MEAN TO US
IN THE BEAUTY CATEGORY?

53. THE PRESSURE TO LOOK
GOOD IS PERVASIVE

55. Source: Piper Jaffray 2014
Food 21% Clothing 21%
Personal Care/
Accessories
10%
Shoes 8%
Car 8%
Electronics/
Gadgets
8%
Video Games/
Systems 7%
Music/
Movies 6%
Events
6% Books/
Mags 2%
Furniture
1%
Other
3%

61. FROM FOCUSING ON
SINGULAR IDEALS
TO EMBRACING
MOSAIC IDENTITIES

62. FROM PORTRAYING
THE UNATTAINABLE
TO FACILITATING
AUTHENTIC ASPIRATIONS

63. FROM THE PROVOCATIVE TO THE CONFIDENT

65. WELL, IT SHOULD BE NO SURPRISE
THAT THEY'RE HAPPY SHOPPING
ONLINE…

66. THERE ARE DISTINCT DIFFERENCES IN
HOW THE GENERATIONS SHOP
Gen Z expects retailers to be agile and flexible as
seeing something new to broadcast and share is
table stakes!

67. taking these experiences we create at retail, and making
them more adaptable, more responsive and more nimble
AGILE is all about
Trey Ratcliffe

68. that Generations Y & Z are underwhelmed with old school retail
(cue sudden rush of underutilized selfie walls)
We’ve known for a while…

69. Because they live their lives at an increasingly frenetic pace,
driven by nothing short of a new definition of time - mobile time
The biggest reason for AGILE for Z?

70. for every year physical retail takes to do something new,
mobile has already reinvented itself 7 times over (at the very
least)
Which is like dog years vs human years

71. BECAUSE OF THIS, RETAIL IS IN A
PERIOD OF UNPARALLED
UPHEAVAL…

72. The
Cycle of
Retail
Behaviors and
expectations
Change
Traditional
Retailers
Evolve or
Go Away
Macro-Trends,
Mega Systems,
and Startups
Influence

73. This
Disruption
inretailis a direct
responseto thechangein
behaviorandexpectation
of theconsumer.

74. Traditional
CONSUMERS ARE SHIFTING
Please sort out this
image crop problem
here
Today Tomorrow

75. Traditional
Digital Foreigner
Partially Informed
Product Availability
Expects Efficacy
Desires Convenience
What Can I Buy?
Today Tomorrow
CONSUMERS ARE SHIFTING

76. Today
Digital Learner
Overly Informed
Product Overload
Expects Efficiency
Desires Transparency
What Can I Experience?
Traditional Tomorrow
CONSUMERS ARE SHIFTING

77. Tomorrow
Digital Native
Personally Informed
Product Curation
Expects Generosity
Desires Conversation
What Can I Achieve?
Traditional Today
CONSUMERS ARE SHIFTING

78. CONSUMERS ARE RESPONDING TO BRANDS BORN IN DIGITAL
Try Before You Buy
Evolved Product
Direct to Consumer
Customized Service
Aligned Personality
Category Expert
Casper
Raden Luggage BirchBox AmazonKindle
WarbyParker Reformation

79. Aimed at Reducing Friction, Addressing
Pain Points within Exploring & Locating

80. The Past… Exploring Locating
Dreaming
No specific
purchase
intent
Achieving
Post-Purchase
using product or
service
Specificproduct or servicePurchase intent in
thecategory

81. DRIVING TRADITIONAL RETAILERS INTO EXTINCTION
Fortune 500 companies in 1988 vs2016:
88% are gone.
Source: World Economic Forum

82. Traditional Reasons To
Have Physical Stores
are Being Challenged…

83. THAT’S NOT TO SAY PHYSICAL = irrelevant
Try Before You Buy
Evolved Product
Direct to Consumer
Customized Service
Aligned Personality
Category Expert
Casper
Birch Box Amazon Kindle
Warby Parker Reformation
Raden Luggage

84. Digital +
human +
physical =
seamless

85. (makethejourneymore
STICKY)
Creating new
experiences which also
allow for
Dreaming& Achieving.

86. The now andnext
Exploring
Purchase intent
in the category
Locating
Specific product
or service
Dreaming
no specific
purchase intent
Achieving
Post-Purchaseusing
product or service

87. In almost every category
we are seeing the
emergence of new and
progressive concepts.
"I don't think retail is dead.
Mediocre retail experiences
are dead.”

88. 91
Experience
Themes
- Shrines
- Launch Pads
- Playgrounds
- Campfires
- Workshops
- Tailors
- Theaters
- Collections
- Co-ops
91

89. 92
Experience
Themes
- Shrines
- Launch Pads
- Playgrounds
- Campfires
- Workshops
- Tailors
- Theaters
- Collections
- Co-ops
92

90. PLAYGROUNDS – ULTIMATE “TRY BEFORE YOU BUY”
• Familiar, mimic real world use
• Play and experimenting is actively encouraged
• Literally forget you are in a store
Sonos, Soho, NYC
Lush, Oxford St, London Pirch, Soho. NYC
Hunter,Tokyo
“selling by not selling –
selling by experiencing”

91. 94
What if...
…we had stores that were
100% focused on play, test,
experiment & share – where
engagement trumps
transaction?

92. CAMPFIRES – SPENDING QUALITY TIME WITH THE BRAND
• Knowing customers and what unites them
• Creating spaces people are “drawn to”
• A place to share stories – just like a real campfire
Rapha CCSPT, Spitalfields, London Apple,San Francisco
“retail = community”

93. 96
What if...
…our stores were focused
solely on creating
communities based on a
‘brand love movement’?

94. TAILORS – ONE SIZE DOESN’T FIT ALL
• High levels of service, powered by digital AND humans
• Customizable, unique, memorable
• Feels one-on-one, even if it caters to the masses
MCD Next, Tokyo, Japan
Nike 45Grand, Soho, New York Apple,San FranciscoCreyate, Mumbai, India
“MEtail, not retail”

95. 98
What if...
…our customers all had an in-
store personal coach who was
incentivized to help them
achieve dreams and visions,
not just purchase one more
product?

96. COLLECTIONS – ALIGNING PRODUCTS TO NEEDS
• Highly rotational to maintain energy
• They are retail, not museums
• Fun to shop
...AND OTHER STORIES LONDON LULULEMON NYC
“thoughtful selection
without permanence”

97. 100
What if...
…our stores behaved like an
incredible beauty blog rather
than a cosmetics shop where
there was also a heightened
anticipation of what’s next?

98. CO-OPS – SHIFTING CONTROL FROM US TO THEM
• Focuses on membership and new communities
• Nimble and responsive to customers’ wants
• Takes brand advocacy to a new level
SoulcycleAIRBNB - experiences SOUL CYCLE
“listening is the new
selling”

99. 102
What if...
…our stores were places
where our customers could
share their expertise and get
rewarded for it?

101. DONT STEREOTYPE THEM

102. BE MINDFUL OF YOUR
VOCABULARY

103. JOIN THEM IN CHANGING
THE WORLD

104. OPINIONS & ADVICE OF
THEIR FRIENDS & PEERS
TRUMPS ALL OTHERS

105. MOVE BEYOND THE
MAINSTREAM

106. DON'T MAKE THEM WAIT

107. LET THEM CHOOSE

108. DON'T UNDERESTIMATE THEM