The expectations for the retail sector have really moderated: Dana Telsey
While Canadian retailers have made significant progress in attracting Gen Z customers, a new study shows that opportunities still exist to cultivate brand loyalty among the demographic.
A study from American Express Canada looked at spending habits among Gen Z consumers and retailers’ attitudes toward the demographic between 2019 and 2023. The study found that 64 per cent of retailers agree on the importance of attracting Gen Z customers, an increase from around 50 per cent in 2019, according to a press release last week. Additional findings included that retailers have had success in reaching the demographic, but are yet to drive “true brand loyalty,” the release said.
“Together with Millennials, Gen Z wields unparalleled influence on the future of retail, driving trends that continue to reshape the industry,” Kerri-Ann Santaguida, the vice-president and general manager of merchant services at American Express Canada, said in the release.
“Retailers can propel future success by effectively targeting this cohort and making the right investments to drive loyalty.”
The study also said that Gen Z consumers were among the most loyal, with 47 per cent saying they are loyal to brands “most of the time.”
Gen Z consumers were also found to be responsive to loyalty programs. The study found that 45 per cent of Gen Z respondents indicated they would have subsequent purchases from a brand if they earned rewards on purchases.
“When you win with Generation Z, you could be winning a customer for life if you understand their expectations and preferences," Santaguida said.
However, Gen Z has a diverse range of interests, Santaguida said, presenting challenges for retailers.
“At times, they value frugality and sustainability, shopping at thrift stores and looking for a deal, but they're also willing to pay more for high-quality products,” she said.
The study found that 61 per cent of Gen Z consumers preferred to shop at a brick-and-mortar store, while 28 per cent indicated they shop more at retail stores than before the COVID-19 pandemic.
Despite the interest in brick-and-mortar stores among Gen Z consumers, the study found that 27 per cent of retailers offer unique in-store experiences, which are valued among the demographic.
Research for the study was conducted by Maru Public Opinion on behalf of North Strategic. Data was derived from 115 randomly selected Canadian business owners, partners or senior decision-makers in the retail industry who are Maru Voice Canada, online panellists.
The survey was conducted from April 21 to April 30.