What's Happening?
Gen Z, often perceived as digital-first consumers, are showing a strong preference for in-person shopping experiences, according to Paige Lustbader, Retail Audit Director at BDO USA. This trend is contributing to a potential rejuvenation of malls, especially those housing retailers with a strong Gen Z connection like Claire's, Five Below, Muji, and Daiso Sangyo. Lustbader notes that Gen Z's spending power is increasing, and retailers are shifting focus to cater to this demographic. The post-COVID environment has heightened Gen Z's desire for connection and in-person experiences, which they missed during the pandemic.
Why It's Important?
The shift in Gen Z's shopping habits is significant for the retail industry, as it could lead to a resurgence of physical retail spaces, particularly malls. Retailers that successfully integrate in-store experiences with digital journeys stand to benefit from Gen Z's growing spending power, projected to reach $12 trillion by 2030. This demographic's interest in sustainable packaging and thrifting also presents opportunities for brands to align their values with those of Gen Z, potentially driving sales and brand loyalty.
What's Next?
Retailers are expected to continue adapting their strategies to meet Gen Z's preferences, focusing on interactive in-store experiences and merging online and offline environments. Companies like Warby Parker, which started as online-only, are expanding their physical presence to connect with Gen Z. The trend may lead to more malls being transformed to cater specifically to Gen Z, potentially revitalizing commercial real estate.
