The emergence of Generation Z and their power to spend has changed the rules of traditional retail. This cohort behaves differently and requires a tailored approach — especially as the industry enters a new age of engagement, noted Karin Tracy, head of industry beauty, fashion, luxury and retail at Meta, during the WWD Apparel and Retail CEO Summit.
During her presentation, titled “Beyond Gen Z: How to Power Creativity, Culture and Growth,” Tracy said when she was preparing for this session, the idea “of the power of creativity and culture all used to fuel your growth, I kept coming back squarely to Gen Z and the influence they are having on all of this.”
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“As every new generation comes along, we all try to figure out what makes them special,” Tracy said. “And having done this for many years, it usually goes back to some kind of youth narrative and how that youth is connecting to the medium of the time. So, think about the MTV generation or the internet generation and what makes them special and what makes them tick. This time, I believe it is profoundly different. And the reason is that Gen Z is the first generation to have had all of these mediums at their disposal, and it’s creating a cultural line in the sand in terms of human behavior.”
There’s also a lot of money at stake.
Tracy said Gen Z makes up 40 percent of the population and has a spending power of $360 billion. “Now, along with their Millennial counterpart, they will make up at least 50 percent of the luxury market in the next three years,” she said. “But when we think about the differences between Gen Z and the Millennials, they really are significant.”
Tracy, for example, noted how Gen Z avoids conformity. And while Millennials tend to have a huge group of friends, most of them are strangers. “Gen Z is about a tight circle of friends that they trust,” she explained. “Instead of following trends, they are reappropriating them. They fit in by standing out. And this is not only affecting their generation, but every generation around them because they are the children of global recessions, they have been through societal disruptions, and they were here for the rise of technology, all giving them unique characteristics that are shaping culture as we know it.”
These behavioral differences are also cast against major changes in everyone’s lives. “Think how we connect to each other, how we work, how we express ourselves, and what’s important to all of you, how [Gen Z] shop,” Tracy said. “And these shifts are going to affect how they think about you as a brand and then how you should be responding to this.”
She then shared several “cues” to help brands and retailers better connect to Gen Z. “The first is about this idea of creative activism,” Tracy said. “Gen Z thinks of themselves as your talent scout, as your cultural curator. They feel that they discovered your brand with you and expect to co-create with you. They expect to be heard. And the way we’re seeing this play out on social is through comments. They look at it as what they’re calling a social brief.”
Tracy said Gen Z is expecting to be heard. “And the brands that are winning right now with this generation are responding and co-creating whenever they can.”
The next cue or approach is about the speed at which Gen Z is devouring and creating culture. “You must keep up with this speed at which this creativity is happening,” she said. “And if you sleep on the trend, you will certainly miss it. And the third, and I think most important, is that we are dealing with an omni-cultural generation. They grew up with major cultural defining moments like #MeToo and Black Lives Matter. Diversity, equity and inclusion and this whole sense of belonging are table stakes to this generation.”
She said 63 percent believe that what a brand stands for “will lead them to make a purchase decision. And in all of this, authenticity is key.”
Tracy then noted how there is a “full-screen environment of immersive creativity” occurring with endless engagement. She said Meta is “seeing 95 million posts and videos a day on the platform. That’s 66,000 by the time I’m done with this slide.” But it is shared connections that fuels Gen Z “to continue to be a major part of how we evolve and how creativity is expressing itself on the platform. And how this is playing out is what we call this ecosystem that is cohesive with multiple canvases.”
She said culture is created on social platforms such as Meta’s. “And it’s created by this incredible mashup of people and creators and brands coming together to do this in this beautiful canvas of multiple formats,” Tracy said. “And it’s ubiquitous because it’s all happening in the palm of our hands, right on our phone. And because of that, it totally makes sense that this would be the place where culture starts. But what’s also happening is social is the place where this generation is coming to discover your brand. And what I want to make sure is clear here is where they are spending their time, is on Meta platforms.”
All of which is powered by the creator community. “They are spending 13-times more time on creator content than they are on brand content,” Tracy said. “So, what you all have to think about here is how your brand shows up in this way. And it is why we as a company are investing heavily in the space — $1 billion toward the creator ecosystem — to make sure that we are providing value not just for creators but all of you, the brands that they work with.”
She said brands are sharing their stories in new ways and are open to an entirely new audience.
“Because make no mistake, as we think about where this continues to evolve, creators will be the ones to build Web 3,” Tracy said. “These hybrid experiences are the expectation of this generation. And you have to tell immersive stories that connect in entirely new ways. And I cannot mention immersive stories without at least touching on the metaverse. The metaverse is this big bet that we are all trying to figure out. And I know everyone’s dabbling in their own way in terms of how we will use this immersive format to connect with consumers in entirely new ways. To put it simply, the metaverse is the successor to the internet.”
Looking ahead, Tracy said creativity will continue to evolve and impact culture. “As creators, technology and people will come together to create something entirely new,” she said. “What I want you to take away from this talk is that [the] creative has become an incredibly powerful tool to fuel your business outcomes, especially in a post-cookie world. Creativity is the lever to performance. Good creative will equal performance for you if you get this right. The most important thing you can do right now is to build great creative.”
Tracy urged the attendees to lean into creativity “and lean into creators to do this for you and tell your story across multiple formats. Culture is happening at a speed we are not used to. Get comfortable with the uncomfortable, move at their speed.”