7-minute read

Like generations before them, Gen Z and younger Millennials – born between 1997-2012 and 1990-1997 respectively – naturally want to embrace brands and experiences that feel relevant and authentic to them. However, these consumers have grown up with access to smartphones, social media, and the internet – which has altered attitudes towards established brands and how they shop. The challenge remains for legacy brands to find ways to engage with these new consumers in meaningful interactions that help drive sales.

Where are they shopping, and what do they expect?

They might be the first generation born to the eCommerce age, but Gen Z really are the omnichannel generation. Our survey of 500 18 – 34-year-olds found that 50% of 18 – 24-year-olds still prefer to shop in-store with their favourite retailer, while 27% would first shop via the website.¹ However, 80% of 18-24-year-olds agreed that they’re more interested in what they’re buying than where they’re buying it from – whether from a particular brand or a specific channel.

Shopping via social media channels remains relatively new, even for Gen Z. Commerce options weren’t fully launched by social media companies until 2020. Because of this, brands with established alternative channels could take longer to embrace social commerce. But what role do social channels play right now? Both Gen Z and younger Millennials are turning to social for inspiration. For those 18 – 24-year-olds, 68% use Instagram and 54% use TikTok to research and plan a purchase, making them essential places to promote products and brands. Social platform choice also differs significantly. For example, 25 – 34-year-olds are twice as likely to turn to Facebook for inspiration compared to those younger.¹

Earning brand reputation

What brands are saying and doing now is more relevant to an 18 – 34-year-old audience than what the brand has done in the past, with just 26% of our sample saying reputation and brand history were important factors when shopping at a retailer compared to 77% for price.¹

With less disposable income, Gen Z and younger Millennials are known to be careful with their money – as seen on TikTok, with the rise of #Dupes, replica products that offer the same quality for a lower price. While some of these may be knock-offs, plenty are generic or less well-known brands that offer a similar experience at lower prices.

However, by understanding customers’ passions and goals, brands are finding new ways to engage with younger audiences. For example, beauty brand Youthforia’s founder, Fiona Co Chan, uses TikTok to create a conversation with customers – listening and responding to their comments as well as sharing tips and advice on getting the best from beauty products.

Creating longer customer relationships

According to McKinsey, even if Gen Z shoppers have a favourite brand, 62% would look elsewhere before making a purchase,² which makes building loyalty hard. To build loyalty, Stanley embraced having a viral moment: gifting a customer a new car and travel mugs after a fire destroyed her car but not her Quencher travel mug or the ice inside it. A viral moment doesn’t last forever but boosted Stanley Quenchers as a TikTok must-have item – as much for their behaviour and attitude, as the product and its branding. The search for quality and value for money makes customers more willing to try new brands and experiences – creating opportunities for newcomers and legacy brands alike.

With a near-ubiquitous use of social media, influencers and peer networks become important gatekeepers in brand discovery. Often, relationships quickly evolve into more authentic and impactful partnerships. When Hugo Boss repositioned itself as two brands, Boss for Millennials and Hugo for Gen Z, they asked TikTok star Khaby Lame to help them relaunch. Lame’s importance to the brand continues to grow, with him designing a limited-edition capsule collection for them.³

Transforming legacy into brand fluidity

Faced with the challenge of staying relevant to younger generations, Hugo Boss has heavily invested⁴ in its data capabilities to leverage more demographic insight and personalise experiences.⁵ This helps sharpen their targeting and ensures they connect the Boss and Hugo brands to Millennials and Gen Z, respectively. Rohan Kumar, Head of Client Insights at Barclays Global Transaction Banking highlights that, “Businesses are turning to external payment data sources to enhance their insight, such as consumer spend reports and industry-wide aggregated spend data”.

Winning customers over with experiences that enchant

Gen Z and younger Millennials are looking for meaningful, impactful interactions – bringing heart and excitement into the brand experience – with 65% of Gen Zs believing brands should be thinking about giving customers goosebumps.⁶ Experiential retail becomes an important way to circumvent cynicism around marketing and engage audiences emotionally. This holistic rather than product-focused approach allows brands and audiences to explore other modes of engagement, from virtual reality experiences to bespoke rewards that give exclusive access to a like-minded community.

One method is offering hospitality or entertainment. Upmarket brand Hackett provides customers with gin and tonic when waiting to have their shoes polished or resoled, while HMV works to make stores a hub for local bands and culture-themed communities.

Making loyalty personal

According to our research, a loyalty scheme will help sway the decision to shop at a retailer for 35% of Gen Zs and younger Millennials (more than those encouraged by metaverse presence – just under 3%).¹ They also appreciate exclusive rewards that give a deeper emotional satisfaction over monetary rewards – from invite-only perks to access to special collaborations and experiences.

However, this audience brings complexity to loyalty programmes. They like to be rewarded beyond shopping; for example, they want rewards for living more sustainably or healthily and to see offers linked to complementary products or brands. Kirsty Morris, MD of Client Experience and Market Development, Barclays Transaction Banking explains loyalty programmes further, “It’s got to be right for your brand and offer meaningful rewards for the audience. Young consumers often see better personalisation as a good exchange for their data”.

Making sure every micro-interaction counts

When it comes to personalisation, brands should focus as much on the small, nuanced interactions as the big, overarching customer journey. Take Sephora’s approach, built on insights that not every customer wants staff interaction. They offer customers a choice in-store: red baskets for assistance or black baskets to shop uninterrupted – kickstarting a personalised experience that lasts throughout the entire in-store journey.

These opportunities exist throughout the customer journey – including at the end, where payment choices can transform into a memorable part of the experience. “Paying has been traditionally seen as a point of friction, but a choose-your-own-payment experience approach can change that, ” says Chantal Willis, Director of Large and Strategic Account Development at Barclaycard Payments. This is because 26% would be encouraged to shop at a particular store if they had self-service checkouts, and 12% would want to shop there if they knew their preferred way to pay was offered.¹

Time to take advantage of a legacy of change

With advances in big data, analytics and behavioural insights, legacy brands are in a position to keep adapting to the growing influence of this new generation. Barclaycard Payments’ Director of Retail and Corporate Industries, Adam Mepham says legacy brands are sometimes accused of lacking relevancy but explains, “these long-established businesses didn’t just help create markets, they continued to embrace new trends and technology, from changing personal tastes to changing shopping habits”. Once brands start winning over younger customers, it can become a virtuous circle. Almost 60% of 18-24-year-olds in our research agreed they liked to shop at the same stores as friends their age,¹ creating a social network effect to boost a brand’s popularity.

The shopping list for brands

Legacy brands are experts at adapting, and with Gen Z and younger Millennials wanting them to provide seamless experiences that work effortlessly for them across all channels, brands must learn that understanding the next generation of customers is vital. With multiple factors for legacy brands to remain relevant, from price to going viral – brands should look to combine zero and first-party data with external payment data for insight and personalisation to ensure this relevancy is not wasted. Barclaycard Payments’ data analytics service can help provide insights about customer purchase behaviour, whilst also ensuring that customers can pay the way they like with our end-to-end capabilities at any touchpoint.

¹Barclaycard-commissioned Maru poll of 500 UK consumers (February 2024).
²Source: Mind the gap, McKinsey & Company, April 2023.
³Source: Press release – There’s a new boss in town, Hugo Boss, June 2022.
⁴Source: Press release – Metyis campus inaugurated, Hugo Boss, June 2023.
⁵Source: Dynamic Yield Personalisation Awards, 2023.
⁶Source: The Age of Re-enchantment, Wunderman Thompson, June 2023.

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