Gen Alpha Are Changing the Retail Landscape
Similar to prior generations, every demographic cohort has a unique and collective mindset with their shopping habits, spending power and more. Despite the current lack of purchasing power by Generation Alpha, they are already influencing and changing the future of the retail market.
Gen Alpha encapsulates the youth of today — born in the mid-2010s and estimated to finish around 2025. The majority are the children of Millennials and are the first generation born entirely in the 21st century. Many of them are facing the effects of the pandemic early on in their childhoods.
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Marcel Hollerbach, cofounder and chief innovation officer of the product-to-consumer company, Productsup, spoke to WWD to discuss predictions for Gen Alpha’s purchasing power, key generational characteristics, the influence of artificial intelligence and more.
WWD: As the majority of Generation Alpha is under the age of 13 and some are still yet to be born, how can retailers forecast the future retail landscape? Are there predictions for this generation’s purchasing power?
Marcel Hollerbach: For the time being, retailers will focus marketing campaigns and strategies on generations they’re already familiar with. Luckily, this provides retailers with a good jumping-off point as they prepare to cater to Generation Alpha. With Generation Z, for example, we’ve already seen an uptick in interest toward more digitally driven shopping experiences. More than 50 percent of Gen Z shoppers expressed interest in the metaverse — particularly one that serves them in the real world too, with quicker purchases and returns, as well as the ability to buy physical and virtual products.
Knowing Gen Z craves a mixed-reality shopping experience gives retailers the data needed to predict how Gen Alpha will react to related campaigns and opportunities. And although Gen Alpha doesn’t have purchasing power yet, their parents do — creating an avenue to market to this generation without knowing exactly how they’ll shop in the future.
WWD: What are some generational characteristics of Generation Alpha that are already clear to retailers when looking at the future of the industry?
M.H.: Generation Alpha will be the most fluent in technology and social media than we’ve ever seen before. Using social platforms to cater to this generation will be crucial. Gen Alpha’s interest in digital experiences, like the metaverse and other Web 3.0 applications, is already clear. For example, major, established brands like Walmart have experimented with the metaverse by appearing on popular games like Roblox. By normalizing purchases in the metaverse, Gen Alpha will view digital products in a way that other generations never had the opportunity to. Digital goods will be on a level playing field with physical ones.
WWD: What are some of the key retail categories that Generation Alpha is already influencing and will influence?
M.H.: In addition to in-game purchases on Roblox and Fortnite, brand collaborations are already a hot commodity among Generation Alpha.
Gen Alpha YouTube influencers like Vlad and Niki — the global preschool phenomenon — are driving retail demand by recommending certain products, namely toys, that surge in popularity among their millions of subscribers.
WWD: How are brand manufacturers and the supply chain anticipating these changes and adapting to them currently?
M.H.: Brand manufacturers probably aren’t anticipating specific changes in supply chain processes as it relates to Gen Alpha yet, but Gen Z shopping behaviors provide a good baseline for how to prepare. For example, TikTok trends and product dupes that cause items to go viral overnight show the importance of preparing inventory accordingly.
WWD: What role will AI, sustainability and social media play for retailers looking to connect with Generation Alpha consumers?
M.H.: Artificial intelligence, specifically generative AI, is going to have a big impact on how retailers connect with customers moving forward. Although we don’t know the extent to which ChatGPT will support brand marketing and customer engagement strategies, big box retailers like Walmart are now getting involved with the development of GPT-4. There’s also an opportunity for brands to leverage generative AI in a way that describes products in words that make sense to different age groups. For example, companies can leverage this technology to extract qualities from an image of a product, put those qualities into ChatGPT and ask it to describe the product in words that make sense to a five-year-old versus a 40-year-old, then use it for marketing purposes.
The same goes for sustainability. There’s an opportunity for brands to leverage this technology to calculate the carbon footprint of products, like asking ChatGPT to provide the carbon footprint of popular products by inputting certain parameters. This will be crucial for brands looking to connect with Gen Alpha customers, knowing Gen Z is more committed to purchasing products that are environmentally friendly.
Above all, social media, specifically social shopping, will be the standard for Generation Alpha. Ninety-seven percent of Gen Z consumers already see social media as their main inspiration for shopping, so it’s no secret that Gen Alpha will follow suit. Retailers that want to be recognized among Gen Alpha will offer digital shopping experiences and ensure each of their social profiles are shoppable. This gives Gen Alpha, which is set to be the most digitally native generation, the opportunity to engage and build trust with brands in an environment they’re comfortable with.
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