Gen Z is a brick-and-mortar generation

Gina Acosta
Executive Editor
Gina Acosta profile picture
Gen Z customers continue to spend their disposable income in physical stores, where they can have a more engaging in-person experience versus online shopping.

Gen Z shoppers are spending more time in physical retail stores but the reasons why may surprise retailers.

Beyond the traditional focus on shopping for their favorite products, this generation is using the retail experience to socialize, interact, and be entertained, according to PwC Canada's Canadian Consumer Insights: Retail Evolution Report.

Despite the perceived rapid growth of online sales, this segment still only represents 8.1% of core retail sales in Canada. The report, based on a survey conducted with more than 1,000 Canadian respondents, shows that customers continue to spend their disposable income in physical stores, where they can have a more engaging in-person experience versus online shopping.

According to the report, 58% of consumers prefer to spend their disposable income on products while 42% spend it on experiences.  Of those, Gen Z prefer spending their money on experiences like socializing with family and friends (71%), events (55%) and traveling/vacations (51%). 

"Stores are moving away from shelves and registers to create entertaining and engaging retail spaces. In a bid to continue to attract the next generation of consumers to physical stores, retailers are focused on creating 'showroom' spaces where customers can enjoy experiences and interact with the product. Generation Z customers indicate they will keep coming back to their favorite brands because of the full in-store experience," says Myles Gooding, National Retail Leader, PwC Canada.

The report also finds that emerging technologies, such as AI and advanced analytics, are helping retailers improve sales productivity, labor allocation, customer engagement and retention while building a more customer-focused value chain. As indicated in PwC Canada's Digital IQ Survey, retailers who value customer-facing technology activities report revenue growth and profit margin increases above 5% for the past three years.

"Emerging technology is providing retailers with even greater insights on their customer base to gain a better understanding of their habits and needs. It allows them to predict customer preferences more accurately, sharpen the assortment, and provide customers with the experience they want from their favorite brands," Gooding said.

"Everyone agrees that the use of technology has become a staple in the retail sector, and that retailers are now wondering what their digital IQ is," said Sonia Boisvert, Partner and National Retail and Consumer Leader at PwC Canada. "The more retailers develop their technological capabilities, the more easily they will be able to achieve growth and increase profits. Whether it is through AI, data analytics, behavioral economics or, even better, the combination of many of these technologies, retailers need to understand their consumers, sometimes better than themselves, and offer them an experience they will want to have over and over again." 

Customers now expect retailers to be more aware of and act on their shopping preferences. According to the report, 38% of Canadian consumers aged 25-34 expect retailers to have up-to-date information on how they like to interact with them.

The report also showed that mobile payment is now the preferred payment option for 35% of shoppers. Despite the adoption of mobile payment, 58% of respondents said they are worried about mobile payment security - an issue that retailers must address if they want to succeed in the Canadian retail space.