Tags: Business Insider | Social Media | Traditional | Retailers

Business Insider: Social Media Is Killing Traditional Retailers

Business Insider: Social Media Is Killing Traditional Retailers
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By    |   Monday, 15 February 2016 10:12 AM


Traditional retailers are struggling to adapt to the changing shopping habits of today’s teenagers, who have centered their lives and purchasing decisions around social media, Business Insider reports.

A recent Ernst & Young survey reported that teens, or Generation Z, has the highest expectations out of all consumers, and if retailers please them, they'll in turn, please everyone, BI reports.

"Their entire life, if it’s not shareable, it didn’t happen," Marcie Merriman, Generation Z expert and executive director of growth strategy and retail innovation at Ernst & Young, told Business of Fashion. "Experiences define them much more than the products that they buy," Merriman said.

The only apparel young people want is clothing that can translate into an experience on Instagram or Snapchat.

“Given their limited budgets and frugal tendencies, they're more likely to purchase lots of clothes at fast fashion retailers, like cutting-edge Zara or cheap Forever 21, so that they have ample images to share,” BI’s Mallory Schlossberg explains.

"What I'm suggesting is that they [retailers] understand the needs of Gen Z as the barometer," Merriman told Business Insider. "They have the highest expectations. If you please them, you're also going to please millennials – and Gen X and baby boomers and others will be happy."

But Instagram and social media outlets like Pinterest are affecting the way older consumers view fashion, as well. Consumers have nearly instant access to trends on the runway, and they want the looks that they see as soon as possible.

This is why companies like Zara, with rapid-fire supply chains, are succeeding; they can respond to trends churn out runway-esque designs swiftly, BI explains.

“Traditional retailers, like J. Crew, Abercrombie & Fitch, and Gap, are not equipped to do that without having to completely revamp their business models. Instead, they have to resort to incessant discounting to get rid of styles that failed to resonate with consumers. The heavy discounting, in turn, leads to two major problems: declining sales and the general devaluing of a brand as a whole,” BI explains.

In a piece at Forbes last year dissecting why teen brand Buckle’s sales were down, Nikki Baird argues that in spite of disposable income being down, teens would happily spend their money at these stores if they had a compelling reason to do so, Vocative reported.

Baird dove into their social media presence to identify another reason so many teen brands miss the mark these days: They fail to engage in an authentic way with their customers and come off as out of touch, pushing products obviously made by adults trying to seem hip to teenagers.

To be sure, Generation Z was born digital. “They have no idea that there’s been a technology revolution,” Piers Guilar, executive strategy director of Fitch, a retail and branding consultancy, told Business of Fashion.

“They’re above ‘tech savvy,’” agrees Nancy Nessel, founder of marketing advice website Getting to Know Generation Z. “I call them ‘tech genius.’”

Indeed, 92 percent of U.S. teens go online daily, and 24 percent are online “almost constantly,” according to a 2015 report by the Pew Research Center. This digital fluency has changed the places where teenagers congregate and the channels they use to shop.

“The old rules of retail no longer apply,” explains Guilar. “Teenagers don’t distinguish between buying online, looking at things on Twitter and buying in a bricks-and-mortar store.”

Technology has also changed what teenagers spend their money on. From 2005 to 2015, fashion purchases including clothing, accessories and footwear dropped from 45 to 38 percent of teenage spend, according to consultancy firm Piper Jaffray’s latest teen spending review, published in October 2015. Over the same period, expenditure on electronics and gadgets doubled, rising from 4 to 8 percent of teenage spend.

“They’ve grown up with choices of other things to spend it on. Millennials grew into technology, whereas Generation Z, since birth, has distributed their income,” explains Merriman. Today’s teenagers are more likely to ask for smartphones, tablets or wearable technology for Christmas and birthday presents, instead of clothing, she says.

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Traditional retailers are struggling to adapt to the changing shopping habits of today's teenagers, who have centered their lives and purchasing decisions around social media, Business Insider reports.
Business Insider, Social Media, Traditional, Retailers
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2016-12-15
Monday, 15 February 2016 10:12 AM
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