Amazon may have a problem attracting youth.
Generation Z — defined as those between the ages of two and 20 — isn’t particularly interested in utilizing Amazon, according to the findings of a survey of 15,500 across four generations of shoppers in nine countries conducted by OC&C Strategy Consultants, and disclosed at the annual Financo Inc. Forum held earlier this week.
“They’re quite discerning, researching fewer places, curating fewer brands. They are controlling what they see and less likely to engage in Amazon,” said Coye Nokes, partner at OC&C, during her presentation at the forum revealing the new Gen Z study conducted in the fourth quarter.
“Gen Z is far more likely to be swayed by a brand’s ethos and values, more than Baby Boomers or Millennials or Gen X,” said Nokes, who later mentioned to WWD that Gen Zers are more likely to engage in brands directly,” rather than Amazon.
Past forums have been more contentious with panelists debating each other, while this week’s Financo Forum was provocative, particularly with the Gen Z findings, and designed to be more informative, with a presentation by Financo chief executive officer John Berg on the changing character of M&A in the consumer space.
There was also a panel discussion with newer, disruptive companies discussing what it means to be a brand, social causes, and why they’re not putting product on Amazon, at least for now. The panel was led by Ben Fischman, founder and former ceo of Rue La La, and founder and ceo of Launch, a venture-backed organization seeking to introduce “immersive, branded consumer retail experiences.”
“Activity in the M&A market in the consumer space has been incredibly robust,” Berg said. But it’s dramatically changed, he added.
“M&A was relatively straightforward” driven by a desire to consolidate, cut costs, win market share and gain pricing power.
Now it’s about the “convergence of data, products and services,” Berg said. “It’s no longer just about having a great product at a great price. M&A is the new R&D.”
Berg also said strategic minority investments are gaining steam for “access to talent and capabilities, and to try to suck some of that DNA” of other businesses into their own. He cited Walmart’s acquisition of Jet.com and Williams-Sonoma’s acquisition of the AR and 3-D start-up Outward, as strategies to stay on top of new technologies.
“The largest companies realize they have to stay current and just aren’t fast enough to do it on their own,” Berg said.
Among his advice to the crowd of 300 industry executives at the 583 Park Avenue event space: set a clear docket of priorities and take stock of what’s missing, evolve your historic mindset to the new order of strategic M&A, think like an entrepreneur and adjust your risk profile. Berg also indicated Financo’s 2018 results, noting that the investment banking firm completed 19 transactions with a total value of $4 billion.
“Starting a business has never been easier, but landing a business does not mean you are creating a brand,” said Fischman.
According to Neil Blumenthal, cofounder and co-ceo of Warby Parker, if the brand doesn’t clearly define what it stands for, it can’t be authentic. Allbirds, one of the hottest shoe brands currently, Blumenthal said, is defined by “comfort and sustainability…You see it in the product, marketing and the people.”
“I think about brand as a promise,” said Victoria Tsai, founder and ceo of Tatcha, a luxury skin-care brand inspired by timeless Japanese beauty rituals. “We’ve never done consumer research. All we do is listen to our customers.”
“In some ways, it’s harder to build a brand. We live in a very noisy world,” said Simon Belsham, president of Jet.com, the e-commerce platform purchased by Walmart for $3.3 billion in September 2016.
Addressing the Amazon question, and why they’re not putting their products on the platform, Blumenthal said, “We think we can protect our business and really build it outside Amazon.”
“There’s never been an empire that hasn’t fallen. I can say that because I’m British,” said Belsham.
Though Jet is now owned by Walmart, “We’re still relatively independent. We have our own team, yet we share some back-end infrastructure like the cloud…It’s very, very easy to impose a culture.”
He said Walmart stopped Jet.com’s happy hours but three months later, after sensing employees weren’t happy, Jet.com was allowed to reinstate happy hours.
“It’s important we have more trust,” said Melanie Shapiro, ceo of Token, a solution to access and protect personal information through a biometric-based wearable ring. She said she sees the Token Ring most applicable to the Apple and Microsoft stores, rather than other retailers or marketplaces.
Also on the panel was Karissa Bodnar, founder and ceo of Thrive Causemetics, a beauty brand that for every product purchased donates “to help a woman thrive” and offers vegan, “cruelty-free formulas containing proven ingredients” without parabens or sulfates.
The OC&C study indicates the Gen Zers…
• Are more likely than previous generations to demand their clothing be stylish and somewhat unique.
• Are more demanding of brands. As one 20-year-old U.S. woman said in the survey, “I would like it if they (brands) increased their offerings and made it easier to find things you’re looking for.”
• Represent 30 percent of the global population and account for $3.4 trillion in annual spend through what they buy or via purchases that they influence.
• Are more likely to be influenced in purchasing decisions by friends and celebrities than earlier generations, which may underscore the importance of brands to court major influencers with large followings on Instagram, Twitter and other social media.
• Are more concerned about reducing waste and recycling plastic.
According to OC&C, Gen Z already makes up 30 percent of the global population and circa 50 percent in parts of Africa. “In little over a decade, Generation Z will account for a third of all consumers worldwide — presenting vast opportunities for businesses,” OC&C indicates.
“With this generation we enter the age of the influenced and the influencer, the finsta and the rinsta, the activist and the individual,” according to the OC&C study. The finsta is the private Instagram account for close friends and family only, and the rinsta, is the polished and public ‘regular’ account.
Gen Zers have been shaped by political and economic turmoil including the Great Recession, 9/11, refugee crises, gay marriage legalization, Donald Trump’s presidency, the #MeToo movement and the rise in populism.
“As the oldest Gen Zers come of age, we’re starting to grasp just how much these worldwide events may have influenced and defined the characteristics of these young consumers, the OC&C report indicates. “We’re seeing how concerns around social responsibility are affecting purchase decisions, for example, and that equality and diversity — not the environment — are the most significant issues for this group of people.
“These young adults, teens and tweens don’t ‘go online’, they live online…This doesn’t mean they’re not concerned by their social media use, however. Over 50 percent worry about the wider impact social media has on society, while two in five are concerned by the effects social media has on their health.”
As one 20-year-old woman from the U.K. stated in the study, “What makes us different from any other generation is that we are more cautious and pragmatic. We grew up during a global recession, war and terrorism. When planning our futures, we seek stability and security rather than the optimism and flexibility of Millennials.”