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COMMENTARY

How Gen Z's Love for Stores Is Reshaping D2C Landscape

• by Sarah Mahoney , Staff Writer @mahoney_sarah, May 6, 2024

Aerie stores are a favroite with Gen Z shoppers

While younger consumers’ love for digital brands and experiences has formed the bedrock of hundreds of direct-to-consumer companies, new data reveals how that’s changed.

About 31% of Gen Z now says that in-store shopping is how they prefer to buy fashion and accessories, the highest of any age group, and 41% like to shop in a hybrid way, using both in-store and digital. According to 2 Visions, the market research firm that conducted the research, that’s radically different from millennials, with only 19% favoring in-store and 66% preferring hybrid shopping for such purchases. (Gen X and baby boomer consumers closely mirror millennial choices.)

Yates Jarvis, principal at 2 Visions, says Gen Z gives three reasons for this preference. While fit is first, the second-most mentioned reason is for comparing two or more fashion and accessory items in person. “User experience is built around navigating a large selection to a single item,” he tells D2C Insider. “Comparison UX doesn’t exist for clothing.”

But importantly, Gen-Zers say they simply like browsing a store. “It’s the experience of getting out. Because they are digital natives, they might have had fewer of these experiences,” says Jarvis.

Yet industry perceptions persist that it’s older consumers favoring stores, despite post-COVID behavioral shifts.

“We often find senior executives are working off of data from a few years ago, if not decades ago,” Jarvis says.

Income plays a part in people’s channel preferences. Virtually all the study’s high-income respondents say they can access in-store shopping within 30 minutes. For those earning less than $50,000 per year, only 85% say they are able to do so.

The most hybridized shoppers are the most affluent, with 67% of those earning $100,000 or more per year saying they use both digital and physical.

In-store shopping habits are also impacted by where people live. And since Gen Z-ers are often renters in urban areas with many stores, these shoppers have more stores to enjoy.

But preferences aren’t that simple, adds Jarvis. For example, shoppers of all ages in the densel -populated Northeast region lead the nation in exclusively buying clothing online. However, they have a higher preference for in-store shopping for home décor and personal-care products. “It isn’t so much about the way they shop overall,” he says, “but the way they prefer to shop by category.”

What do these findings mean for all the retailers who can’t seem to lure Gen Z into their stores? For D2C brands now scrambling to open their own stores, should they go wholesale, or focus on pop-ups? “They keep thinking like businesses, and they go for scale,” Jarvis says, “often launching more stores than I would recommend.”

Instead, he believes retailers should consider each store an R&D lab. “They need to develop a better connection to Gen Z, in terms of research and intel, and then they need to have a better testing engine.”

Those small-scale efforts won’t drive much revenue at launch. “But the goal should be understanding the nuances of the experience that Gen Z wants, learning how to delight them. Retailers can’t keep rolling out the in-store experience of 10 years ago and expect it to work.”

Another disconnect, he says, is that department stores were “built on the power of brands, and that’s hurting them with Gen Z.” While previous generations were drawn to big national names, “Gen Z has much less interest in incumbent brands, and a much higher desire to trust up-and-comers.”

The company conducted the research, based on a survey of 2,400 U.S. shoppers, with Portless, a third-party logistics company.