Brick-and-Mortar Isn't Dead

As Millennials begin to grow older and mature as consumers, retailers must now shift their focus to the next generation: Gen Z. Those who fall in the Gen Z category are born after 1997 and are just now starting to come into their own as consumers.

While they may share similarities with Millennials, individuals of Gen Z exemplify many behaviors that set them apart from other generations. If you’re looking to adjust your real estate strategy to attract this new generation of consumers, here’s what to keep in mind.

Because of their young age, Gen Zers are beginning to form their own spending habits that will influence their habits later in life. They also make up the largest demographic in the United States at 27.7 percent, positioning the generation as a prominent target audience. And while technology is almost an accessory to Millennials, it’s more like a necessity to Gen Z. They were born into an age with more technological revolution than any other generation and are very tech-savvy.

Brick-and-mortar isn’t dead

If it’s believed that Millennials were killing physical retail stores, shouldn’t it be assumed that the generation after would deliver the final blow? Truth is, this probably isn’t the case. In fact, Gen Z might be the saving grace for brick-and-mortar.

Despite their tech savvy, 73 percent of this generation prefer discovering new products and 81 percent prefer making purchases in stores, something that might be attributed to “retail therapy.” Gen Z takes the opportunity to go shopping to disconnect from browsing online and social media. Because of their preference for in-store shopping, Gen Z may be an important generation for your brand to zero in on for a trusted brick-and-mortar experience. 

Prioritize fulfillment

Gen Zers are thought to show more impulsive behavior than Millennials, meaning they might make a purchase just because they saw something that caught their attention or simply because they felt like it. This can also signify the importance of a speedy checkout process or fast delivery for Gen Z individuals. Time is of the essence when it comes to making quick consumer decisions.

You may want to focus on developing locations that will be able to fulfill customers’ requests quickly, whether that be an in-store purchase or delivery. Focus your location search on areas that are close enough to heavily populated areas of Gen Zers. The layout of your location factors into this as well. It’s critical to make sure your store is using space efficiently to minimize wait times and potential errors.

It’s all about the experience

Brick-and-mortar should experience a serious comeback as Gen Z’s purchasing behavior matures. However, this does not mean things can remain status quo. As Gen Z customers enter a store to buy a product or service, the risk of boring them or failing to catch their eye right away is more of a risk than you might think. According to a report from IBM, 56 percent of Gen Z customers want a fun in-store experience.

Now, a great in-store experience doesn’t mean having a fireworks display and rolling out the red carpet for every guest who walks through your door. Restaurants, for example, can host customer appreciation events or tastings to bring guests in the door for a casual, yet memorable get-together. More often than not, Gen Z consumers will want to share these experiences with friends and family, which means store layout is a key factor in this as well. To use the restaurant example again, consider creating seating and private rooms large enough to accommodate larger groups.

Consciousness is key

One similarity Gen Z shares with Millennials is their propensity to gravitate toward businesses that share the same conscious mindset as them. Your real estate decisions can be affected by this, too.

Consumers today can look up nearly anything and everything they want to know about your company, including what kinds of materials are used and what environmental certifications your physical stores have, if any. If you’re not making environmentally sustainable real estate decisions, these customers will know and will be less likely to do business with you.

Take the lifestyles and habits of residents in the area into consideration as you hone in on your target real estate site. Before beginning construction, are you getting feedback from nearby residents on what they’re looking for in a new business? Could the location of a new store have a negative impact on the local residents? Will your business be located in an area where you can make a positive contribution to the local area? Does your location offer spaces where different members of the community can meet and get to know each other? These are just a few of the questions to ask when selecting a new site for a brick-and-mortar location.

As younger generations continue to grow and make their own decisions as consumers, it’s imperative for brands seeking to attract them as customers that all aspects of your business adapt to fit their needs, wants, and consciousness. Even real estate decisions can have a serious impact on whether a business will boom or bust with new consumers.

Carl Jenkins is Director of Real Estate at Huddle House. Previously, he spent more than 28 years in commercial real estate roles for Advance Auto Parts, McDonald’s, and Panda Restaurant Group, where he supported both corporate and franchise development.