Gen Z, the stage is yours…
It’s an exciting time to be working in ethical and sustainable retail. A new generation of makers, entrepreneurs and values-driven visionaries are coming of age and making real waves within the world of ecommerce. Gen Z are no longer a cohort of consumers, ready to be carved up – they’re a dynamic, future-focused generation of free thinkers, ready to step into the world of work and make a big difference.
Typically defined as being born between 1997 and 2012, members of Gen Z are currently between 9 and 24 years old, and they number nearly 68 million in the United States. Our first generation of true “digital natives,” Gen Z are characterized by their acceptance of diversity and investment in our planet’s future (after all, they’ll actually be around to see a fair bit of it!)
When thinking about Gen Z, it’s easy to get hung up on the changes their progressive, individualistic preferences will bring to the consumer market. However, we think the more interesting question is – what will their active contributions mean to the future of business, innovation and retail?
So, get ready – these are the new makers, producers and founders charting their own paths.
In this article, we’ll explore some great examples of this group and the waves they’re making…
What Characterizes a Gen Z Retail Business Model?
First, let’s explore some of the general characteristics that typically help to characterize a Gen Z business. For a start, they have prolific and highly-motivated founders. A recent poll found that 40 percent of students surveyed from 5th-12th grade stated they wanted to run their own business. Of these, 24 percent said they had already started.
You can expect brands founded by this altruistic generation to be values-led and highly diverse. Diversity is more than a box-ticking exercise for this generation – they recognize the benefits of having a diverse team – it’s a deeply held and non-negotiable element of life and business. Likewise, when it comes to sustainability, ethics and transparency, these values are second nature to a socially responsible and conscious Gen Z founder.
While direct-to-consumer (DTC) brands have typically courted a wealthy Millennial audience, with their fluency in social media, we can reasonably expect this business model to remain popular amongst founders who are part of this generation. A close focus on customer connection is a key marker. This group is ambitious – they respect the need to know their market, and to deliver a “next level” customer experience – after all, they’ve been raised in the age of Artificial Intelligence (AI) and personalized marketing themselves. Standards here are high and ever-advancing tech is here to help.
As consumers, Gen Z have long been associated with the search for ease, convenience and a seamless transaction. These preferences are reflected in the business models they create – we build what we desire!
Gen Z, TikTok and Ecommerce
It’s virtually impossible to talk about the rise of Gen Z in the world of retail and ecommerce without referencing TikTok.
TikTok has evolved to represent a viable ecommerce sales channel, most notably through its seamless integration with the Shopify platform. Therefore the stage was set for Gen Z businesses built with TikTok sales specifically in mind to skyrocket.
TikTok ticks a lot of Gen Z boxes – it celebrates the individual, champions an honest, human and often self-deprecating approach to promotion and offers endless opportunities for entrepreneurial enterprise.
To give one example of a Gen Z business within the TikTok space, let’s look at “twinfluencers” Shanae and Renae Nel – aka The Gloss Twins. While YouTube is the traditional channel for beauty influencers, these UK-based sisters harnessed the power of their epic audience to monetize their account through a standalone product line of lip glosses, sold in a DTC model through TikTok.
Offering both a sales channel and the opportunity for brand building and promotion, TikTok will doubtless continue to provide a foundation for many Gen Z retail business ventures. As the platform evolves and its functionality expands, we’re excited to see what the future holds for Gen Z and TikTok. There’s a lot more at stake than the latest dance trends, and older generations who write off the platform as nothing more than a bit of lighthearted fun and online posturing are missing the real deal.
The Six Figure Side Hustle
We’ve already touched upon the entrepreneurial spirit of Gen Z – and the concept of the side hustle is certainly something that appears to resonate strongly with them. As a generation who have never known life without access to the internet (giving a 24/7 view of live world events) and whose formative years will have been hugely impacted by the pandemic, a sense of uncertainty and the need to have eggs in many baskets must be prevalent.
Older generations often have the tendency to “punch down” about the work ethic of those growing up after them. However, the tenacity and graft of Gen Z is hard to find fault with. Resilience and productivity are baked in. A survey by Upwork in June/July 2020 found that of Gen Z freelancers, 36 percent had started during the pandemic.
Take designer Hogoè Kpessou as an example. Born in Togo, she emigrated to the U.S. when she was six. Today, she’s on track to make over seven figures – but while she was building up her brand ready for launch? She was working as an Uber driver. A classic example of Gen Z’s willingness to adapt, embrace a range of business models and mix up their income sources while they move towards an entrepreneurial end goal.
Why the Smart Money is on Gen Z
With Gen Z baking closely-held values into their business models, it’s important to factor in the impact that this might have on future investments. Generally, we’ve been witnessing a rise in investment in businesses with high CSR (corporate social responsibility). In fact, 83 percent of professional investors are more inclined to invest in the stock of a company with a strong association with social responsibility.
Not only are these attributes known to positively impact a brand’s reputation and public image, but workforces also tend to be more motivated, prices commanded can be higher, and generally, risk factors that might impact an investment decision are considered to be reduced.
Beyond general investment, what’s the scene looking like for Gen Z investors themselves? Impact investing is the name of the game here. Around three-quarters (72 percent) of Gen Zers expressed hope that responsible investing could improve sustainability outcomes, and there appears to be a definite trend towards cause-driven businesses.
The Craftory is a fantastic example of these values in action. Founded in early 2018 by Elio Leoni Sceti and Ernesto Schmitt, they represent a $375 million global investment house, which is focused exclusively on responsible CPG brands. Their site is a masterclass in Gen Z transparency and a straight-talking heart. From clearly communicated, well-structured values based around the UN’s Sustainable Development Goals, to a portfolio bursting at the seams with much-loved mindful brands, in their own words, “We’re not Anti-Capitalists, we’re a whole new thing, we’re Cause Capitalists.”
Gen Z: Nailing Transparent Communication
Transparency is a valuable trait for any brand to maintain, and Gen Z is definitely wise to this. The first generation to have been raised in an age where social media was a constant given, it’s perhaps unsurprising that as a group, they’re pretty masterful in their leverage of these platforms.
By maintaining an authentic, natural presence on social media, Gen Z brands built around mission are able to clearly communicate their values through informative (but often playful) content marketing. This allows for the easy creation of supportive online communities (a natural environment for the digitally native Gen Z to congregate). Social media isn’t bolted-on to their brand – it’s an effortless, instinctive extension of their values, personality and vibe.
The wonderful Scoria brand, a GoodCarts member, is a great example of this easy, natural leverage of transparent social media and content. Although it should be noted that their founder self-identifies as a “Zillenial” – we love Scoria’s consistent, relaxed approach to customer connection, allowing plenty of “behind the scenes” insight, and a varied, informative and engaging Instagram presence.
New Business Models Embraced by Gen Z
Finally, let’s consider this generation’s willingness to rip up the business rule book. This generation is certainly not afraid to find innovative new business models that are fit for purpose.
Increasingly, we’re seeing an uptick in the number of businesses that are founded upon the principles of circular economies and value chains.
Gen Z is in a very powerful position when it comes to spreading the word about the environmental benefits of a business. “They quickly share their opinion with all virtual friends not only about the experience with brands and companies but also about their business effect on ecology. Thus, their contribution to future sustainable business and social responsibilities is immense and indisputable. The conclusion provides some recommendations.” (Source)
Perhaps as a result of this dependable support and extended social promotion, a wide range of fantastic Gen Z businesses have grown up around circular or sustainable concepts. Much more open to the concept of reselling or repairing (of course, all aided by modern, tech-forward solutions), Gen Z are able to embrace (and fully understand) markets that wouldn’t have been considered viable only a few years ago.
This generation seems to have a knack for building businesses that have value chains firmly embedded into their very foundations. AgriCycle is a great example of this. Their Jali Fruit Co. brand is also a GoodCarts member.
They work with a global network of over 35,000 smallholders across a vertically-integrated value chain to enable revenue generation and sustainable growth. The result is a range of brands with fantastic appeal and a real underlying purpose. The company exists to eradicate extreme poverty around the world and is making huge waves through the innovative deployment of technology, strategic connections with community networks and clever products.
What can we all learn from Gen Z about our own brands and behaviors?
There’s no doubt about it: this is a remarkable generation and one that we’re only just beginning to see the true potential and power of. Existing brands can learn a lot from the enterprising young founders behind these businesses, and the path that they have chosen to walk.
Here are five lessons that brands and retailers could all learn from Gen Z:
This generation leaps before they look, learning on the job and being mentored by their peers on social media. They start quickly and develop quickly.
Transparency is Key
Gen Z keeps business open and authentic. They’re happy to debate, explain, discuss and admit mistakes. Raised in an age of constant communication, their doors are always open.
Gen Z are content to build whole businesses around a defining mission statement. They recognize this is empowering, not limiting!
Profit is Not a Dirty Word
Gen Z are making money! They’re making it young and they’re making it on their own terms – proof that you can still be ethical and be earning.
Gen Z aren’t interested in going into debt to get a degree in business. They’d rather get their hands dirty and learn from a few mistakes (or, let’s face it, TikTok!)
GoodCarts 🖤’s Gen Z
The future of ecommerce looks bright with the trends that the youngest generation is setting. At GoodCart’s we firmly believe that Gen Z are set to rewrite the rulebook for the better when it comes to the future of retail.
If you’re a Gen Z founder who’d like to quit giving all of your margins to digital behemoths run by older generations in order to reach and sell to your Gen Z peers – we’d love to help!
Interested in connecting and networking with like-minded Gen Z impact entrepreneurs and investors? Fill out our simple form and we’ll let you know about our next digital meet-up.