Marketers spent the last decade enthralled with the elusive, so-called millennial generation, striving to understand its ever-changing social habits -- from Instagram to Snapchat to Periscope -- and burgeoning nonconformity, thrifty spirit and swelling hot sauce obsession.
In attempts to grab hold of the consumers also called Generation Y, Pizza Hut doused its pies with sriracha, Whole Foods announced a lower-priced grocery chain and brands everywhere looked to YouTube stars and bloggers to give their products a youthful sheen.
Even as the cohort ages and evolves, marketers are still chasing the shadows of millennials' younger selves. Consider the plight of teen retailers such as Abercrombie & Fitch and Aéropostale, which are struggling to revamp their merchandising and marketing approaches to better attract audiences that have already largely outgrown them.
Plenty of advertisers, in fact, were caught off guard by the pace at which technology advanced culture. And as the cycle of culture continues to speed up with the next generation -- dubbed Generation Z, or sometimes "centennials" because they were born around the turn of the century -- smart marketers are looking ahead and making small, fast bets to avoid losing touch with the next crop of teens. They don't even have to look very far ahead, as it happens: With the oldest members of the group hitting 18 this year, Generation Z has already arrived.
Small bets
After seeing their parents and older siblings struggle through the
recession, Generation Z is practical and value-conscious. They
relish experiences and use the enormous amount of information at
their disposal to unearth unique stories. Marketers have to think
outside traditional tactics to get the cohort's attention. But once
they have it, the generation can become excellent brand
ambassadors, using social to spread the word.
Brands like Taco Bell, Target and DreamWorks Animation's AwesomenessTV are already testing the waters to see what Generation Z responds to. By looking ahead, and experimenting with apps, pop-up shops, immersive store experiences and other marketing efforts, these companies are becoming more responsive and adaptable to changes in the marketplace.
"It's this idea of taking on an experimental mentality," said Dan Gould, senior cultural strategist at Sparks & Honey, an agency that has researched Generation Z. "The easiest way to start is by making small bets."
A year ago, Taco Bell's insights teams began asking itself what it knew about the next generation, and how it differs from millennials.
"It took some digging," said Melissa Friebe, VP-Taco Bell Insights Lab. "We found that similar themes are manifesting themselves in different ways. They've become even more empowered, entrepreneurial and just creative."
That's led the fast-food chain to lean in to emerging platforms, including Periscope; build campaigns around cultural moments, such as "promposals"; and continue to embrace food mashups.
Recently, Taco Bell made its Periscope debut with a live "newscast," unveiling its latest breakfast concoction -- the biscuit taco -- and announcing a giveaway for every customer in America on Cinco de Mayo.
"We're always in beta and trying things out," said Ms. Friebe. She said that approach resonates with the way young people, who were born into technology, experience things. "[Our consumers] are used to living in this world where people are constantly trying something, seeing if it works and making changes."
Taco Bell is also transporting consumers back to their childhood with inventions like Cap'n Crunch Delights, a doughnut hole inspired by the classic cereal, as well as ads like "Unboxing Kids," which features a brother-sister duo who went viral with their retro fist-pumping home video of unwrapping a Nintendo 64. "[Young people] have access to all of this information and technology, but it also can be overwhelming," said Ms. Friebe. "They are drawn to things like nostalgia."
Constantly looking
In some ways, Generation Z is a natural progression, mimicking
younger millennials, according to Mr. Gould at Sparks & Honey.
They're practical and value-conscious, having watched their
millennial siblings struggle to find work and move out of their
parents' homes. With more information than any generation before
them, they do their homework to find the best quality at the right
price. And once they find something they like, they're loyal and
they like to share.
"They are experimental; they're innovative; they're risk takers; and they love to discover new things," said Jim Fielding, global head of consumer products and retail at AwesomenessTV, which caters to young people. "They're constantly on the lookout for something different, fresh and exciting. And they want to share it immediately. It's almost a treasure hunt for them."
Building on that idea, AwesomenessTV is growing its retail presence and experimenting with new, more flexible formats. Last October, it opened a pop-up shop in Los Angeles featuring merchandise from its robust collection of YouTube creators. It also partnered with the New York-based concept shop Story on a four-week installation with products inspired by six of its stars.
"This generation, they don't shop the way the generation did before them," said Mr. Fielding. "It's not about going to the mall. They're shopping digitally, remotely and physically. They're just constantly looking."
These new shopping habits are inciting retail innovation, including reimagined pop-up shops, concept shops like Story that focus on the customer experience and e-commerce models built for the smartphone generation.
A mobile startup called MikMak, for example, is updating infomercials for the iPhone generation. It taps comedians and other personalities to produce short commercials for shoppable products available through the mobile app. And retailers like Rent the Runway, which puts discovery before ownership, are growing rapidly. The dress-rental service grew from a modest e-commerce startup in 2009 to an estimated $500 million company with brick-and-mortar locations in New York, Washington, D.C., Las Vegas and Chicago.
