The Doing Business in Bentonville Podcast
To create an ecosystem that connects leaders of all kinds – industry, community, student, educational, civic, investment and entrepreneurial – to help overcome Omnichannel Retail barriers through exclusive, insight-rich content.
The Doing Business in Bentonville Podcast
Ep. 95 - Gen Alpha: Retail's Digital Native Future
Meet Generation Alpha – children born after 2010 who are already reshaping retail landscapes globally. In this eye-opening conversation with Madison McBride, senior analyst at McMillanDoolittle and member of the Young Ebeltoft Group, we uncover surprising insights about tomorrow's power consumers.
While you might assume these young consumers are too young to matter yet, the data tells a different story. With over 80% of Gen Alpha already wielding pocket money and significant influence over family purchasing decisions, they're not just future customers – they're present ones. What's particularly fascinating is that despite being the first generation raised entirely in a digital world, Gen Alpha actively seeks meaningful in-person shopping experiences.
The research, spanning 6,000 respondents across 15 countries, reveals this generation's unique shopping behaviors and brand expectations. They engage with companies through non-traditional channels like gaming platforms, social media, and influencer content. Brands like Claire's, Chipotle, and Allo are setting new standards with interactive experiences that seamlessly blend digital and physical worlds.
For retailers and brands, the message is clear: building authentic relationships with Gen Alpha today is essential for future success. This requires creating compelling in-store excitement, fostering genuine connections through partnerships, producing engaging short-form content, and developing seamless technology integration across all touchpoints.
Ready to prepare your business for retail's next frontier? Discover the complete Ebeltoft Group Gen Alpha study and position your brand to thrive with tomorrow's consumers.
Hello everyone and welcome to the Digital Front Door. I'm Scott Benedict. Throughout my career in retailing, first as a retail merchant, as an e-commerce executive and now as a consultant, one of the most consistent elements of success in any of those roles, indeed across retailing as a whole, has been the study of consumer insights. Data that informs us about how consumers are shopping, what their tendencies are, what their preferences are, have always been invaluable across a number of different functions within the broader community of retail. A particular interest to professionals in our industry are studies about particular consumer segments, highlighted by things like demographics or personal characteristics like age, gender or marital status. Geographics where the customers are located, not only in particular areas, but rural versus urban versus suburban. Behavioral tendencies, some of their buying habits or how they choose to shop. And psychographics, things like lifestyle, their personal interests, their opinions on issues of the day. All those provide a fascinating picture of consumer groups that retailers use to make good decisions about the products that they carry and how they market to particular consumer segments.
Speaker 1:Now, recently, I came across some fascinating data on a consumer group that not much has been written about yet, but about which an interesting picture is beginning to emerge. That group is referred to as Gen Alpha, or consumers that were born since 2010. Now, it might not seem that that particular consumer group is old enough perhaps they're a bit too young to garner much attention, but the insights rooted in this particular group are fascinating and foretell a lot about the future of retail markets, both here in the US and around the world. A study I'm referencing was published by the Ebeltoff Group, a global alliance of retail and brand consulting firms working closely with clients around the world. My colleagues at Chicago-based Macmillan Doolittle are members of the Apple Talk Group, and Madison McBride serves as a senior analyst at the firm, and she joins us today from Chicago. Maddie, welcome to the program. I'm so excited to have you here with us today.
Speaker 2:Thanks, yes, great to be here, excited to have you here with us today.
Speaker 1:Thanks, yes, it's great to be here, awesome. Why don't we start, maddie, with talk a little bit about your role as a board member in what is called the Young Ebeltoft Group, and that's a group within the broader Ebeltoft Group organization. Can you maybe describe a little bit about that initiative and why it was formed?
Speaker 2:Sure, so Young. Ebeltoft is a group of Gen Z and millennial consultants from all over the globe, and our purpose for starting the group was really to elevate emerging consultants voice within the retail industry. We believe maybe I'm biased, but we have a unique perspective to bring, given that we're often the target audience of brands and retailers. Today, we have a different reference point when it comes to what it means to shop, how it means to shop, and so we gathered voices from all over the globe Netherlands, south Africa, canada and more and we recently published this work, a Gen Alpha study, and we were able to reach over 6,000 respondents over 15 countries, and we talked directly to the parents and caretakers of Gen Alpha really to understand their values, their motives, how they're shopping today, their interest and what it means for retailers. So that's a little bit about the group, their interest and what it means for retailers.
Speaker 1:So that's a little bit about the group, Awesome. So I think probably the first question a lot of our viewers will likely have is why study this particular group now, given that the oldest members of this segment have not even reached adulthood yet?
Speaker 2:Right. So a little bit of context which you provided earlier. Right, so you know a little bit of context which you provided earlier Gen Alpha being born between 2010 and 2025. The oldest are around 15 today, so still pretty pretty young, and often parents are millennials, you know, siblings of Gen Z. But really the big takeaway here is, although they are young, gen Alpha is already your customer. So I kind of mean that in two main ways First, gen Alpha already has their own money to spend.
Speaker 2:We find that in our study, over 80% of Gen Alpha has pocket money money from special occasions, chores and they have the freedom to spend it how they'd like. And secondly, you know Gen Alpha we find influence parent shopping decisions, both in what to buy and also where they're shopping. You know, in terms of categories, we find obviously toys, but also sporting goods, activities parents are bringing their children into the family decisions on what to buy. And then, lastly, also kind of interesting, we find that Gen Alpha are really tuned into trends in terms of fashion, beauty, culture. Over 45% of our respondents mentioned that they follow along on these trends. I think it's kind of interesting, comparing even to Gen Z, as I am myself, when my friends and I look back at photos of ourselves when we were 10, 12, we're wearing baggy t-shirts, we're wearing Nike shorts, crew socks, and then, when we see Gen Alpha today, they're wearing crop tops and they have a full face of makeup. So it's just, it's really interesting, even comparing you know, from my perspective as a Gen Z, to our Gen Alpha counterparts.
Speaker 1:That's neat, and it's interesting that one of the elements of this study that really stood out to me was the finding that Gen Alpha really does enjoy shopping in physical stores, not just online. Can you share a little bit more about that?
Speaker 2:Sure. So an important context about Gen Alpha is they are the first generation to fully grow up in this digital world, even more so than Gen Z. I was getting my Instagram, my phone, in late middle school, early high school, whereas toddlers today are carrying around tablets. Kids are doing all of their school online or back in COVID, but that's trickled. But, yeah, the impact of COVID in early childhood, early school years so we're, you know, an important context is really being the first fully digital generation when the store comes into. That is that we're starting to see this swing into, you know, an emphasis both on the parent side and kids seeking out, you know, in-person experiences, hands-on, immersive, screen-free activities.
Speaker 2:Our research finds that the number one worry of parents today when it comes to their Gen Alpha kids is over-dependence on technology on screens. That was, across every country, as the top-rated issue. So we're seeing this swing to more of an in-person experience With that, I think, because it's so easy for Gen Alpha and so typical and normal to be able to purchase anything in a click of a button, get things fast, get things cheap, get things easy. The in-store experience has to give them a reason to come, and so we're finding immersive experiences, hands-on pop-ups really connecting with Gen Alpha on pop-ups really connecting with Gen Alpha.
Speaker 1:You know, it's very clear, and you kind of make the point, that they have been digital natives since birth and, while that is not surprising, I imagine that there are some non-traditional communication channels, so things like social media, online gaming, streaming services that are, I suspect, big influencers of the brand preferences of this age segment as they come into their adult years and as they come into peak spending years. Is that accurate?
Speaker 2:Yes, absolutely. So what we're finding here really interesting is that non-traditional channels and I mean social media, gaming, influencers, streaming have a stronger influence over purchase decisions compared to traditional channels. So cable print publications, radio ads, and so, with that, some of the emerging channels we're seeing. We've talked about Roblox and the metaverse for a while now, but Roblox still being very relevant, youtube, fortnite, tiktok TikTok being short form videos being really important here. So, kind of in terms of the channels and driving down a little bit deeper when it comes to social media, we're finding the brands that are winning with Gen Alpha are the ones that aren't just selling their product but selling more of a personality to their customers. A fun example Sour Patch Kids. I mean they've been around forever, but on Instagram, I mean they have over 800,000 followers, um, and when you scroll through their page it's quite interesting. There's a few, you know, product pages or product images here and there, but really it's mostly memes and videos and it's taking their little sour people and bringing them to life and you know it actually gets a ton of engagement through their social media for their unhinged content. So, you know, being able to have more of a personality and connect with customers and consumers that way. We're finding to be very fascinating, to be very fascinating. And also I alluded to the idea of short form content.
Speaker 2:Being able to stay on trend and how you're connecting with your consumers is crucial. Trends are just every day a new trend is popping up and brands can't spend months and months building a campaign when maybe they'll need to really jump on the next thing that is, speaking to their consumers. So that's also very critical that we're seeing. And then, lastly, something interesting when it comes to the non-traditional channels is often Gen Alpha are learning about your brand for the first time through these influencers, through more secondary sources. So, while your own social media page is really important, finding ways to get your brand out there through social media, but not directly.
Speaker 2:So an example of this, a trend these days I watch this on TikTok too but a trend are these get ready with me videos. So essentially, an influencer will set up their phone while they're getting ready. They're just showing their makeup, not talking really about it, but just showing it and doing it, and I know it kind of sounds silly, but they're very popular. And so how are you getting your product in the hands so that that's being shown and people are seeing that and there's a ton of these 10-year-old influencers are actually blowing up. So I don't know how I personally feel about that, but that's something that we're seeing.
Speaker 1:Yeah, it occurs to me, as we're talking and as you were sharing, that that one difference about Gen Alpha versus prior generations is, as many cases some of the older generations were very influenced by their parents, and it sounds like what you're saying is Gen Alpha has a lot of other influences that guide their interests, their brand preferences and that sort of thing. Is that fair?
Speaker 2:to say, yes, definitely, you know, word of mouth still being the top way of you know hearing, but those coming to discussion through these more viral moments.
Speaker 1:Gotcha. So one of the best practices that the report highlights on Gen Alpha's interest is their interest in interactive content, Some of the things that you're mentoring, influencer collaboration and more. I guess the thing that occurs to me as a retailer is are there any retailers that are really doing a good job or perhaps setting the standard in terms of how they're getting ahead and building relationships now with a Gen Alpha consumer while they're young to set themselves up for the future? Any good examples out there?
Speaker 2:Sure, one that I'll talk about is Claire's.
Speaker 2:So you know, accessory beauty company for kids.
Speaker 2:But recently they launched the collab which they worked with they call it Gen Z and Alpha influencers in order to bring them in and to building the direction of the brand, and through that they created influencer campaigns.
Speaker 2:They have product pages on the Claire's website where you can go to you know, if I was an influencer it would be, you know, maddie's page with my curated selection of bracelets and makeup, um, so really connecting you know, the those out there that Jen Alpha already watching Gen Z are already connected to um and kind of bringing them into their brand. But, you know, wanting to call out it, it feels very authentic in the way that they're doing it. It's not just, you know, let me kind of have this person you know talk about my product. It's really bringing them in to help create the future of what Claire's looks like and then also talk about, you know, how the brand resonates in their life today. And with that I'm talking more about digital channels that they're showing up, but we also see in-store collaborations, we're seeing events, interactive campaigns. So, again, not just that digital focus but focusing on kind of every channel. Really, how are you connecting?
Speaker 1:So any particular best practices or things that you think are you'd recommend to clients that want to get ahead on building relationship with this consumer segment?
Speaker 2:Yeah, I would say, you know, creating authentic connections in terms of you know, an influencer or a partnership, you know kind of Gen Alpha can see through, I feel like very easily like if it doesn't seem genuine, then it may kind of be off putting. And you know, because on one scale it's, you know, being talked about, it is great and you want to get your name out and go viral, but for the right reasons, obviously. And um, you know, kids today are kind of are kind of brutal, um, so you know, wanting to do more of like an authentic connection and then again, engagement throughout various channels, um and experiences, and kids are shopping across social media, they're shopping on the website, they're shopping in store. So it's the one path that won't really be enough.
Speaker 1:Gotcha, so it really sounds like you have to engage them across channels and across platforms, right?
Speaker 2:Yes.
Speaker 1:Yes. So to be certain, omnichannel is not your concept in retailing. But how important is Omnichannel to the Gen Alpha consumer as they approach increasing influence on the retail market?
Speaker 2:Yes. So in our view, omnichannel is essential. It's very vital really, because kids today don't know any different. Even I feel like, speaking from my Gen Z experience, you know that's just table stakes these days, and so you know, being really intentional on, you know, building that experience and connecting seamlessly both the in-store and online touchpoints. But one that I want to bring up that's maybe not always in the strategy is kind of thinking about these gaming platforms or thinking about these.
Speaker 2:I know metaverse has been a buzzword for a while, but thinking about how to connect maybe emerging channels into their strategy. So one I'll talk about is is Roblox. So we're thinking about Chipotle. They have this, you know, game. I actually played it recently. I was just wanting to test it out to kind of see what the hype was all about.
Speaker 2:And there's this Chipotle game within you know. So Roblox, you can join different games. You can. You have your own character, like it can look like you, you know. So it's kind of your, your double, your double and in a virtual world. And so for Chipotle, they have this game where a customer comes in and you're a Chipotle employee. They tell you what you want. You're building burritos, and then you can actually.
Speaker 2:Yeah, I know it sounds silly, but I mean I'm like I could see why. You know, I would do this um in my free time and you can connect with um. You know different people across the globe on it as well, but you know, something interesting is, yes, that lives in more of a digital world, but now there's also ways to redeem your points in a physical store or there. If you're the first one to join this game, you could get points to redeem. So it's kind of like how are you bridging now not just your website and your physical store, but these online gaming platforms and stores?
Speaker 2:Or another example Allo, really popular athleisure company. These days they have a game within the Roblox as well and you can take your little character to go on runs or meditation, and it's a fun way that they bring their brand to life. But now in the store they have little stickers at checkout where, if you scan that while you're checking out, you can redeem a virtual sweatshirt online. So again, it's like really bridging the two, between online platforms and in-person stores as well.
Speaker 1:That is so neat. It feels like one of the things that has been truly emerging is the use of loyalty marketing in new and different ways. But what you're just describing there goes beyond the if you sign up with us, we'll give you a coupon. It's a lot more interactive to your point earlier and it feels like it's a much more building of an engaging relationship with the consumer than perhaps loyalty marketing as we historically think about it has been in the past.
Speaker 2:Is that safe to say yeah, and I think something interesting is that, as I mentioned earlier, being able to purchase online, you can compare across brand, you can pair like on Amazon, like that's just so typical now and often you know we're seeing Gen Z and Gen Alpha. You know buying dupes of, you know brands that are really popular, but so dupe is a duplicate or you know kind of off brand that's ton cheaper. You know not as high quality but still like does the trick. And so you know we're finding, in order to really win them over, your brand has to like, like have, you know, a higher kind of meaning to your, your customer, because it's so easy to buy an alternative and you know it's close enough for many, especially when they have money to spend. But pocket money and special occasion money is different than maybe a Gen Z-er who has a job that they're having that income from.
Speaker 1:Yeah, it feels like building a relationship with them now is kind of critical to your future success with reaching that segment. I'm curious what advice would you give, either to a retailer or to a consumer brand, to prepare for the coming of age of the Gen Alpha segment that is so large and so influential already? It feels like there should be work that they are doing now to get ready as that population enters more adult years and has more disposable income as they go forward. Any recommendations or thoughts on things that they should be doing now?
Speaker 2:Yes. So, as you mentioned, building a relationship with Gen Alpha today will lead to, hopefully, long-term success. So really building that into the strategy now is what we recommend, and I'll kind of give three ideas of what to think about. First is creating in-store excitement, for, as I kind of mentioned, you need to give Gen Alpha a reason to come into your store. So a few examples of that you know creating highly immersive experiences. You know here in Chicago we're preparing for the Harry Potter store to open up. You know so really excited to see how you know they do their experience there, but very highly immersive. You know what signature items are in store that you can't get online. Is it a limited edition bag that's Chicago specific? Is it generating a little bit of excitement? I feel like all the store openings I've gone to recently have Chicago branded merch that's only available the first few days or something of that nature. So generating that in-store excitement. Or another fun example we're seeing is a lot of jewelry brands now are having personalization in-store. So Pandora has their machine that you can go in and personalize. So what about the experience? Can you not do online and are you giving Gen Alpha a reason to come in? We see a lot of fun pop-ups also now, or mobile vehicles that are going to for more Gen Z but college campuses, or they're popping up at events in order to, especially if they're a digital first company, really bring their brand to life and again establish that loyalty early on with customers. Second, I've mentioned building authentic connections. It's important to do collaborations and partnerships that amplify your brand, but in a very authentic way. So we find some that are really leaning into goofiness and you know excitement and that's really fun to watch. And also, with that, you know, providing short form content, recognizing that Gen Alpha even more so than Gen Z, you know attention span, you know just less relevant, so just needing to produce, you know, short form content that really catches the attention of this next generation.
Speaker 2:And then, lastly, going to talking about just a seamless integration, seamless technology and also creating mobile first experiences, but also thinking about the tablet experience. I think that's something kind of interesting to examine. I mean, I know you've probably seen while you're out at restaurants or you're just out anywhere, you know a tablet is present. So kind of what do you? How are you creating? I know Chick-fil-A launched this like play app where they have stories and games, and I've kind of I've noticed you know that on on tablet screens while I'm out walking around, so that there, what gamification are you doing in order to connect in that way? And then, lastly, kind of a swing but what screenless activities or screenless experiences are you bringing to your customer in order to connect that way? So kind of, to sum it up, that in-store excitement, that authentic connection and creating mobile-first and tablet-first experiences in order to connect that all together.
Speaker 1:Well, that is so neat, Maddie, and I appreciate you joining us today and kind of sharing insights on this. I think one of the recurring themes that I've seen throughout my retailing career is that retailers or brands who don't change, who don't evolve as consumer segments come of age and they have new ways of wanting to be engaged with, of being sold to and being spoken to. It's really those retailers that tend to perish over time and those that stay up-to-date, relevant and engage new consumer groups while staying true to some of their existing customers, those that figure out how to thread that needle, are the ones that are successful over time, would you agree?
Speaker 2:Yes, for sure. In our research we did find that the top brands are kind of the same ones Nike, walmart, target for the top brands that can stand the test of time, we are seeing them adapting in their Nike the in-store experiences that really hit the head on the in-store excitement. So we are seeing top brands continuing if they are investing in this next generation of global consumers.
Speaker 1:Awesome. Well again, Maddie, thank you so much for your time, for sharing your insights on this study, and we really appreciate you joining us today.
Speaker 2:Thank you.
Speaker 1:All right. Well, I'll tell you, it sure seems like both retailers and consumer brands really always have to keep their eyes on the horizon for what is new and what is emerging in consumer trends, both in general and particularly with younger consumers whose preferences, whose interests and whose mindsets may differ than those of prior generations. Consequently, the members of the retail community who ignore a large and increasingly influential customer segment like Gen Alpha probably do so at their own risk. Probably do so at their own risk, and so staying attuned to new consumer groups as they come of age is of paramount importance. Again, whether you're a retailer or a consumer brand.
Speaker 1:Now to gain access to the Ebeltoff Group's Gen Alpha study, check out the link there on your screen for not only this study but a lot of other really great content that the Ebeltoff Group and my friends at Macmillan Doolittle create on an ongoing basis, and you really find it to be a treasure trove of information about consumers and about the retail community, not only here in the US but around the world. Thank you for watching the Digital Front Door. I'm Scott Benedict. Thanks for joining us.