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Millennials and Gen Z are powering a retail revolution – and they represent a massive opportunity. Consider these 7 facts about the future of retail and how you can get on board.
$143 billion. That’s 26 times the net worth of Elon Musk. Double the total revenue of Target. It’s also the estimated buying power of the latest consumers to join the retail revolution: Gen Z.1
Along with millennials, who are now in their prime consumer years, Gen Z is powering a retail revolution. Their phones are glued to their hands. They can tap out a tweet faster than the speed of light. Their preferences change quickly, but they know one thing: Whatever they want, they want it now. They’re the future of retail – and they represent a massive opportunity.
The changes could be dramatic: 44% of Gen Zers say they’re willing to supplement traditional banking with apps or other tech solutions.2 They’re eager for technology, and whoever gives it to them will rocket their revenues into the future at warp speed.
A next-gen market demands next-gen solutions. The right payments platform can create a force field around retailers so they can enter the new world of Gen Z and modern technology. Here are seven facts about the future to consider.
48% of 18- to 34-year-olds have a mobile wallet, and another 32% are interested in them.3
Millennials and Gen Z are true digital natives. Millennials were social networking way before Facebook was a thing, and Gen Z grew up on YouTube and Twitter. To Gen Z, phones have always been smartphones, and the internet has always existed. They’re driving the rise of mobile commerce, in-app purchases, and the latest payment tech: mobile wallets and P2P (peer-to-peer) payments, like Venmo.
After all, when your phone is your lifeline to the world, why bother taking up space in your pockets with credit cards and bulky paper money?
If retailers want a piece of that $143 billion in spending money, they must keep up with the ways younger consumers want to pay. PayPal for Enterprise is the only payments platform that offers PayPal, Venmo (US only), and popular wallets like Apple Pay and PayPal Wallet, plus debit and credit cards and ACH transactions.
We even take it a step further with Store Cash: just set up a Store Cash campaign, and when a potential customer abandons a sale, we’ll automatically send a credit to their PayPal Wallet in the specified amount. Retailers don’t pay unless the sale is made. Give customers the options they want at checkout and incentives to complete their purchase, and help drive conversions for the next generation.
Probability of bounce increases 32% as page load time increases from 1 to 3 seconds.4
Millennials and Gen Z live in a world of instant gratification. Netflix shows they can binge one right after another. Ordering pizza just by tweeting a hashtag or texting an emoji. Checking out with a single click – or no clicks at all. And while shopping online, they demand a fast, simple, and seamless buying process from page load to checkout.
Can we blame them? It’s easy to get used to having everything you want in the blink of an eye. Now it’s retailers who need to keep up.
Large retailers face even more of a challenge providing the seamless experience that customers are looking for. But consider this: One study showed that by improving checkout design, large e-commerce sites may be able to boost conversion rates by more than 35%.5 With PayPal for Enterprise, it’s easy to deploy a consistent customer experience across all channels, adding the latest technologies as buyers demand them.
50% of 18- to 24-year-olds in the US have a credit card.6
Millennials and Gen Z aren’t entirely alike. Growing up in a recession earned millennials a “cheapskate” reputation, and to this day, 23% still don’t own a credit card.7 They’re not against credit – more than anything, they’re wary of credit card companies with long-term commitments and high APRs.
Gen Z is much more likely to have a credit card. They grew up in a thriving economy, so they’re more trusting of financing. They also have lower overall debt, because they’re just beginning their financial lives.
Offering a financing option at checkout can help retailers capture more revenue from both of these markets. With no credit cards, millennials may be more likely to opt for financing for large-ticket items.8 And with no trust issues, Gen Z is all about financing to begin with.
We offer customer financing through PayPal Credit,* allowing customers to pay over time while businesses get paid up front. This has been shown to lead to more purchases and larger purchases:
42% of PayPal Credit users would not have made their most recent purchase if this type of payment wasn’t offered.9
Businesses that promoted PayPal Credit on their site and at checkout saw 214% larger PayPal Credit transactions than those who did not.10
*Subject to consumer credit approval
58% of 18- to 25-year-old internet users have used BOPIS at least once.11
Offline shopping hasn’t gone the way of the flip phone just yet. Millennials and Gen Z are still visiting physical stores – but what they’re looking for has changed. Days spent hanging out at the mall are out. Hours browsing sales racks looking for the perfect deal are out, too. They can meet their friends virtually and find deals instantly online.
These generations have everything they need in that 5-inch device in the palm of their hands. So what brings them into a store? The same thing that motivates them online: convenience.
Gen Z is bringing back BOPIS, or Buy Online, Pick up In Store. Nearly 60% say they’d be more likely to use a retailer that offers BOPIS.12 The reason? They want their items even faster than they can get them online. And when they do want to browse around a store, they still want an easy and quick checkout process.
Large retailers with both storefronts and online sales must combine “brick” and “click” into an omnichannel strategy. PayPal Here has all the functions retailers need for a frictionless in-store experience, with the ability to accept swipes, chips, and contactless payments, including Apple Pay, Google Pay, and PayPal Wallet. And it all seamlessly blends with your online experience.
Only 34% of Gen Z checks Facebook on a daily basis.13
What millennials and Gen Z love today could be totally out of touch tomorrow. Twitch has replaced Vimeo. TikTok is gaining on Snapchat. And even Facebook is falling out of favor. When it comes to payments, mobile wallets are on the rise – for now. But in the world of the digital native, only one thing is constant: change.
Retailers need a customizable payments platform that can detect and respond to these trends and supply them with data-driven insights that support growth. That’s where we come in.
PayPal is a flexible, modern payments platform for retail that can quickly adopt the latest tech. With real-time insights into customer behavior, we help businesses to not only predict trends, but adapt to them. Whether customers are using a new payment method more frequently, experiencing high decline rates, abandoning their carts at a higher rate, or any number of other data points, we’ll help you see the patterns – and help fix them.
68% of consumers are concerned that a retailer they shop at will be hacked.14
When it comes to data security, retailers can put aside assumptions about generations. Security matters to Gen Z, millennial, and boomer alike. In fact, tech-savviness and use of basic security like two-factor authentication is nearly equal across age groups.15 And with data breaches at major retailers, it’s understandable that consumers are more concerned than ever about security.
One breach of customer data can lose trust and keep consumers from coming back. The latest security tools don’t just help to protect your revenue – they help protect your reputation.
PayPal can help you discover the security solutions that work for you. We’re a validated Level 1 PCI DSS provider, using the latest technology like network tokenization, encryption, and transport layer security to help keep your data safe. Plus, we’ll conduct quarterly vulnerability scans and annual penetration testing.
The cost of fraud amounted to 1.86% of total revenue for retailers in 2019.16
Card-not-present theft. Synthetic identities. Automated botnet attacks. Fraud is an unfortunate fact of life for e-commerce merchants. Next-gen retailers need to keep up with these next-gen fraud techniques. And they need to do it without increasing decline rates for customers – a growing concern for large retailers.17
Every transaction comes with risk, and retailers should examine all sales carefully. But they can also opt for a payments platform with the latest fraud tools, so that they can focus more resources on creating the perfect shopping experience and less on fighting chargebacks.
Control panel reports from PayPal let retailers view and manage transaction disputes and easily pull settlement batches categorized by payment method. We use technology like webhooks to provide real-time information on your gateway and network tokenization to help improve auth rates and keep data secure. Retailers can identify opportunities for improvement and see where they’re thriving – all in one place.
Millennials have been on most retailers’ radars for years, but they’re still an elusive bunch. And the power of Gen Z cannot be ignored. They’re no longer just teenagers living in a parallel universe. They’re creating a world of their own, and retailers need to plant their flag. A payments platform for retail can be a partner in helping to understand this unknown planet, and is essential to continued growth. Learn more about “Navigating the New Era of Payments” in our latest whitepaper.
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