AS Watson unwraps the power of Generation Z customers

Health and beauty retailer AS Watson has gathered insight from its businesses around the world to compile an overview of what is driving Generation Z customers and how they can be attracted to its retail brands across the globe.

“Generation Z is shaping up to have great spending power and they are the future of modern retail,” said AS Watson Group COO Malina Ngai. “It’s important to stay relevant to them, not only focusing on the products they want, but also the stories and experiences that go with them. To best meet the demand of Gen Z, customer insight plays a vital role in helping us understand their needs, perceptions and even their shopping behaviour.”

This year, Gen Z became the largest consumer segment—now accounting for 32 per cent of the global population of 7.7 billion. AS Watson operates more than 15,200 stores under 12 retail brands in 25 markets, and using this extensive network the group’s insight shows a 23-per-cent increase in Gen Z’s spending power in last year’s figures.

This shows that on average 86 per cent of Gen Z are beauty shoppers, and more than 70 per cent of Gen Z spending is on beauty, the highest among all generation groups. Essentially, Gen Z has become the growth driver of AS Watson’s business, and the linchpin of the firm’s current and future plans.

While Gen Z is the first generation of digital natives, insight data shows that they prefer in-store shopping and they love the social and experiential aspects of browsing and shopping at physical stores with their friends. ASW’s customer insight shows that 99 per cent of Gen Zers shop offline, and they like shopping in “destination stores” – stores in shopping malls and city centres.

The digital natives spend most of their time on screen and they look for brick-and-mortar shopping coupled with technology, so in-store digital devices are key drivers to sales success. These include the introduction of AR and AI in the store environment, as well as the linking of offline and online experiences through apps and social media.

Gen Zers choose their beauty products based on the trend, price and quality and use their phones to read other users’ feedbacks and reviews while browsing in stores.

Sustainability concerns are a big factor for Gen Z customers. Since 2014, AS Watson Group has banned the use of microplastic in its rinse-off own-brand cosmetics and personal care scrub products, and by the end of this year, this ban will extend to all brands, meaning no microplastic will be found in any rinse-off cosmetics or personal care products sold in the stores.

“Generation Z is a very different customer to the Millennials that came before them,” said Ngai. “They are reinvigorating the retail industry with their desire for experience and activities, while at the same time helping shape a more sustainable future with their emphasis on the environment and doing good.”

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