Department stores well-known for their longevity in the marketplace and their traditional reputations are seeking ways to engage a younger generation of customers. Many of these established retail brands—Macy’s, Nordstrom, etc.—have realized that the previous way of attracting new generations to their stores isn’t going to cut it in today’s fast-paced, ever-evolving marketplace. Millennials and Gen Z are not won over with a broad selection of products. They seek authenticity, connectivity, recognition, and much more.
Brand members of Loyalty360 frequently share that they are eager to engage younger shoppers. They are well aware that authenticity is critical and that it can foster emotional loyalty, which can then lead to brand affinity and even advocacy. Leveraging loyalty programs while keeping abreast of key trends, retailers and brands now navigate a landscape inhabited by hyper-informed consumers—Gen Z and Millennials—who research brands and products, discuss options with peers, look to trusted social media influencers, seek to do business with companies reflecting their values, expect personalization and relevant communication, demand sustainability, charitable, and inclusivity efforts—and this is just the tip of the iceberg.
Loyalty360 brought the topic to its supplier-member experts, who shared their observations on how and where brands can better engage a younger generation of shoppers to earn not only their dollars but their true customer loyalty.
Article contributors:
· Steven Douglas, CEO, Addtowallet.io
· Aaron Lobliner, Chief Client Officer, CataBoom
· Madison Fisher, Manager, Strategic Services, The Lacek Group
· Ed Dziedzic, EVP Marketing & Communication, Phaedon
· Tim Barlow, Sr. Director, Brand Strategy, Phaedon
· Ed Wogan, SVP, Chief Merchant Officer, Valuedynamx
How Traditional Brands and Retailers Can Engage Today’s Consumer
With changes in consumer expectations, a marked increase in the number of competitors, and new technologies emerging faster than ever, Loyalty360 asked the experts if they could begin by providing some of the ways more traditional brands and retailers are using the power of their brands to engage today’s more astute consumer—who is shopping with an unprecedented amount of information about brands and products.
When considering the influx of choices retail consumers have in 2024, Lacek’s Fisher has found they are conducting more research before making a purchasing decision than they have in the past. For example, young generations are turning to tools like the sticker functionality in the iPhone Notes app to log, organize, and plan outfits before making purchases. For brands to break through the noise and engage with today’s savvy consumers, Fisher believes they need to insert themselves into the consumers’ research phase by developing tools or loyalty benefits that support consumers in fostering their own unique point-of-view.
CataBoom’s Lobliner offers three elements he sees as necessary to execute successful engagement strategies:
· Expanded Omnichannel Experience
· Transparency and Authenticity
· Storytelling and Brand Heritage
With an expanded omnichannel experience, integration of online and in-store experiences—like “buy online, pick up in-store”—and incentivizing desired behaviors such as visiting stores/ecomm and providing online product reviews, all while naturally weaving in incentives to be part of their loyalty/rewards program, traditional brands can indeed increase engagement.
More than ever, brands find themselves leaning into greater transparency—providing information on how products are manufactured, outlining the brand’s impact on the environment and activities lending to sustainability, and emphasizing social inclusiveness around business practices. All these areas are scrutinized by consumers seeking to interact with brands that reflect their values.
“Be upfront about sourcing, manufacturing, and sustainability efforts,” answers Lobliner when asked about providing transparency and delivering authenticity. “This can be visualized and gamified in ways that highlight corporate commitments.”
He notes that highlighting the brand’s history and heritage in a way that resonates with younger audiences can also be leveraged and encourages brands to focus on its craftsmanship, quality, and timeless appeal.
“These can be pulled forward via prizes and rewards in promotions and loyalty programs, special offers, and content that can be unlocked,” Lobliner adds.
Phaedon’s Dziedzic sees utilizing culturally relevant moments as a vehicle for a brand’s authentic value proposition as offering a more powerful way to break through.
“Whether it’s a brand act, a partnership, or just a more dialed-in message, uncovering natural alignments between your brand and the lives and interests of your audience is the only way to generate a true signal within such a noisy market,” says Dziedzic.
For an example of a brand leveraging exciting technologies to engage shoppers, Addtowallet.io’s Douglas nods to Sephora, where the shopping experience is enhanced by allowing consumers to “try before they buy” using both augmented reality (AR) and in-store sampling stations. While AR offers a convenient and entertaining preview, it complements rather than replaces the tangible experience of testing products in person, feeling the textures, and enjoying a store’s ambiance.
Not Your Parents’ (or Grandparents’) Brand
Some of the more traditional brands and retailers are navigating how to best facilitate the discovery process with a younger demographic of customers. Still, stepping away from the shadow of “we’re your parents’/grandparents’ brand” and finding relevancy with Millennials and Gen Z is not an easy task.
Brands showing the most relevance with younger consumers are those that can uncover their value proposition, find alignment between that proposition and the needs of their target audience, and then create new and interesting ways to bring that to life both online and offline. Dziedzic cites curated collections, one-off partnerships and collaborations, and superior experience or service as options to explore.
“Retailers like Target have historically demonstrated this ability through their design partnerships, but more recently through their beauty offering, which shelves a robust assortment of national, niche, and even D2C brands as well as the added service experience of consultations,” says Dziedzic.
Dziedzic provides another example: IKEA and its curated pop-ups. While he acknowledges the retailer’s traditional store format can feel overwhelming in scale and traffic, the smaller format offers the best of IKEA, including top-selling items like the brand’s “(in)famous Swedish meatballs” with the added allure of accessibility and a personalized shopping experience.
For Lobliner, it’s about providing experiential retail or “retailtainment” opportunities. He contends that brands and retailers can offer events, workshops, and classes that go beyond selling products. These opportunities create shareable moments and build connections with younger audiences.
Fisher is in agreement. Going beyond the product or sale is critical for brand success in fostering relationships with younger consumers.
“Millennial and Gen Z purchasing decisions are influenced by factors beyond price and product,” says Fisher. “It is not enough for brands to just be on social media; they need to cultivate engaging content, interact authentically, and leverage influencer marketing to entice consumers who naturally gravitate toward brands that reflect their values.”
Fisher sees Nike as remaining a powerhouse, leveraging athlete partnerships, social justice initiatives, and user-generated content with a focus on inclusivity and purpose. She also points to beauty brand Glossier as building a cult following through authentic influencer marketing, aesthetically pleasing visuals, and a focus on natural beauty.
Attract Younger Demographics with Updated Tactics
Certain tactics used to entice consumers in-store—for example, coupons—are not seeing the same success as they once did with older generations, particularly Baby Boomers and Gen X. Brands and retailers need to understand how to draw the next generation of shoppers through their doors. Determining the best way to do so is a marked challenge for many.
“Simply offering discounts isn’t enough to sway young consumers,” emphasizes Fisher.
Brands that are adapting to lure younger demographics in-store are those prioritizing experiences over transactions. Fisher believes community-building events such as fitness classes or educational workshops give consumers a reason to interact with a brand in a physical location with the promise of learning more about their passions or meeting like-minded individuals.
Valuedynamx’s Wogan highlights how widespread technology adoption spurred a need for merchants to offer truly seamless omnichannel rewards and loyalty programs. He believes card-linked offers are a must-have tool for businesses looking to drive loyalty by reaching tech-savvy shoppers.
“Much like affiliate offers that are only available online, card-linked offers are easily accessible digitally but can also be utilized in-store, enticing customers to shop in-person and generating footfall for retailers,” explains Wogan.
He also shares that according to the Retail AI Council, a staggering 93% of retailers are using generative AI to support customer-facing personalization.
“But are they using it effectively?” Wogan muses. “The jury is still out.”
Gamified experiences focusing on discovery are tactics recommended by Lobliner. He suggests that brands can acquire and engage loyalty program members with points, badges, and rewards earned through in-store activities like product trials, scavenger hunts, or social media engagement. Brands can also curate unique product selections, highlight local or sustainable finds, and offer personalized recommendations through digital engagements like personality quizzes to guide customers to purchase in-store.
To this, Douglas adds, “Brands expect consumers to download apps and yet yearn for long-term adoption, requiring a customer to love you before they even like you. By integrating services directly into mobile wallets, brands can create seamless, low-commitment touchpoints that build loyalty through convenience and personalization.”
Luxury Brands Face Unique Challenges
Consumer trends like shifting values of authenticity over aspiration and an increase in second-hand shopping create a unique set of challenges for luxury brands when it comes to engaging with younger shoppers, according to Fisher.
“Some notable strategies that luxury brands are employing to connect with these audiences include collaborations and partnerships with streetwear brands and emerging designers to create a sense of product novelty,” says Fisher. “Additionally, brands like Stella McCartney are increasingly incorporating sustainable material, ethical sourcing practices, and transparent supply chains into their brand identities.”
Phaedon’s Barlow contends it’s easier for luxury brands to become stuck in their approach, grow stale, and eventually age out of relevance. However, he notes that many luxury brands have remained constant—for example, Rolex or Loro Piana®—and still others that have embraced evolution, like Balenciaga. All are still relevant and aspirational in the minds of today’s younger consumers.
“There is a common denominator, which is their alignment in values with Gen Z,” explains Barlow. “This generation is an open, inclusive-minded one which represents a disconnect with traditional luxury value propositions focused on the elite.”
Brands that can align their luxury, high-price-point items to an alternative point of relevance—e.g., highest quality, made-to-last, application to pop culture, personal expression, etc.—are those who will continue to find ways to remain top-of-mind for younger consumers, despite their higher price points.
“Luxury brands must then take this value-alignment message and engage Gen Z through their social ecosystem,” finishes Barlow.
Choosing Online Over In-Store
With so much information only a digital click away, consumers have many more options to browse, learn, buy, and review products online. The convenience for some outweighs other perks discovered during an in-store experience. Traditional brick-and-mortar stores must pivot to deliver that elevated customer experience online.
“The constant bombardment of information in the social media age has profoundly shaped young people, making inspiration and discovery an essential aspect of their self-understanding,” affirms Fisher. “Traditionally brick-and-mortar stores that are delivering elevated online experiences are leveraging digital tools to interact with, and immerse, consumers.”
Fisher spotlights IKEA’s augmented reality tool, which delivers a 360-degree product view, letting customers virtually “place” furniture in their rooms. She also notes that some fashion brands use shoppable videos or clickable hotspots on model images instead of relying on static product photos.
“This makes browsing more engaging,” says Fisher.
Lobliner also sees an opportunity to interact with online shoppers.
“Leverage personalized engagement—content and recommendations—with consumers in fun, even gamified ways to understand preferences, provide targeted offers, incentives, and more,” says Lobliner.
The Power of Corporate Social Responsibility (CSR)
Increasingly, corporate social responsibility efforts and initiatives are particularly important to Millennial and Gen Z shoppers. Many Loyalty360 brand members have shared that they plan to further leverage the power of their CSR efforts to engage younger shoppers through authentic connections.
“Highlight your sustainable practices,” directs Lobliner. “Showcase sustainable materials, ethical sourcing, and community initiatives via digital engagements using elements such as trivia/quizzing and video Q&A. Weave in content across digital activations.”
He also suggests that brands partner with causes. Partnering with charities or environmental organizations that resonate with younger generations and integrating those efforts into loyalty programs with ways to contribute via loyalty currency, unlock company matching contributions, or “win” contributions and more can heighten engagement.
“For younger shoppers who would like to make a difference but lack disposable funds, turning to rewards from their loyalty programs can be an easy way to provide support on their own terms,” agrees Wogan.
This avenue is building steam, as the opportunity to donate points or miles to a charity of choice is a convenient and cost-effective way loyalty and rewards program members can be altruistic while protecting their budget—all via a few swipes or clicks.
“With the winter holidays and the ‘season of gifting’ approaching, driving awareness of charitable and CSR efforts can help ensure your customers have the opportunity to give back in a way that works best for them while also supporting your initiatives,” says Wogan.
“The key is authenticity,” states Barlow. “It’s unfortunate this word has become such a boardroom bingo staple that it’s lost impact because authenticity is essential to establishing connection.”
Barlow points out that today’s consumers are highly attuned, and even if they don’t see through it straight away, there are a thousand pundits and commentators happily waiting in the wings to expose brands for their hypocrisy. To that end, it’s essential that brands identify CSR efforts that feel true to their brand and are in line with their place in culture.
“They also need to walk the walk and put their money and influence where their mouth is,” continues Barlow. “If they don’t build these CSR efforts with a grassroots, internal-external, ‘this is who we are’ approach, they’re always going to approach CSR with hesitancy and fear versus boldness and conviction.”
From Fisher’s perspective, young generations uniquely redefine brand loyalty as simply loving a brand, even without buying it. Brand values and CSR efforts play an important role in winning those young consumers. Brands can leverage the power of their CSR efforts to authentically connect with young shoppers by amplifying their voices and co-creating change.
“Gen Z wants to be a part of the solution, and they gravitate toward brands that provide platforms for their voices to be heard, involve them in CSR initiatives, and empower them to create positive change,” finishes Fisher.
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