genyWhen it comes to knowing your customer, one group in particular – Generation Y shoppers – is of utmost importance to retailers. This group, between the ages of 18 and 35, represents the future generation of shoppers and their buying habits and preferences will inform retail strategies for years to come.

A new report from the Urban Land Institute (ULI),Generation Y: Shopping and Entertainment in the Digital Age, explores the shopping preferences of Gen Yers and finds that this group associates shopping with socializing, places high value on living close to retail, and makes a majority of purchases in-store vs. online.

“Contrary to what some retailers have feared, we found that Gen Y still does most of its purchasing in stores,” said Leanne Lachman, co-author of the report. “Gen Yers use the Internet to research products, compare prices, envision how clothing or accessories might look on them, or respond to flash sales or coupon offers, as well as to purchase items; they are definitely multi-channel shoppers.”

The findings from the survey have numerous implications for today’s retail property owners, developers and managers, including the following:

• Restaurants at all price points are popular with Gen Y, but owners should be careful of providing tenants with generous improvement allowances to attract them. Young consumers tend to move from one “hot spot” to another; vacancies can result when a hot trend turns cold.

• Enclosed malls remain popular, but can face challenges to retain their appeal among fickle consumers. To keep shoppers visiting, mall owners should refresh interiors frequently, encourage social gatherings, incorporate movie theaters and renovate obsolete ones, add specialty food purveyors and grocery stores, serve as pick-up points for merchandise ordered online, and encourage pop-up stores.

• Malls are big contributors to the chronic inventory of excess retail space in the U.S.; many are ripe for redevelopment. Smaller formats are more suitable for time-conscious shoppers, many of whom may just be looking at goods that they will ultimately buy online.

• Gen Y strongly supports discount department stores and warehouse clubs – a format that could supplant aging malls and be suitable for infill sites. In contrast, power centers with single-focus “big box” stores are losing out to both warehouse clubs and online aggregators such as Amazon.

• Most lifestyle centers target older, affluent shoppers; to attract Gen Y, owners should focus on apparel brands favored by Gen Y, offer more choice in eateries and include specialties such as a gym, salon, “green” grocer, bike shop, pet store and/or dog run, and uniquely local offerings.

These findings underscore the importance of multichannel communications for retailers. They need to evaluate and understand how the various channels interact and how the profile of their online Gen Y customer compares to the in-store shopper. A new approach for understanding this involves using retail analytics to understand the market and spatial relationships among today’s increasingly agile customer base.

Using data analytics and location intelligence technologies, retailers can get a better sense of what their brick and mortar Gen Y customer looks like as well as what their online customer looks like and determine if they are the same or if there are levels of intricacy that differentiates the two.

For more information on the ULI report, visit: http://www.uli.org/wp-content{filedir_23}ULI-Documents/Generation-Y-Shopping-and-Entertainment-in-the-Digital-Age.pdf.

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