A.S. Watson Group, the largest international health and beauty retailer responsible for The Perfume Shop and Superdrug in the UK, has published research suggesting that shoppers in the Generation Z age demographic are driving both theirs, and the industry’s, growth.

Gen Z are defined as being born between 1995 and 2009, and are a cohort that is more populous and influential on consumer spending than any generation before them, according to the study.

Malina Ngai, group chief operating officer at A.S. Watson, said that Gen Z is shaping up to have great spending power, making them the future of modern retail. “It’s important to stay relevant to them, not only focusing on the products they want, but also the stories and experiences that goes with them – to best meet their demands, customer insight plays a vital role in helping us understand their needs, perceptions and shopping behaviour.”

According to separate Bloomberg research, this year Gen Z became the largest consumer segment and now account for just under a third of the global population.

A.S. Watson Group operates over 15,200 stores under 12 retail brands in 25 markets. It conducted analysis of this retail network, finding a 23 per cent increase in Gen Z’s spending power last year.

The research showed that on average, 86 per cent of Gen Z were beauty shoppers, and over 70 per cent of Gen Z spending is on beauty – the highest among all the generations.

“In short, Gen Z has become the growth driver of A.S. Watson Group’s business, and is the lynch-pin of current and future plans,” read a statement.

Backing up previous studies, it found that while Gen Z is the first generation of digital natives, they actually prefer in-store shopping, as they love the social and experiential aspects of browsing and buying at physical stores with their friends. The customer insight showed that 99 per cent of Gen Z shop offline and prefer in ‘destination stores’ in shopping malls and city centres.

A.S. Watson suggested that Gen Zs spend most of their time on screen and they look for brick-and-mortar shopping coupled with technology, so it proposed introducing things like augmented and virtual reality in the store environment, as well as the linking of on and offline experiences through apps and social media.

In its recent UK focus groups Chloe Skinner, 19, said: “I do look online a lot when I’m planning what to buy but I love shopping in stores with my friends, especially when there are fun things for us to do like playing on the makeup mirrors that let us create pics of ourselves to share on Snapchat.”

Gen Z 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 store.

To capture the Gen Z customers, A.S. Watson business units across the globe have created campaigns to resonate with their local markets.

In Europe, The Perfume Shop has introduced a new digital service, Go in Store, to modernise choosing perfume. The service connects online shoppers with an in-store expert via live video chat, enabling them to get a personalised consultation and be shown around the store from the comfort of their own home. It launched earlier this month and since then there has been conversion rate increase of over 155 per cent for those interacting with the service.

Sustainability concerns are also a big factor for Gen Z customers.

In the UK, Superdrug has certified as its own brand beauty and personal care products as cruelty free and clearly signs vegan products in stores and online. It also opened a special Little Vegan Pop Up Shop which offered 1,000 vegan beauty essentials.

The Perfume Shop stopped seven million plastic carrier bags being introduced to the UK and Savers introduced a bag for life which almost a million customers bought.

Ngai concluded: “Generation Z is a very different customer to the Millennials that came before them – 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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