The recent CNBC article titled “Gen Z is finding love at a surprising place you visit often, study reveals” highlights a notable shift in consumer behavior among Generation Z, with a growing preference for in-person shopping experiences over online alternatives. This trend has significant implications for the Electronic Data Interchange (EDI) industry, which has traditionally focused on facilitating electronic transactions between businesses, as well as for the future of supply chains in general.
Table of Contents
- Understanding How Consumer Behavior Affects the Future of Supply Chains
- Implications for the EDI Industry
- Challenges for the EDI Industry
- Strategic Responses from EDI Providers
Understanding How Consumer Behavior Affects the Future of Supply Chains
Generation Z, individuals born between the late 1990s and early 2010s, have grown up in a digital era. These people have no idea what it’s like to hear “dial-up” internet like Gen X and even some millennials before them. Despite their familiarity with technology, recent studies indicate a resurgence in their interest in physical retail spaces. The CNBC article notes that Gen Z consumers are increasingly visiting malls, seeking tangible experiences that online platforms cannot provide. This shift is attributed to a desire for social interaction, immediate product access, and the experiential aspects of shopping that e-commerce lacks. For the purpose of this article, “malls” also includes outdoor shopping centers as our research also indicates that traditional indoor malls are becoming extinct but that’s for another blog.
Key factors driving this behavioral shift include:
1. Desire for Tangibility
Gen Z values the ability to see, touch, and try products in person before purchasing. This preference stems from a need for authenticity and assurance in product quality that online shopping often cannot guarantee.
2. Social Interaction
Malls and physical retail spaces offer a venue for social engagement, allowing Gen Z shoppers to connect with friends and family. Shopping is no longer just about purchasing items; it is also about shared experiences like brunch or happy hour. In fact, some malls are using destination restaurants as the “retail anchor” rather than department stores.
3. Increased Trust in Brick-and-Mortar Stores
Physical stores provide immediate product access and eliminate the uncertainties associated with online orders, such as shipping delays or receiving items that do not match their descriptions.
4. Experiential Shopping
Retailers are investing in creating immersive, interactive in-store experiences that attract younger consumers. Activities such as pop-up events, live demonstrations, and exclusive in-store promotions contribute to the appeal.
5. Sustainability and Ethical Concerns
Gen Z’s commitment to sustainability and ethical consumption leads them to favor local stores and brands that align with their values. Shopping in person allows them to make more informed decisions and reduces the environmental impact of excessive packaging and shipping.
6. Economic Considerations
With inflation and economic uncertainty, some Gen Z consumers find better deals or unique items in physical stores, especially during sales or clearance events.
These factors collectively contribute to the growing trend of Gen Z favoring malls over online shopping platforms. Retailers and related industries must adapt to these evolving preferences to remain relevant in a competitive marketplace and solidify their place in the future of supply chains.
Implications for the EDI Industry
The EDI industry has been instrumental in streamlining electronic transactions, enabling efficient business-to-business (B2B) communications, and supporting the growth of e-commerce. However, the renewed interest in brick-and-mortar shopping among Gen Z presents both challenges and opportunities for EDI users.
1. Integration of Physical and Digital Channels
With Gen Z favoring in-person shopping, retailers are adopting omnichannel strategies that seamlessly blend physical and digital experiences. This integration requires robust data interchange systems to manage inventory, customer data, and transactions across multiple platforms. EDI solutions must adapt by offering capabilities that support real-time data synchronization and integration between online stores and physical outlets.
2. Enhanced Supply Chain Visibility
The preference for immediate product availability means retailers must maintain optimal stock levels in physical stores. EDI solutions can facilitate improved supply chain visibility, ensuring that inventory data is accurate and up-to-date. We are definitely seeing an uptick in EDI documents like inventory advice (EDI 846) and Product Activity reports (EDI 852). This capability enables retailers to respond swiftly to changing consumer demands and reduce the risk of stockouts or overstocking.
3. Support for Experiential Retail
As retailers focus on creating engaging in-store experiences to attract Gen Z consumers, there is a growing need for personalized services and tailored marketing strategies. EDI solutions can assist by providing data analytics capabilities like GraceBlood’s VelociLink Analytics that help retailers understand consumer preferences and behaviors, allowing for the customization of in-store experiences.
4. Adaptation to Changing Retail Models
The resurgence of physical retail necessitates that EDI solutions adapt to new retail models that emphasize direct-to-consumer interactions and localized inventory management. This adaptation may involve developing solutions that cater to smaller, boutique retailers who are capitalizing on the Gen Z trend towards in-person shopping.
Challenges for the EDI Industry
While the shift towards physical retail presents opportunities, it also poses challenges for the EDI industry:
- Legacy System Limitations: Traditional EDI solutions may not be equipped to handle the real-time data processing required for integrated omnichannel strategies. Upgrading these solutions to meet new demands can be resource-intensive. Migrating away from these solutions to outsourced EDI platforms like VelociLink which leverages APIs can save thousands of dollars in both upgrade costs, staffing, and chargeback prevention.
- Data Security Concerns: With increased data interchange between physical and digital platforms, ensuring the security of sensitive information becomes more complex. EDI providers must implement robust security measures to protect against data breaches.
- Need for Interoperability: The diverse range of systems used by modern retailers requires EDI solutions to be highly interoperable. Achieving seamless integration across various platforms and technologies is often a significant technical challenge.
Strategic Responses from EDI Providers
To navigate the evolving retail landscape influenced by Gen Z’s shopping preferences, EDI providers can consider the following strategies:
- Investing in Technology Upgrades: Enhancing EDI platforms to support real-time data processing, cloud integration, and advanced analytics will enable providers to meet the demands of modern retail operations.
- Embracing API Integration: Incorporating Application Programming Interfaces (APIs) can improve system interoperability, allowing for real-time data processing, as well as more flexible and scalable solutions that accommodate various retail models and omnichannel strategies.
- Focusing on Customer-Centric Solutions: Developing EDI services that prioritize the needs of retailers and their customers, such as personalized data insights and seamless transaction processing, can enhance the value proposition of EDI providers.
Generational Impact on the Supply Chain
The trend of Generation Z gravitating towards in-person shopping experiences signifies a transformative period for the retail industry and its supporting sectors, including the EDI industry. By recognizing and adapting to these changes, EDI providers can play a pivotal role in facilitating the integration of physical and digital retail channels, ensuring that businesses remain competitive in an evolving marketplace. And as Gen Alpha and Gen Beta come of age, we will see yet more changes. Perhaps a shift back to online or even something we haven’t even heard of yet. Self-driving cars have come to pass, but will we see them making Amazon deliveries? Time will tell. In the meantime, GraceBlood can help future proof your supply chain with cutting edge EDI and analytics solutions.
