Retailers are wrapping their heads around the current crop of Millennials, but JLL is predicting even more disruption caused by an up-and-coming generation born in the year 2000.
According to Statistics New Zealand, there were 56,605 births in 2000 out of a total population of 3.8 million. Another 55,799 people were born in 2001 and 54,021 in 2002.
As this generation begins to harness their spending power – or often, their parents – it’s predicted they’ll have a massive impact on retail through their spending habits.
“They’ll be very different from any generation that’s gone before,” JLL UK’s head of retail and leisure Tim Vallance says.
“Their retail behaviour, which I think could be best summed up as ‘promiscuous’, could be the greatest disruption to real estate yet – far greater than the technological revolution we’ve seen over the last 10 years.”
According to JLL’s research, some of the attributes they’ll have that are unlike previous generations include being unlikely to save for their own home and working whenever and where ever the want.
They’ll also prefer spending money visceral experiences and unique entertainment, rather than traditional material goods.
Since they’ve grown up with so much choice in the marketplace via the world wide web, they’re less likely to be loyal to certain brands.
This all boils down to them having higher disposable incomes, but being less compelled to spend it.
Vallance says it won’t pay for retailers to underestimate their indifference to retail traditions or tendency for retail promiscuity.
“If I had to make any predictions of what they’ll want, I’d say a variety of smaller niche shops in authentic places where they can eat a variety of foods, drink coffee, and hang out with their gadgets, as well as their friends and colleagues,” he says.
“And if they need to use any workspaces, they want them to be nearby so that their leisure and working lives are seamless.”
JLL New Zealand national director of retail sales and leasing Chris Beasleigh says one of the key trends being driven by this generation is the growing percentage of food and beverage space in shopping centres.
“People want to have a different experience when they go to a shopping centre, with bars, restaurants, cool brands, they’re looking for a day out – an experience,” he says. “Retailers and landlords have to be aware of that.”
He says New Zealand has stayed ahead of the curve and is pretty good at picking up trends for the most part.
“What’s held New Zealand back is not having international retailers that have gone into other countries, but last year we picked up Topshop, Zara and H&M.
“Having those brands as well as other shopping centres revitalising themselves like The Brickworks [at LynnMall] putting food and beverage precincts in, if we were behind we’re catching up pretty quickly.”
The key takeaway for retailers isn’t to “change your shop today”, he says, but to keep an eye on this generation and be ready to react to them.
Vallance also notes it’s also important not to lose sight of the importance of the older generations.
“It may be that we have a dual society – one group that’s mobile and driven by great experiences, and another that’s more fixed and asset-holding – now that really would be very disruptive,” he says.