While zillennials still flock to physical stores, they want to bring online convenience and personalization to their in-person experiences. Adopting AI-assisted shopping features can help merchants bridge this gap.
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Zillennials may be digital natives, but they still frequent physical stores.
Four in 10 members of this crossover generation — comprising younger millennial and older Generation Z consumers born between 1991 and 1999 — prefer to buy consumer retail products in person. However, zillennials will not settle for the same old in-store shopping experience.
PYMNTS Intelligence finds that more than 8 in 10 zillennials want to include artificial intelligence-assisted features in their in-store experiences. More broadly, this generation embraces Click-and-Mortar™ shopping that mixes online tools and conveniences with the in-real-life appeal of physical stores. This is especially true for consumer retail products.
These are just some of the findings explored in “Generation Zillennial: The Future Is Click-and-Mortar™,” a PYMNTS Intelligence special report. This edition examines zillennial shopping preferences with a focus on AI and physical stores. It draws on insights from a survey of 2,692 U.S. consumers conducted from Aug. 1 to Aug. 15.
What is Click-and-Mortar™ shopping?
Click-and-Mortar™ shopping merges digital tools and physical locations. For example, a consumer may go online to research a product and visit a local store to buy the item in person. While at the store, the same customer may receive an alert about a personalized offer and use their smartphone to check competitors’ prices before finally making a decision.
How AI Can Boost Click-and-Mortar™ Shopping for Zillennials
Zillennials are always looking for ways to enhance their shopping experiences, both in-store and online. Eighty-one percent said digital innovations, such as personalized recommendations, have at least some influence on where they shop. Moreover, 46% of zillennials indicated that innovative experiences are very or extremely impactful on their choice of merchant.
The explosion in AI technologies has made it easier than ever for merchants to deliver Click-and-Mortar™ innovations. PYMNTS asked consumers about eight AI-assisted in-store shopping experience categories and found strong overall demand. Interest was especially high among younger respondents. Seventy-seven percent of zillennials said they would want at least one experience to be available, followed by millennials at 76% and Gen Z at 74%. Merchants should prioritize adding the most-wanted features, particularly personalized promotions and deals, the top choice for 23% of zillennials.
Zillennials Still Love Stores
For consumer retail products, zillennials prefer online shopping but also flock to physical stores.
Zillennials are consummate omnichannel shoppers. In the last 30 days, three-quarters made a purchase online, and the same share shopped in person. Millennials were less likely to shop online, while Gen Z consumers were less likely to shop in person. This varies widely by product category. Most zillennials favor in-person shopping for groceries and online channels for transportation and travel. Restaurants and non-grocery retail split much more evenly. Three in 10 zillennials prefer both channels for non-grocery retail, highlighting the importance of Click-and-Mortar™ for this segment.
However, when asked to pick their favorite channel for consumer retail products, zillennials chose online shopping as the winner. Sixty-one percent prefer either ordering online as needed (39%) or using scheduled or auto-fill subscriptions (22%). The remaining 39% would rather shop in person. The fact that so many zillennials prefer physical stores reflects their persistent appeal. Merchants can capitalize on this by leaning into Click-and-Mortar™ strategies.
In-Person Shopping Needs a Digital Reboot
Physical stores can take cues from their digital counterparts to provide a compelling Click-and-Mortar™ experience.
Zillennials gravitate to physical and digital shopping channels for different reasons. Nearly half of zillennials who prefer physical stores for personal and household supplies name one of three factors as primary. Eighteen percent cite a lack of additional costs, 15% say increased control over product selection and 13% name easier item exploration. Quality is not a key differentiator. Roughly 1 in 10 zillennials say item quality is their top consideration when choosing between in-store or online shopping. Unsurprisingly, the speed of shopping, checkout and delivery carry much more weight for online shopping than in-person shopping.
Two key areas stand out in which physical stores could use AI-assisted shopping to boost their competitiveness. The first is to drive a pleasant shopping experience. Just 3.1% of zillennials cite this as a reason for preferring in-store shopping, compared to 8.7% who say the same for online shopping. For example, AI-assisted features could make it easier for consumers to find desired items and check out smoothly. The second is to reduce the fear of running out of a product at home. AI-based features could send customers reminders about restocking as well as offer a refill-by-delivery option. This is a textbook example of how Click-and-Mortar™ combines the best of in-store and online features.
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“Generation Zillennial: The Future Is Click-and-Mortar™,” a PYMNTS Intelligence exclusive report, is based on a survey of 2,692 U.S. consumers conducted from Aug. 1 to Aug. 15. The report examines shopping preferences surrounding physical stores and AI technology. Population weights are used to ensure analysis remains representative of the U.S. adult population.
About
PYMNTS Intelligence is a leading global data and analytics platform that uses proprietary data and methods to provide actionable insights on what’s now and what’s next in payments, commerce and the digital economy. Its team of data scientists include leading economists, econometricians, survey experts, financial analysts and marketing scientists with deep experience in the application of data to the issues that define the future of the digital transformation of the global economy. This multi-lingual team has conducted original data collection and analysis in more than three dozen global markets for some of the world’s leading publicly traded and privately held firms.
The PYMNTS Intelligence team that produced this report:
SVP and Head of Analytics: Scott Murray
Managing Director: Aitor Ortiz
Senior Analyst: Marcos Muñiz
Senior Writer: Daniel Gallucci
Content Editor: Matthew Koslowski
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