Merchants have much to gain if they find the way to the hearts of Gen Z consumers — and can get them to click on the buy button, in store or online. Better yet, as Kirk Stuart, SVP, head of North America Merchant, Acquiring and Enablement at Visa, and Natalie Youn, founder and president of DoggieLawn, told Karen Webster in the latest PYMNTS SMBTV installment, incentivizing them to sign up for recurring subscriptions can keep those consumers happy and loyal for years to come.
The opportunity is a sizable one, as 20% of the U.S. population is between the ages of 12 and 27. Gen Z is the cohort that everyone from retailers to real estate brokers wants as a customer. They’re digitally native — 26% more of the consumers in this cohort use apps to make retail purchases, PYMNTS Intelligence data shows.
Stuart knows whereof he speaks — he’s the father of 22-year-old triplets, newly out of college and just starting their professional careers. There’s no cookie-cutter approach to capturing their attention and carving out share of wallet, he cautioned. And from his vantage point, “In many ways, this generation is extremely different — certainly from my generation, but they are also very different than millennials.”
For starters, they are the only generation that grew up with digital-first technology basically from birth, where social media (found by PYMNTS Intelligence to be highly important to two-thirds of Gen Z individuals) and other online channels help inform their worldview — and how and where they shop. Stuart noted that in one recent transaction, his daughter chose a back massager through TikTok and is also looking for social media recommendations to help furnish her new apartment.
There’s a flexibility, too, in how merchants must approach Gen Z consumers, said Stuart, who noted that, according to “Visa Insights Engine: 2024 Predictions,” 83% of shoppers still go to in-store settings during their commerce journeys. Research commissioned from Visa Acceptance Solutions and conducted through PYMNTS Intelligence has found that the “Click and Mortar™” shopper has come back to malls and merchants, even if the actual transaction might happen on the device. Merchants must be agnostic as to where the sale happens, with a seamless continuum between the store and the website.
As to the seamless experience, he said, “there are lots of ways in which payments play into that.” He noted that with transactions made through Visa, the payment network’s Authorize.net service, or through digital wallets or buy now, pay later (BNPL) options, the goal is to meet these younger consumers where they are. With tap to pay, in addition, he said, “we’ve been able to take everybody’s mobile device and turn it into a payments terminal,” with 6.7 million active terminals, as of Visa March 2024 data.
DoggieLawn: When They’ve Got to Go, They’ve Got to Go
Those young consumers’ tendencies to go online to shop, to get recommendations and, especially, to set up subscriptions, have proven to be a boon for DoggieLawn, a firm catering to pet owners through a strategy that incorporates all of those elements. The company sells indoor grass pads it calls an “environmentally friendly way” for dogs to do their business, without the odors or chemicals of artificial turf.
Youn launched the company as a way to quit the corporate workaday. She said the principle behind the organic natural pee pad is simple.
“We ship out grass all over the nation to people who have dogs and who don’t have access to a backyard — and they need a solution,” she said. Having the DoggieLawn on a balcony or even indoors, she said, also is a natural extension of the daily walk, where our canine pals are already used to “going” outside on the grass.
The model is subscription-based, complete with free shipping and loyalty points.
Younger consumers, particularly Gen Z and millennials combined, represent a significant portion of DoggieLawn’s clientele — and its targeted audience.
Think, then, of the young adults who have flown the proverbial nest and now are starting off on their own, living in apartments in or out of school.
“You’ll have a lot of college students who are still Gen Z, but we expect that as they start to become professionals, they will have more discretionary income,” Youn said, “and they will become a larger segment of our customer base.”
Though DoggieLawn’s “primary channel” is its own site, the company also looks at where millennials and Gen Z consumers are shopping and where they are spending their time — not surprisingly, that’s Amazon, TikTok and Chewy.
“We try to be in different places where we know that there’s going to be clusters of people looking to purchase pet products,” Youn said. With that data on hand, the company can tailor its approach to the consumer. The main site promotes subscriptions; on the eCommerce sites, she said, the move is to try to introduce DoggieLawn and incentivize an initial purchase. The company also has videos and testimonials on social media channels embedded into its email communications with prospective customers, illustrating the cross-pollination of these points of engagement.
Appeal of Subscriptions
Nearly 40% of Gen Z consumers have subscriptions, which Youn said makes them a natural fit for DoggieLawn, as the pads eventually become “essential” to everyday pet ownership, and to setting a routine for the dog.
With a nod to the final piece of the puzzle, the transactions, Stuart noted, “When it comes to the payment side of working with these Gen Z consumers, there is a lot of work that has to be done in terms of marketing to these folks, retaining them and growing your business.”
Stuart said the subscription model sports the least friction-filled option in commerce, due to recurring billing, and the ability to keep cards on file — while tokenizing those credentials, too, making those transactions safer and preventing failures when credentials or addresses have changed. Reordering is made easy, while firms control their costs through direct sales and streamlining returns.
For Visa, “We don’t make companies like Natalie’s have to hold on to that consumer information, and have challenges with data security.”
As Stuart said, “Payments, in many ways, should be the very last thing you should have to think about.”