Last updated: Gen Z and Generation Alpha rising: How brands can win customers for life

Gen Z and Generation Alpha rising: How brands can win customers for life

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Life lessons are everywhere – my nine-year-old daughter learned one on Mother’s Day. We wanted to get her mom an amazing gift, and thought ordering five weeks ahead was enough lead time.

Unfortunately, we didn’t know the item was out of stock. The gift didn’t arrive until three weeks after Mother’s Day. The experience left a bad impression on my Generation Alpha daughter. 

She didn’t make the same mistake for Father’s Day. Instead, she made sure to shop only at websites that could show delivery windows. My gift arrived on time, and my daughter knows where she’s shopping in the future.  

Gen Z is the current powerhouse in the retail space, but brands are already sizing up the next generation of shoppers. With Gen Alpha, it’s a chance to start early and win true brand advocates.

Generation Alpha consumers were born beginning in 2010. Individuals born through 2025 fall into this generation, which follows Gen Z (born between 1995 and 2009).

How to win customers for life: From data insights to demand signals 

As brands prepare for younger shoppers like Generation Z and Generation Alpha, the days of simple segments are fading fast. In their place, successful retailers are prioritizing customer centricity and business agility.  

To win customers for life, they’re learning more about each customer at every touch point:

  1. Who they are 
  2. Channel, device, and communication preferences 
  3. Context of their interactions 

Then, with this foundation of identity and permission-based data, brands are working to create rich customer profiles that form the basis for their overall business strategies. The goal is to connect supply, demand, and customer satisfaction.  

This pursuit is not new and has had many names: a single source of truth, the 360-degree customer view, a common data model, the holistic customer profile, etc. Yet as customer data grows in volume, variety, and velocity, the finish line continues to move farther away.  

As proof, a recent study by Harvard Business Review, sponsored by SAP, found that 79% of the organizations surveyed had plans to implement a common data model, but only 13% have successfully done so. 

The dangers of getting ahead of your supply chain 

While they work to understand their customers and get ready for upcoming generations, retailers face tough inventory challenges.

The problems for big retailers like Target stemmed from their responses to pandemic spending and supply chain bottlenecks. They misread the tea leaves of what people want to buy, when those items will be in stock, and what to do with the excess.  

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Now inventories of big retailers are up over 26% compared to last year, and the surpluses are causing big dents in profits. 

Old Navy is another example. They started selling an expanded catalog but weren’t clear on the sizes and styles loyal customers preferred. As a result, they sold out quickly of core sizes, which frustrated their loyal base. They also had excess inventory of sizes and styles customers didn’t want. This stock required discounts to move. 

What lessons can retailers take from these examples?

Consumer spending habits have always been a moving target, but the speed of the shifts has increased thanks to the pandemic.

At the same time, supply chain visibility and inventory management have shifted from back-office system secrets to customer experience cornerstones. 

Customer data platforms: The benefits of connecting the front to the back 

Brands can tackle today’s retail challenges by connecting front-end engagement with back-end business processes.

An enterprise-grade customer data platform (CDP) can put the data puzzle together – identity, consent, supply chain, inventory, return data, and more – to create a clear understanding of customers at scale.  

For example, a retailer’s calculations of customer lifetime value can go beyond identifying the biggest spenders to factor in returns data. This will identify the most profitable segments, not just those who spend the most up front. 

Customer data platform screenshot
A customer profile in a CDP that shows LTV and returns data

These data insights can serve the entire business, not just marketing.

Connecting customer data to an enterprise’s supply, inventory, warehouse, and financial data through a CDP can inform critical business decisions ranging from market expansion to customer service to product development.  

With the right CDP, a brand can increase the fidelity of customer demand signals and connect them to back-end processes to become more resilient and agile. In addition, intelligent analytics within a CDP can help predict and execute next-best actions. This reduces churn and optimizes opportunities. 

Examples of how understanding customers pays off for the long-term

Shein is an example of a brand that uses data to understand young customers and prep for Generation Alpha. They’re a top 5 Gen Z ranked brand that’s pushing the fast fashion world forward.  

They have an innovative business model that shrinks the globe to connect consumers in over 200 countries to fashion trends via influencer marketing. They also work to reduce manufacturing cycle times from weeks to days, streamlining warehousing and logistics to delight their young customer base.  

As a result, their global popularity and profits are soaring. 

Nike is another success story. They worked to understand customers in their core business of selling running shoes. Then, with this rich foundation, they moved into adjacent sports – basketball, tennis, baseball, golf, and much more – using a repeatable approach that starts with shoes and then moves into soft goods and hard goods.  

Through this strategy, Nike grew profits and separated from their nearest competitor, Reebok. 

Winning customers for life: Loyalty earned, then rewarded 

As Gen Z and Generation Alpha enter the market, retail brands have a chance to win customers for life by adapting to their expectations.

My daughter is too young to know how businesses function in today’s digital economy. Along with every other shopper, she’s never said, “I like the brands that connect front to back.” Yet that’s exactly what she, along with her whole fearsome generation, expects.  

The brands that embrace this mindset now will outpace their competition in the future – and help to future-proof themselves. 

What can a CDP do for you?
Watch our interactive demo.

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