Generational Preferences are Causing a Seismic Shift to the Supply Chain

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By Issam Abu-Ghallous

April 12, 2022
7 min read

The supply chain disruption that has been dominating the headlines is a complex and multi-faceted issue to be sure. Much has been said and written about what is snarling the global supply chain: too few truck drivers, dormant factories due to COVID, backlogged ports, you name it.

However, one contributing factor that has been less explored, but which is perhaps one of the most significant disruptors of the supply chain, is the rapidly evolving purchasing preferences of the different generations. How, where and why we buy looks very different than just a few years ago, and that stretches from Baby Boomers to Gen Z. Taken together, it represents a massive shock to the supply chain, and one that supply chain leaders need to be fully aware of and plan for going forward.

How Adoption of Online Shopping Has Changed

Consider this, prior to the pandemic (2018), only 14 percent of Baby Boomers reported grocery shopping online. By 2020, more than 60 percent of Baby Boomers were online shoppers. Among Generation X, just 29 percent shopped online pre-pandemic. After COVID hit, that jumped to 72 percent.

With that many more people now shopping online, and with all the different expectations that come with the virtual experience, it’s no wonder the supply chain is rattled.

How Generations are Upending Supply Chain Dynamics

Baby Boomers

The influx of Baby Boomers (born 1946-1964), who’ve joined the ranks of online shoppers, represents approximately 38 million Americans … in just that generation. While many of them are projected to continue online shopping, the majority of Baby Boomers still prefer to pay now and avoid debt, if they can. That points to a hybrid shopping experience going forward, which supply chain leaders must be prepared for.

Baby Boomers also spend 93 percent of their annual income, which demonstrates enormous buying power.

Generation X

Like Baby Boomers, Generation X (born 1965 – 1980) now shops online in a big way—with 90% shopping online. The wealthiest of the generations based on the income they generate, they tend to value status and have loyalty to brand names. They also place a premium on customer service, both when shopping online and in-person, and expect rapid resolution of any issues or questions they have.

Millennials

Still relatively new in their careers, Millennials (born 1981-1996) spend 90 percent of their annual income. Not surprisingly, they are very comfortable with online shopping. What is more interesting is the number of Millennials who report being comfortable with buy now pay later, this is expected to grow from 18 percent to more than 40 percent by the year 2025.

This is a generation that “works to live, not lives to work.” They came of age during the Great Recession and place a premium on work-life balance and the social impact of their purchase decisions. Many Millennials delay major life milestones, such as getting married, having children and buying a home. As they continue to earn more, they will likely increase their spending.

Generation Z

True digital natives, online shopping is nothing new to Generation Z (born 1997 - 2012). Generally, they don’t tire of researching their purchase decisions, both online and in-person, but when they’ve found what they want / need, they often buy impulsively, “with 47% of them agreeing overall they often make purchases on the spur of the moment.”

Gen Z also places a high value on the social impact of the products they buy and the businesses they support. With a fifth strongly agree that the brands they buy from must share their values. Think fair-trade coffee, carbon-neutral businesses or products from conflict-free zones. They are not as impressed by brand names and status and are more rooted in social responsibility and climate impact, and they are willing to pay more to support the causes they care about. Finally, Gen Z craves authentic, “real” messaging in the products they buy. They can see right through marketing ploys and know when they are being “sold” with meaningless puffery.

Key takeaways

So what to make of it all? For supply chain leaders who want to stay ahead of the rapidly evolving tastes and preferences of the different generations, the following are eight key takeaways to consider:

Access to information: Across the generations, consumers now expect immediate access to product information. Not only that, but the information needs to be clear, relevant and personalized with product descriptions and reviews.

Understand that speed is everything: Regardless of the generation, they all expect near instantaneous fulfillment. Waiting days, or even hours, to receive what they want when they want it, is now less and less acceptable. And when it comes to Gen Z, they will choose the retailer and brand that can provide what they want the quickest. To keep up, delivery should be nimble and include different options.

Show your social responsibility: As stated above, newer generations care deeply about the social and environmental impact of their purchase decisions. They expect clear and detailed information about how a product, and the company behind it, is making the world a better place.

Prepare to personalize: Millennials and Gen Z expect their digital experiences to be reflective of what they’d experience in person—speak directly to them. Literally, them as individuals. The messaging and products they encounter online should be specifically curated to their tastes and interests. Brands need to make the case that they “know” their consumers personally with their product positioning, which requires robust data analytics and predictive modeling to make that happen.

Amplify with social media: Social media IS the new online marketplace. Many Gen Z and Millennials are learning and, get this—engaging—with brands, the latest trends and products through their Instagram and TikTok feeds. Brands need to be present on social media if they are going to be competitive with these generations. Consider this: more than 76 million people in the United States will make a purchase via a social network at least once this year.

Be ready for tomorrow: Millennials and Gen Z make up 51 percent of the population. They are the most educated and will soon likely have more purchasing power than the other generations. Prepare for this eventuality by gathering data about their preferences and build a dynamic and efficient execution strategy going forward.

Be flexible in delivering your goods: Our purchasing experience is now fluid, consumers are no longer thinking of online and brick and mortar buying as separate. For example, have you ever been in a store and looked at your phone to see what aisle something was in or what the reviews were on the different TVs available? Recognize that and develop systems and processes that accommodate this “hybrid-buying” future.

React to new trends: All generations are collapsing their online and in-person shopping habits. While the online world offers quick and easy ways to research products (price, quality, origin), there is still a desire to experience (see, feel, touch) products in the real world.

What this all comes down to is the convergence of generations and how they expect to be treated during their purchasing process. New trends arise on a near daily basis, and consumers respond quickly and make purchasing decisions accordingly. However, they are also more likely to move on to another trend just as quickly. What this requires, is a dynamic digital supply chain fueled by real-time data and analysis. What’s possibly even more important, is that your team has the digital skills needed to run this dynamic digital supply chain in order to match expectations and demands.

Is your team prepared for the digital demands on your supply chain as a result of these generational shifts? Connect with a member of our team today to see how we can help.

About  Issam Abu-Ghallous

By Issam Abu-Ghallous, Ph.D., MBA, Associate Professor of Economics, DeVry University

Issam earned a BA in Business Administration from Bethlehem University in Palestine, an MBA from Lewis University, and a Ph.D. in International Economic Development from the University of Southern Mississippi. Issam joined DeVry University in 2015 and is currently teaching and designing economics and international relations courses.

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