How to Win with Gen Z in Retail, Lessons from American Eagle Outfitters
Move over Millennials there is a new game in town, Generation Z. This is the generation born after 1996 and the oldest of the cohort will turn 24 this year. So what’s Gen Z like? They are diverse, hyper connected online, and have a lot of spending power at their disposal. They are also mature beyond their years as they take on causes like protecting the environment and balk at brands that lack authenticity. Clearly this generation is one that will leave their mark on the world.
One of the retailers that has had success relating to this generation is American Eagle Outfitters (AEO). This is the retailer known for several popular brands including American Eagle and Aerie. Last October investment bank Piper Sandler announced the results of its 40th annual survey, Taking Stock With Teens. In the survey teens rated American Eagle as their second favourite apparel brand, behind Nike and ahead of Adidas. If you want to know how to cater to this generation of savvy consumers consider these ten keys to success.
1. Understand just how diverse Gen Z is. Approximately 48% of Generation Z is non-white making this generation the most racially and ethnically diverse generation in American history. 25% of Gen Zs in the United States are Hispanic, 14% are African American and 6% are Asian.
This is the generation that embraces same sex marriage, broader definitions of gender as well as interracial marriage. Overall, instead of dividing, this generation seeks to unite. Without a strong understanding of the nuances in the wants and needs of members from this generation retailers risk appearing out of touch.
2. Appreciate the spending power of this generation. While everyone obsesses over Millennials in just a few short years, by 2026, there will be 82 million Gen Z consumers, more than any other generation. Members of this cohort between the ages of 16 and 21 already spend an estimated $143 billion per year. AEO has focused on the Gen Z consumer for some time and now has a foot in the door which it can capitalize on for many more years as these consumers age and their disposable income increases.
3. Align with Gen Z’s top social causes. Instead of getting the hot model of the day to become an Aerie brand ambassador which are called #AerieREAL Role Models the brand has targeted young activists. One of these activists is Aly Raisman the world class gymnast who courageously spoke out about the sexual abuse she suffered while being treated by her former physician, Larry Nassar. By going down this route Aerie is turning its retail business, popularity and customer base into a platform to elevate important causes.
Another example of AEO’s focus on social causes is the first ever AerieReal Summit which took place last year on International Women’s Day. The Summit brought together AerieReal ambassadors and customers in a single location to have powerful conversations and workshops about causes that are important to women.
Aerie took its activism even further by setting aside $400,000 to award 20 young people who are activists within their own communities. The funds are supposed to be used in support of the winners’ platform for change. “We believe everyone has the power to be a changemaker. Together with our incredible Role Models, we cannot wait to award $400,000 to 20 fierce and inspiring members of the #AerieREAL community,” the brand wrote on its website last January.
Since 90% of Gen Z consumers believe an organization should be responsible for addressing social and environmental causes and would pay more to shop at organizations that are civic minded it simply makes sense for brands to get involved with causes that are top of mind with young consumers.
4. Use inclusive models. Aerie features models of all shapes, sizes and ethnicities across all of its marketing collateral which makes young consumers feel like the brand is speaking to them. It has gone farther than most brands by featuring people with disabilities and illnesses on its website.
Whether it is a model wearing intimate apparel in a wheelchair and or a model with crutches, Aerie makes everyone feel included.
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5. Ditch photoshop. Six years ago in 2014 Aerie launched its first #AerieReal campaign featuring models that are not re-touched. Speaking about the campaign a spokesperson for Aerie said: “we left beauty marks, we left tattoos, what you see is really what you get with our campaign,” Some of the other “flaws” that are not retouched are: lines, dimples, fat, puckering and slight stretch marks.
A study found that 79% of Gen Zs will trust an organization more if the brand uses images that are not photoshopped. This generation is growing up during a body positivity movement. It isn’t the generation that sees Victoria Secret models as the definition of beauty but instead flock to brands like Aerie which use models that feel more like a true representation of themselves and their friends.
“It’s not easy to grow a brand today,” Jennifer Foyle, AEO’s Chief Creative Officer says. “It has to have a purpose. And I think with the authenticity that we deliver in Aerie, the community just wants to be part of it. And the community is our customer.”
6. Promote self-love. Aerie see itself as much more than a retailer selling cute bras and t-shirts. Its brand ambassadors, #AerieREAL Role Models, as described on Aerie’s website: “spread the brand’s mission to love your real self—inside and out. They empower and inspire the Aerie community to be the change they want to see in the world through leadership, advocacy, workshops and philanthropic partnerships. As one of the fastest growing brands in the apparel industry, Aerie is equally committed to creating exceptional merchandise collections for its customers while positively influencing the way women see themselves and treat others.”
Self-love is something that resonates with all young people. Who couldn’t use more positive encouragement and a sense of belonging? By targeting all types of young people Aerie is essentially saying we love you and we hope you love how you feel in our clothing. Sounds simple but many retailers still lag behind in this regard.
7. User generated content works. For its #AExME Back to School 2020 Campaign American Eagle transferred much of its creative control for its campaign to Gen Z brand ambassadors. The ambassadors dance in videos they shot themselves from their own homes wearing American Eagle clothing, of course. The video stars also did their own hair and makeup. “I was inspired by the incredible talent of real kids producing innovative creative content in social media,” says Michael Goldberg, American Eagle’s Creative Director. “But I didn’t want to just imitate or reproduce that content in our campaign. By truly co-creating with these young dancers, it became a creative collaboration and a chance for AE to really participate in youth culture.”
Giving up control is hard to do but sometimes your customers know what will resonate with your target audience better than you do.
8. Leverage popular Gen Z social media influencers. Aerie has had a lot of success partnering with teen social media influencers. One partnership which has proved to be lucrative is the brand’s partnership with Charli D’Amelio who has over 110 million followers on TikTok.
Last April for Aerie’s #AerieRealPositivity campaign D’Amelio asked her followers to create a video outlining three things they are grateful for and to post the video using the hashtag #AerieRealPositivity.
The campaign was a huge success with more than 4 million likes and over 20 million views of D’Amelio’s video for the campaign. There are now over 1 billion views of videos linked to the AerieRealPositivity hashtag on TikTok.
9. Meet your customers where they are. AEO has taken to TikTok because that’s where most of its existing and target customers spend their time. “On TikTok, advertisers who appeal to this elusive generation with fresh, timely content will be seen as the cool new friend. However, such brands must continue to innovate how they engage with this generation through social media in order to stay relevant,” said Eric Oldfield, chief business officer at social learning network Brainly.
Not only has AEO had success on TikTok but also on SnapChat. American Eagle in conjunction with Disney launched an augmented reality enabled holiday store on Snapchat last November. Visitors were able to browse through the store which was a digital mock-up of an American Eagle store. Consumers shopping in the store were presented with American Eagle staples like jeans and could see what they looked like on various body types using 3D modelling. “It’s taking what has traditionally been a 2D shopping experience on our direct site and bringing it to life through augmented reality and really a 3D experience,” said Craig Brommers, American Eagle’s chief marketing officer.
Brommers called the popup which generated more than $2 million in revenues and 50 million page views “unbelievably successful.” This campaign is the first time consumers were able to shop directly on Snapchat.
10. Find a way to gain a deep understanding of the needs of this generation. To ensure it fully understands this demographic AEO conducts extensive research including focus groups. “We’re gathering feedback from customers at every step,” says Jay Schottenstein, AEO’s CEO. “We’re reading comments on social, we’re getting feedback in stores.” American Eagle also has AExME Council a committee filled with young consumers that American Eagle uses to affect decision making. American Eagle describes the council as a: “group of young advocates and change-makers influencing AE business and working together toward a better, more inclusive world.”