Boomers are ecom's new black

It's not what most of us expected. Baby boomers are the new black for ecom and online shopping while Gen Z and a portion of Gen Y are sweeping back into physical retail stores wanting experience.

New global data of 1.5bn online shoppers compiled in May by Salesforce across its customer base along with quarterly consumer sentiment research tracking should bring cold comfort for some and a burning growth window for others. Seventy five per cent of Gen Z’s say they’re prefer physical retail and will head in-store, even for the Black Friday shopping extravaganza in November. Just 30 per cent of baby boomers, meanwhile, have any plans to follow the younger, cooler set back into store – they continue to stampede online. 

Perhaps more sobering is the forecast from the Director of Industry Insights in consumer and retail at Salesforce, Caila Schwartz, that Gen Z will spend $3 at retail for every $1 they outlay online. 

“Gen Z is actually leading the pack on the return to store,” Schwartz told a press briefing at the tech giant’s annual Connections commerce and marketing conference in Chicago recently. “So Gen Z is the number one generation that is saying they will shop in store on Black Friday this year.”

For Schwartz, it dovetails perfectly with all the anecdotal evidence she’s been gathering. “I’ve seen so many videos from Gen Z shoppers saying, ‘Oh, I wish I could experience the Old Black Friday where people rushed into the store’.  It’s  like a nostalgia that they never experienced. They want to go in-store”

Beyond nostalgia there are three core drivers – they get their product immediately; they can “touch and feel” the merchandise and they can discover new stuff. 

Purchase journeys up-ended

While the old, crusty boomers with much higher discretionary spending are left to drive what’s left of the ecom revolution – globally online sales volumes grew by just 1 per cent over the last 12 months -  Gen Z are now messing with omnichannel retail strategies and purchasing journeys. 

Search behaviour is moving rapidly from keywords to conversational, context-aware search via large language models (LLMs) – 39 per cent globally say they’re using AI chat search at some point in their shopping journey and 10 per cent of Gen Z are starting there. 

“What’s also interesting is that this is not just a digital tool … they are taking these tools into their physical spaces as well,” says Schwartz. “So 41 per cent of Gen Zs and millennials are using AI search, AI chat in the physical store. They’re taking pictures of store shelves, they’re taking pictures of themselves and they’re asking for recommendations when they’re in the store from these chat services, which is just incredible. The questions that they’re asking are way more context based. It’s not just building off an example of makeup - it’s not just red blush, it’s what red blush works with my skin tone and in my budget - oh, and now I want to make sure that it doesn’t have this ingredient in it. So the nature of the question is changing and it’s becoming, for lack of a better word, way more personalised.”

Trust in the machines - and influencers

And it appears trust in the machines is broadly there or at least matching the levels garnered by creators and influencers – Walmart recently released research showing  47 per cent of shoppers trust the recommendations from LLMs and AI chats. 

When Schwartz asked her global consumer research panel why they’re using conversational AI from platforms like ChatGPT, Perplexity or TikTok they said “it gives the best product recommendations, it helps [them] compare prices and find the best deal and it does all the research. Now with Gen Z and millennials, they had one additional top three that was different - they like to use it because they can upload a video, upload a photo, upload audio. So this idea that the shopping journey is becoming incredibly more connected and shoppers are shopping brands, they’re not shopping channels is real.”

Another few trends from the global dataset to note include a 22 per cent uptick in consumer sentiment on personal finances and a wholesale flip on 2024 when a majority said extra cash would go into savings. This year it’s physical goods with one notable exception. “All regions [globally] are prioritising physical goods but what is interesting is the only demographic that is still focused on savings are high-income earners,” says Schwartz.

Temu and Shein's new block

The past year has seen a notable shift from just value to quality in the latest Salesforce ecom data - for the first time since 2020, product quality is a top three reason determining where people buy, with implications for the online rapid rockets of Temu and Shein. "Last year we saw Temu and Shein do really, really well, they had a really strong performance," says Schwartz. "Now shoppers just want better quality product. There's a pullback to quality which we're seeing in the data. They [consumers] will go off those players. We asked what factors make you more likely to shop with a certain brand or retailer - the top two were free delivery and lower prices. So we do still see a pull to value from the consumer. We are not out of that cycle yet ...but the third is better product quality ... so we're seeing that being a driver this year. For brands leaning into value and the quality of their products could be a really strong play."

Trillion dollar AI conversations 

But personal and retailer autonomous agents and conversational AI search are the two areas Schwartz says are having “the most transformational change to consumer behaviour that we've seen in a very long time. It's going to change how consumers discover brands and products. It's going to change the relationship between the brand and the consumer and it's going to change the nature of e-commerce. So what that looks like in the future, I don't know if we have an answer for that yet.”

But Schwartz and Salesforce have put a number on what AI-based conversational search will drive in online and physical sales by December. “We're predicting that AI will drive US$260 billion in global online sales and US$1.6 trillion in global in-store sales,” she says. Check and repeat - $1.6 trillion? “What's different about this prediction that we've done in the past is that this is not an online tool only,” she says.