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May 11 2018

Generation Z goes shopping. An interview with Barbara Busse

Virtual Reality, Augmented Reality, conversational commerce – the consumer behaviour of Young Millennials and Generation Z will also have a dramatic effect on the furnishings market, says Barbara Busse, a future and trends researcher.

In the course of your research, you've studied Generation Z and Young Millennials. What's this generation all about?

Generation Z is a very large generation that will account for 40% of total global consumers in two years. Along with the Young Millennials, they’re the first digital natives. They’ve grown up with round-the-clock Internet access and are at home in worlds like music and video on demand. As a result, they have different expectations of things and products.

Rental furniture is on the rise because of frequent moves and changes. We don't buy furniture, we lease it. What is Generation Z's position on this?

That's interesting, because that's something our generation would do, but not Generation Z – it's not a sharing economy. There's a saying: “Me, the animals and the rest of the world”. That's exactly what makes Generation Z tick: they think of themselves first, then the environment, and then everything else. But they don't want to share.

So Generation Z is selfish?

Totally. They'll have a big impact through “collective intelligence”, but that’s mainly click-activism. By expecting manufacturers to be sustainable, they surrender responsibility. They simply consume and expect that doing so won't harm anyone.

If I keep a sofa for 20 years, I'm acting sustainably. But if I only look at what's in and what I can get with a single click, then you can't really call it sustainable. Isn't that an inherent contradiction? This generation demands sustainability but its consumption patterns aren't sustainable?

Certainly, it will be important to stay up to date at all times. There's a new, very pronounced trend awareness. Through Instagram and Pinterest, and the image-driven world in general, Generation Z is much more trend-conscious than we are today. They are more familiar with colours, which we'll see in the furnishings of Generation Z. Of course, this also means they notice more quickly when a piece of furniture is no longer in. Then it'll be out and replaced quickly. The turnover will be faster. Maybe – and this will make things interesting for the furniture industry – suppliers will develop product concepts for designs that will keep the main elements and allow other individual pieces to be exchanged.

What impact will this have on the luxury segment?

I have worked for the luxury market for many years, so I know the thought processes of these companies. But: status is no longer material status. Status is events, experience, social media credibility. What can I show my followers? Who am I, what have I achieved? I call that “wow-now”. It's a social group that considers the present moment to be the greatest good. Gamers pay up to Euro 2,000 just so they can play with someone to reach a sequence that they'll never reach on their own. So young people spend quite a bit of money on a very short-lived experience.

Will things like virtual currency, exchanges and new distribution platforms have an impact on the furniture market?

There are two issues involved here. One is cryptocurrencies – Bitcoin, for example. At the moment, it's increasing in value and getting very popular, but soon it may be replaced by a new currency. But these cryptocurrencies are no longer controlled by banks. These technologies can store information as well as payment options. This will create new information and payment flows that won't have to pass through certain bottlenecks anymore. In other words: these days many people sell handmade items, for example through Pay Pal, and it's getting easier and easier to do so. The younger generation also has a tendency to “purchase to resell” – they buy something to resell it. In a culture of digital production, where I can design my own furniture and use different payment channels that only work peer-to-peer and have nothing to do with banks, I can suddenly create a new value-added chain that can't be controlled by individual suppliers or furniture manufacturers. This builds a kind of network – like the ones we know from Uber and Airbnb – that no longer has anything to do with big-name manufacturers. Furniture will continue to be manufactured, but more and more often under the maker's control.

So the established manufacturers will have problems?

I think they need to be careful not to react too late. At some point, sales will start to fall. Then you can comfort yourself with the thought that you have a lot of satisfied customers, which means that the path taken thus far can't be so wrong. But they shouldn’t forget to sell to young people in particular. And young people just buy differently. They're interested in AR and VR – Augmented and Virtual Reality. Right now the innovations in those fields are breaking new ground like crazy. For example, Magic Leap is a manufacturer that produces very lightweight glasses that project directly onto the retina. We will be able to experience AR and VR very easily. And we'll use that for shopping. Everyone who has tried it out – and unfortunately that’s still a small number at this point – can see how simple it is. If I have an opportunity to have a look at a product, like a piece of furniture, in VR, I will do that. The IKEA Place App is the new standard for this. But there are certainly many other manufacturers who believe that because they're a traditional company that has nothing to do with technology, they don't have to get involved. That's the biggest misunderstanding. At the end of the day, they cater to customers, not themselves, and the customers have simply changed.

But I can't try out a sofa in VR.

But you'll be able to soon. You’ll be able to have a sensory experience that lets you really feel surfaces and test the comfort of a seat. Maybe we don't need that. But young people will try it out and then they won't want to give it up.

The first step in changing the way we shop was to move away from the store and towards a PC and mouse click. Now we order by app while we're out and about. What's next?

The next step will be Conversational Commerce or Narrative Commerce, which will change the shopping experience all over again. It will create spontaneous opportunities to buy when we're just talking about products. A conversation opens up a sales channel that lets me order samples or furniture, for example by giving a verbal command. Imagine: we're sitting with friends at home on the new sofa and talking about the furnishings. That looks great, where did you get that? I like that, I would like one, too. And then I ask: is it also available in blue? Then my virtual assistant says: yes, it is, delivery time one week. Then I say: OK, please buy. Everything is done by voice. You won't need ads at the bus stop anymore because we'll talk about products to order them. The conversation becomes the point of sale, so to speak. If customers can't order from me by voice in the future, I don't exist as a company.

Will it go so far that at some point there won't be any more shops where you can look at, try out and purchase furniture?

There will still be shops, but they will change. For example, there is the expo-store concept. These are shops that only show the very best and the most amazing. Or Top 10 lists of the coolest things – the coolest chairs, the coolest cabinets, the coolest lamps. And if that's the world I live in, I'm going to go there to look at it. But I'm probably not going to go to some big furniture store to sit on 10 sofas anymore. I'm not going to do that.

So there are two directions of development here?

Exactly. On the one hand, procurement has to go smoothly, adapt to different situations and involve people as a point of sale. And then there's the other extreme: if I want to look at the furniture myself, in “real” life, I have to be offered something. Something has to happen, maybe in the form of a poetry reading that goes on while I sit on the sofa I want to buy. It's about entertainment. Shopping is either so easy that I don't even notice it, or I'm really offered something and am entertained. Because honestly, I don't know anyone who enjoys going somewhere on a Saturday, looking at 20 sofas and then comparing prices and delivery times. There are cool concept stores, including here in Cologne, where I love to go. Even if I don't need a sofa. That's the difference. One is fun, the other is procurement. This procurement process will be different in the future. It must be fun.

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