Gen Alpha Consumers’ Unprecedented Connectivity Changes the Retail Media Game

Gen Alpha kids with digital devices

As retailers look to understand their consumers, both for their own sake and the sake of their advertising customers, Generation Alpha shoppers’ unique, novel behaviors indicate significant changes ahead.

In an interview with PYMNTS, Elizabeth Marsten, vice president, commerce strategic services at Tinuiti, spoke to how these consumers — those born in 2010 and later — and their unprecedented purchasing power and digital fluency are challenging retailers to evolve faster.

“When I went grocery shopping when I was a kid in the 80s and 90s, … I would ask for things, and I’d be told, ‘No,’ basically. So I didn’t ask,” Marsten recalled. “But kids today — I asked a bunch of millennial parents, … [do your kids] get to choose what goes in the cart? And they’re like, ‘They do.’”

As such, she noted that as “Gen Alpha’s purchasing power in these next few years” continues to grow, and as they come to make up more of the population, these young consumers are going to demand quicker innovation, especially given their high degree of connectivity already.

Marsten cited better credit card machines as the most major retail innovation of the ‘90s and self-checkout as the biggest change of the ‘00s, contending that Gen Alpha consumers are “not going to accept that same shopping experience,” instead demanding a more digitally integrated experience.

Indeed, many consumers already demand digital integration in their in-store shopping journey. The PYMNTS Intelligence study “2024 Global Digital Shopping Index: U.S. Edition,” created in collaboration with Visa Acceptance Solutions and drawing from a survey of more than 2,400 U.S. consumers, found 20% prefer to shop in stores with the assistance of digital technologies.

Up Close and Personal

Additionally, Marsten shed light on emerging trends, such as the integration of generative artificial intelligence (AI) in search experiences, enabling retailers to deliver more personalized shopping journeys. Plus, the rise of in-store retail media experiences offers a glimpse into the future of brick-and-mortar engagement, albeit with challenges such as privacy concerns and technological limitations.

“What you don’t want is someone walking through a personal care aisle and being shown an ad as they’re just pushing their cart down the aisle for something they bought in the past that could be slightly embarrassing or they don’t want other people to see on the screen,” Marsten explained. “You’re talking about like your hemorrhoid creams or pregnancy tests — that kind of stuff.”

Overall, for less embarrassing and less public offers, personalization is a key area of innovation. The PYMNTS Intelligence report “Personalized Offers Are Powerful — But Too Often Off-Base,” created in collaboration with AWS, which drew on responses from more than 2,500 U.S. consumers, found that 71% of shoppers received personalized offers and are interested in them. Plus, another 12% did not receive personalized offers, but are interested in them.

Reaping the Rewards

Additionally, Marsten noted increased competitiveness in the loyalty program space, driven by a desire to offer consumers more value and incentives. She underscored the importance of cash-back incentives within loyalty programs, noting their universal appeal and simplicity, with consumers gravitating toward these offers due to their straightforward nature, eliminating the need for complex calculations or comparisons. This aligns with broader consumer preferences for convenience and transparency, driving the adoption of cash-back rewards as a cornerstone of loyalty initiatives.

Rewards are a key draw for shoppers, according to PYMNTS Intelligence’s study “2024 Global Digital Shopping Index: The Rise of the Click-and-Mortar™ Shopper and What It Means for Merchants,” commissioned by Visa Acceptance Solutions. The report, which drew from a survey of nearly 14,000 consumers across seven countries, found that 72% want omnichannel rewards or loyalty programs.

From the Outside In

As consumers’ habits evolve quicker, demanding a higher level of expertise to meet their needs, the retail media industry is growing fast. Marsten highlights the surge in investments, citing the rapid rise of retail media platforms like Amazon, which amassed $30 billion in just five years. This meteoric growth underscores the increasing importance of retail media in the broader advertising ecosystem.

It is not only merchants entering the space. Earlier this month, J.P. Morgan Chase unveiled its latest venture, a retail media network called Chase Media Solutions, and Marsten predicts more companies outside of retail to enter the category going forward.

“Right now, the shiny object is … first-party data, and that has become more available just not from a retailer to a brand perspective, but what we’re calling non-endemic — so that’s what Chase is doing essentially,” Marsten said. “The non-endemic is definitely going to keep growing, as it should.”