Gen Zs can help turn inflation into opportunity: KPMG

Promotional strategies must be reset to attract 600 million Gen Zs through digital and human consumer experiences.

Inflation, along with other challenges to the economy, poses an opportunity for Asian retailers to reset their promotional strategies and attract the bigger Gen Z consumer market, an industry expert said.

In an interview with Retail Asia, KPMG’s head of consumer and retail for Asia-Pacific, Anson Bailey, revealed that the Gen Z consumer market of 600 million people in Asia presents immense opportunities for retailers.

“We’re talking about 300 million Gen Z consumers across China. But if we look at the rest of ASEAN, and we look at South Asia, we’re also looking at a further 280 million Gen Z consumers or thereabouts,” said Bailey.

But to capture that market, retailers must ensure that they are keeping up with consumers’ journey out of the COVID-19 pandemic and providing them with a balance of digital experiences and personal connection to the brands.

Bailey pointed out that there is a significant amount of savings and pent-up demand, which may result in a windfall in revenge spending and travelling.

The KPMG executive advised retailers to reset their promotional strategies accordingly by providing immersive digital experiences, increasing employee empowerment to boost the authenticity of the brands, and creating human connections with consumers. 

Digital transformation is a must if retailers are to remain agile and resilient while adapting to changing times and the needs of digitally savvy consumers like the Gen Zs, he said.

Bailey also noted that as consumers demand authenticity from brands, it serves that interest to increase employee empowerment to become the new influencers since they are consumers themselves.

“I would also say the importance of areas such as ESG, and authenticity, these are all really, really key areas. Ethics, you know, those consumers today have a lot of information at their fingertips, and they’re watching you, they’re watching the brands,” he said.

Also, he reminded retailers not to lose human connections with their consumers for a more complete customer experience.

Amidst the ongoing inflation and economic challenges that struck the retail industry over the past two years of the pandemic, Bailey still believes that the future looks bright for the industry in Asia.

One advantage, cited by KPMG, is that the retail industry in Asian regions is not facing the same inflationary pressures as those in the European Union or the Americas.
“I actually think we are going to expect to see some revenge spending, as well as some revenge travel here in the region, especially around those mainland Chinese consumers,” said Bailey.

Still, he noted that the pressure on margins is real and that retailers must be prepared to deal with it.