How TikTok and Gen Z shoppers are prompting a dramatic overhaul among major Australian retailers

Gone are the days when young shoppers would seek out product reviews on a brand’s website before purchasing new makeup or skincare. Today, the retail experience increasingly starts with a scroll on TikTok. That’s according to entrepreneur Iris Smit, whose Perth-founded beauty brand The Quick Flick has built up a following of nearly 155,000 on the social media platform. Her own account has just under 143,000 followers. “Most of those young shoppers are . . . using TikTok as a search engine,” Ms Smit said. “It makes sense for retailers and brands to be on these platforms because that’s where the customer is searching before making those buying decisions. “Even for myself, I’m not going on to Google anymore and typing in a product and reading reviews on the brand’s website.” Macquarie University consumer psychology and behaviour researcher Jana Bowden said Gen Z and Gen Alpha customers have a penchant for online shopping and a sheer addiction to how social media influences what and when they buy. Today, Gen Z represents a significant portion of the population — about 18 per cent — and with their share of retail spend tipped to reach nearly 50 per cent by the end of the decade, Prof Bowden said the cohort was shaping the retail landscape. Research by Afterpay forecasts the retail market for Millennials and Gen Z will be worth more than $400 billion and $200b respectively by 2030. It might explain why the bosses of retail giants Kmart and Myer have placed greater focus on luring young shoppers when they presented their refreshed strategies to investors and analysts last month. But the makeover won’t be an easy feat. Prof Bowden said young consumers wanted excitement, novelty and variety. She said department stores have been “dying a slow death for years now” and Myer would “need a Hail Mary” for its new strategy to succeed. “Myer is already spruiking a five year timeframe for the strategy to be implemented but the problem is that Myer’s is already a decade behind the eight ball,” she said. “Young shoppers have taken their dollars elsewhere and those brands and product category retailers have the lion’s share of their market — just look at category busters like Sephora and Mecca.” Myer executive chair Olivia Wirth conceded the department store needed to do much better to broaden its appeal, particularly to customers aged under 30, 31 to 43-year-olds, as well as the 60-plus group. The 125-year-old department store is promising blow-dry and nail bars, trendy beauty and clothing brands, as well as refreshed visual merchandising to find the younger shoppers. Sydney-based investment manager Angus Aitken said Myer saw significant opportunity in customers aged in their 30s. “When you see share of wallet out of whack with share of population, I smell money being left on the table and clearly Myer does too targeting these younger segments,” he said in a recent note to clients. The 16 to 30-year-old segment represents 18 per cent of the population but already accounts for about 20 per cent of Myer’s share of wallet. “Myer is under indexed in 31-49 year olds, the women’s brands lacked customer appeal and other such things. These are all being fixed and can drive sales and margins in our view,” Mr Aitken said. Mr Aitken also said Myer could do another $200 million to $300m in sales at higher margins with the right beauty offering. “When you see beauty growing above average versus other categories . . . Myer needs to be in that segment stronger and larger and they clearly can be,” he said. In a presentation at parent company Wesfarmers’ strategy day, Kmart Group managing director Aleks Spaseska unveiled a new store format with a more curated fashion and beauty display aimed at luring Gen Z and Alpha to spend more. Ms Spaseska is aspiring to double sales at the retail giant to $20b over the next decade. “Gen Z and Alpha are the fastest growing customer segments and over the next few years, (and) will come to represent a material portion of total consumer spend,” she said at the time. “Engaging these customers early through the evolution of our product offer and shopping experience is a strategic priority to capture their future lifetime value.” Ms Spaseska also said the younger cohorts were “digital natives, (and) their preference for mobile shopping, omnichannel experiences and social media-driven discovery is accelerating the shift toward digital engagement”. For Ms Smit, TikTok is where she can educate and entertain her young customers because “they don’t want to be sold to”. “The end result of that is, if you tick both of those boxes, you can then convert the customer to actually buying the product,” she said. The Quick Flick sells sunscreen, tanning, eye, brow and hair products and is sold at Priceline, Coles and Terry White. The brand amassed nearly four million views on a recent TikTok video showing Ms Smit being pranked and pushed into a pool filled with flowers during a trip to Bali. The main objective behind the video was to advertise its 50 per cent off promotion at supermarket Coles. “(The advertisement) is just subtly out there in the flower pool, but there’s a whole entertaining element of it that people watch,” Ms Smit said. “TikTok has changed the way that brands market to the consumer . . . we can directly see when a video performs really well, we can actually directly correlate an increase in sales, either on our website, in new markets, in-store.” Ms Smit said on some occasions, she sees sales tripling after a video goes viral.

How TikTok and Gen Z shoppers are prompting a dramatic overhaul among major Australian retailers

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