Jan 18, 2024 - Economy

How to master generative AI and Gen Z, according to retail experts

illustration of a young woman with a crystal ball

Illustration: Aïda Amer/Axios

Retailers are eager to master generative AI and to understand gen Z.

Zoom in: Along with how to design physical stores to compete with online shopping, those were among the most sought-after discussions at this year's National Retail Federation Big Show in New York on January 14-16.

The scene: Nearly 100 people tried to get into a session on "decoding Gen Z" featuring McDonald's, H&M and Spotify execs, after doors were closed.

  • Dozens, including this Axios reporter, were turned away from a packed Generative AI roundtable with Lowe's, Carrefour and Victoria's Secret.
  • It was also standing room only for a talk on improving retail stores to motivate people to shop on their feet.

On Gen Z

Based on podcast listening habits, they're very interested in their financial futures and in career growth, Ann Piper, head of North American ad sales at Spotify, said.

  • "They're really concerned about the workplace and how to be motivated. ... They want to learn about topics and areas that they can grow into, that they didn't learn about in school."
  • This generation, roughly born between 1997 and 2011, have the least amount of trust in political figures and the most trust in people who are like them and within their generation, Caleb Pearson, vp of U.S. customer engagement at McDonald's, said.
  • The most interesting thing about Gen Z, is that they reject the premise of either-or: "Gen Z can want to save, but also want to splurge ... can want digital experiences, but they can also want real life experiences ... be activists and have their voice heard and drive social change, but they can also want moments of pacifism and peace in their lives," he added.

On generative AI

Panelists emphasized the importance of having good data with which to feed AI models, according to a video recording of the session.

  • Jessyn Katchera of Carrefour also warned about using generative AI just because it's fun or cool. "If it doesn't have an impact, do something else."
  • Murali Sundararajan, Victoria's Secret chief information officer, recommended patience for models to become more reliable. "What you generate on day one is not going to be perfect. You have to feed the data back so the model learns more and more."

On reinventing stores

Are they dead? No. Operators should bring back creativity when it comes to staging products, and they should also place a greater emphasis on music selection, Lee Peterson, WD Partners' evp of thought leadership and marketing, said.

  • "Every store is a flagship," he emphasized. Real vibes and creativity are paramount at a time when "retailers and customers alike have been trained for 25 years to make stores like websites."
  • As for workers, "I have two words for every retailer about associates — Pay them. The more you pay them the better they will be. And that's just the bottom line of that whole situation."

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