Gen Z and the Retail Revolution: What to Expect in 2025

By Carsten Krause, January 15, 2025

The retail landscape is undergoing a seismic shift as Gen Z—the digital-first generation—steps into their prime spending years. Their preferences, shaped by a blend of digital fluency, social consciousness, and aesthetic awareness, are revolutionizing how retailers approach the market. Unlike previous generations, Gen Z’s expectations go beyond basic transactions; they demand experiences that are immersive, personalized, and seamlessly integrated across digital and physical spaces. In a time where trends evolve overnight and consumer loyalty hinges on meaningful engagement, understanding and catering to Gen Z isn’t just an opportunity—it’s an imperative. I reflect here on the insights from the 2025 NRF Consumer Research Panel.

In this article, we’ll explore how Gen Z’s shopping habits, focus on aesthetics, and preference for personalization are reshaping the industry. We’ll dive into the impact of micro-trends, visual search technology, and their distinct approach to returns and purchases, offering actionable insights for retailers looking to stay ahead in 2025.

The Gen Z Shopping Mindset: A Blend of Aesthetic and Functionality

Unlike previous generations, Gen Z prioritizes aesthetics and personalization in their shopping experiences. Growing up in an era dominated by social media platforms like Instagram, TikTok, and Pinterest, they are accustomed to visually-driven content that aligns with their individual styles and values.

Retailers are responding by curating immersive and visually appealing shopping experiences. From in-store displays that resemble Instagram feeds to websites that use AI to recommend hyper-personalized products, the focus is on creating a “wow” factor that resonates with Gen Z’s identity-driven approach. As Kelly Peterson, Director of Consumer Products Marketing at Pinterest, noted during the NRF Consumer Panel, “Gen Z is all about curation and discovering themselves through aesthetics. They come to Pinterest to explore visual trends and build their unique identities.”

Micro-Trends: Small Movements, Big Impact

Micro-trends, such as “core” aesthetics (think Cottagecore or Normcore), dominate Gen Z’s fashion and lifestyle choices. These trends often emerge from niche online communities and rapidly gain traction through social media. Retailers must stay agile, leveraging tools like social listening and influencer collaborations to capture these trends before they fade.

For instance, in 2024, the “Nicor” trend—a mix of nostalgia and futuristic design—gained popularity among Gen Z consumers, leading to significant spikes in related product searches on platforms like Pinterest and TikTok. Kelly Peterson highlighted, “Pinterest saw a surge in users exploring new aesthetics and personalizing their feeds to reflect their individuality. This exploration is a core driver of engagement and conversions.”

Visual Search: Revolutionizing Discovery

Gen Z shoppers are visual explorers. Traditional keyword-based searches often fail to capture their nuanced preferences. Visual search tools—like those offered by Pinterest—allow users to find products based on images, rather than text.

“The future of search is evolving,” said a panelist from the NRF session. “It’s no longer about typing words into a search bar. Instead, we’re inviting people into an image and allowing them to visually explore products.” For example, a shopper might upload a photo of a jacket they love and instantly discover similar styles across various price points. This technology not only enhances the shopping experience but also drives conversions by meeting Gen Z’s demand for instant gratification and personalized recommendations.

The Returns Conundrum: Convenience Meets Sustainability

Returns have become a critical touchpoint in Gen Z’s shopping journey. A seamless returns process is no longer a “nice-to-have” but a necessity. According to recent studies, nearly 50% of Gen Z shoppers avoid retailers with cumbersome return policies.

Panelists at the NRF event underscored this point: “We’ve seen that returns are no longer just a backend operation; they are central to the overall customer experience,” said a representative from Happy Returns. “Retailers who fail to deliver seamless, free returns risk losing customer loyalty.” Retailers are investing in AI-powered tools to reduce return rates by improving product recommendations and size guides. Additionally, innovations like drop-off return hubs and instant refunds are enhancing convenience while addressing environmental concerns.

Gen Z’s Influence on Omnichannel Retail

While Gen Z enjoys the convenience of online shopping, they also crave the social and sensory experiences of physical stores. In-store visits are seen as opportunities for exploration and inspiration. “We’ve noticed a resurgence in physical store traffic, especially among Gen Z shoppers who value the tactile and social aspects of shopping,” shared a panelist at the NRF event.

Smart fitting rooms equipped with AR mirrors, mobile apps offering real-time personalized recommendations, and seamless integration between online and offline channels are becoming standard features in forward-thinking retail spaces.

The Path Forward: Adapting to Gen Z’s Expectations

To succeed in 2025, retailers must prioritize:

1. Personalization: Leverage AI and data analytics to deliver tailored recommendations that resonate with individual shoppers.
2. Agility: Stay ahead of micro-trends by monitoring social media and engaging with influencers.
3. Sustainability: Implement eco-friendly practices that align with Gen Z’s values.
4. Seamlessness: Ensure frictionless experiences across all touchpoints, from discovery to returns.

The CDO TIMES Bottom Line

Gen Z isn’t just reshaping retail; they’re redefining the very nature of consumer engagement. Their demand for visually-driven discovery, seamless omnichannel experiences, and eco-conscious practices is a clear directive for retailers to innovate or risk obsolescence.

As the NRF panelists emphasized, it’s no longer enough to offer great products. Success in 2025 hinges on creating a retail ecosystem that aligns with Gen Z’s values, celebrates their individuality, and delivers on their expectations for speed, personalization, and sustainability.

Actionable Insights for Retail Leaders:

1. Invest in Visual Search and Discovery Tools: Enhance your online platforms with AI-powered visual search capabilities to cater to Gen Z’s preference for image-driven shopping experiences.
2. Embrace Micro-Trends Rapidly: Build agile processes that allow your team to monitor and act on emerging trends quickly. Engage influencers and leverage user-generated content to amplify reach.
3. Prioritize Seamless Omnichannel Integration: Ensure consistency between online and in-store experiences. Technologies like AR mirrors and real-time app recommendations can bridge the gap effectively.
4. Streamline the Returns Process: Make returns effortless with AI-driven sizing tools, convenient drop-off points, and instant refunds to build customer loyalty.
5. Focus on Sustainability: Incorporate eco-conscious practices into your supply chain and marketing to resonate with Gen Z’s environmental values.
6. Leverage Data for Personalization: Use advanced analytics to anticipate customer needs and deliver hyper-personalized shopping experiences across all touchpoints.

Retailers who act on these insights will not only win over Gen Z but also set a strong foundation for enduring success in a rapidly evolving marketplace.

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