How PepsiCo Is Working With Retailers to Decipher Gen Z Loyalty
As PepsiCo seeks to help retailers meet today’s new consumer demands, its window into the paradoxical Gen Z may crack their elusive loyalty codes.
PepsiCo’s Pepviz data science practice provides insights to retailers so they can better understand specific shopper segments and identify growth opportunities. When it comes to Gen Z, the demographic may be best defined by a series of contradictions, making the opportunities a bit more layered.
“Gen Z is both digitally native and a huge fan of in-store experiences,” Kate Garner, PepsiCo SVP marketing, demand accelerator, tells CGT. “They are twice as likely to shop on mobile devices compared to millennials, and one-third of all their transactions take place digitally.”
They are also the most likely generation to browse in-store, and they’re more likely to prefer pickup over delivery.
Unlike previous generations who turned to “third spaces” like shopping malls and bookstores to meet people, Gen Z lives more of their lives through digital platforms. This in turn creates a yearning for a deeper connection to the wider world, Garner says, pointing to their love-hate relationship with technology.
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While they use tech to enhance their day-to-day lives, Gen Z-ers also feel it complicates social interactions and distracts them from living in the moment.
As a result, and to better meet these needs, PepsiCo is working with retail partners to develop phygital environments through both media and technology to marry the best of personalized social experiences, digital discovery, and in-store activations.
What Gen Z Wants
Gen Z encompasses one in five Americans, according to the U.S. Census Bureau. While their purchasing power is currently $143 billion, their influence on purchases is double that, says Garner, who notes that their earnings are expected to triple over the next decade. By 2034, Gen Z earnings are expected to surpass millennials as the top-spending generation.
“Compared to other generations, this age cohort is the most diverse yet and has a unique need to feel a sense of belonging that can reconcile their many contradictions,” she says.
For example, although they’re the most active smartphone users, they’re also the most likely to switch to low-tech dumb phones — increasing the pressure on retailers to engage both digitally and physically.
However, although they have the least brand loyalty and are the most likely to switch to try something new, this cohort also prefers loyalty programs more than any other shopper age group.
As the most diverse generation in history, they’re poised to become one of the most important growth cohorts for food and beverage, Garner says. Premium products aren’t enough; they want to support brands that share their values and connect authentically throughout the shopper journey. For retailers, this means leaning into both tailored solutions and omnichannel offerings.
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Retail Collaboration
For its part, PepsiCo is trying to seize the opportunity to bridge such contradictions as unique identity and broader belonging. Garner points to the company’s Starry soda as one example: Pepviz data shows that lemon-lime is a top flavor profile among all demographics, and it has the highest index among Black and Hispanic audiences.
With this information in mind, the company launched a series of marketing campaigns intended to celebrate cultural heritage to develop both individual and group identities. The campaigns, which included a Super Bowl commercial with Ice Spice and a Tinder dating app activation, focused on loyalty, helped the company to capture Gen Z attention and spend through avenues like retail media networks, e-commerce, and stronger brand recall in-person.
These campaigns in turn helped Starry achieve 47% general market awareness and 53% awareness among Gen Z.
PepsiCo continues to work with retailers to improve omnichannel marketing and communicate with consumers throughout the entire shopper journey, including having clear promotions at the right times and effective in-store displays to drive incremental purchases
“Product placement that is optimized for dayparts is one of the easiest ways to unlock growth,” stresses Garner. “Understanding what drives trips and placing items accordingly will lead to fuller baskets. You must understand your shopper and their habits to help inform if they are grab-and-go morning shoppers on their way to school, for example, or driven by afternoon demand and looking to explore new options and pairings.”
