Gen Y Threatens To Rewrite All The Retail Rules

Gen Y, a loose term for younger shoppers ranging in age from about 14 through 28, is a demographic that most retailers are unprepared for. That's partially because this is the first segment that has never not known of the Internet and also because most retail executives have such a radically different worldview.

In addition, many Gen Y shoppers have never known—or believed they had—any privacy, so they are dramatically more willing to give up or sell personal data in exchange for something they see as having value. Their attention span is short, their multi-tasking skills are high and many find the idea of paying for software quaint and old-fashioned.

They can prioritize how they pay (Paypal's popular) over how much they pay as well as how they want to interact with businesses—in as many ways as possible: text on their phones, IM on their laptops, posts for them on MySpace, video pitches in YouTube and avatars in SecondLife.

John Hiraoka, the chief marketing officer at Epicor, has become an expert on Gen Y, partially because of a nearby teacher: his teenage daughter. During a speech at his company's user conference this week, Hiraoka told a room full of retail execs that they needed to look at the retail world through his 14-year-old's eyes for a moment. He was right.

He made a slide out of a picture of her desk in a remarkably neat and tidy room. (The neatness of the room, he said, was the result of a bribe that Hiraoka declined to specify. As the father of a girl in the same age range, I can confirm that the casual approach to room organization seems to be a younger Gen Y trait.)

The point of the picture was to display her personal electronics, which—CPU-wise—rival what NASA had just a few years ago. It included her desktop computer, an iPod, Game Boy, cell phone, digital camera, CD burner, DVD burner, six USB drives and two wireless devices. And a dolphin, although I'm not sure what the point of the dolphin was.

Hiraoka argued that retailers need to hire a lot more Gen Y employees and listen to them. He promised execs that it would be a very different perspective: "These are the so-called digital natives," he said. "They've grown up with no newspapers, catalogs or phonebooks."

That's all true, but prioritizing these consumers has many risks. How far can one go in communicating with them before alienating older demographics, many of which have a lot more money to spend?

Hiraoka counters that the Web theoretically allows retailers to communicate with many consumers individually, with a different approach and format for different demographics.

That is true and appropriate. But it's also very expensive and would require a very different approach. Will retail execs agree to this tactic, on the say so of much less experienced employees? If so, will those execs rename the demographic as Gen Y-oh-Why?