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Google’s Brand Team for Consumer Apps has released a report on the definition of “Cool” for Generation Z in the United States. Unironically, Google has named the report “It’s Lit”.

Cool is what these Post-Millennials – teenagers aged 13-17 – are paying attention to, it’s what gets them excited and what determines which brands they choose to spend money on. This new generation has gained media attention because of their influence as truly digital natives with high degree of brand awareness. They are ultimately the next wave of shoppers.

Gen Z has the power to define which business has the capacity to do well and which will slowly fall into irrelevancy.

There are approximately 60 million Gen Z teenagers in the United States, more than 25.9% of the country’s population. Collectively, their purchasing power is at $44 billion annually and could reach $200 billion if we factor in their impact on household purchases.

As the influence of the United States can be witnessed throughout Southeast Asia from music taste and fashion trends to dining choices, businesses should be aware of what’s factored as ‘cool’ in the west because it will very likely make its way east.

Pink represents female choice. Blue represents male choice. Source: It’s Lit report.

So what do these teens find cool?

“Cool” in Google terms means to bring joy or happiness and stands out from everything else.

According to 13-17 year old boys, they find: technology, sports/outdoor activities and video games the coolest (no surprises here) and choose their activities based on friends and fads.

According to 13-17 year old girls, clothes/fashion/beauty, music and technology rank among the coolest activities because of the way it makes them feel.

Brands such as NYX is popular with younger girls as it is affordable, sold at mass stores such as Target and has a strong online presence, as they tap into the influence of bloggers and social media.

Out of the biggest brands circulating around today, Youtube was ranked as the ‘coolest’. Out of the top 10, six of them involve digestion of media i.e. Netflix, Xbox, Google, Playstation, GoPro and Chrome.

Source: It’s Lit report

The other brands on this list are consumer brands with a strong online presence. Doritos, for example, released the most viral advert during 2016’s Superbowl and Oreo has successfully reinvented its traditional ‘pantry’ brand to become “an agile, culturally prolific marketer”.

This was thanks to Oreo’s aggressive pushes online through its “Twist, Lick, Dunk” mobile app and cheek-in-tongue tweets that garnered a lot of attention among young people. The app became the the best performing branded game ever launched.

“We have a lot of mature brands and culture gives brands rebirth, it breathes life into the room,” says Dana Anderson, CMO of Mondelēz International, parent company of Oreo.

Social media use?

For Gen Z, social media is for consuming and connecting, not sharing.

The most popular social media platforms are Snapchat, Instagram and Facebook. And while this makes them potential marketing channels for brands, only Facebook has a streamline ad platform whereas Snapchat lacks the ability to accurately target certain audiences.

Source: It’s Lit report

New tools for brands range from Instagram stories to Facebook Live.

Being connected all the time means Gen Z consumers have a constant pulse on trends.

Below is a spectrum of brands ranked based on their prevalence in the minds of Gen Z out of 122 brands in total.

(Click to enlarge) Source: It’s Lit report

Tech companies with a ‘cool’ factor:

  • Facebook
  • Instagram
  • Samsung
  • Amazon
  • Apple
  • Snapchat

Who has lost a bit of ‘cool’ factor?

  • Line (this would be very different in Asia, where 69% of its 1 billion active users reside)
  • Zara
  • Uniqlo
  • Lululemon
  • Supreme

What can businesses learn from this?

Gen Z never knew the world without the internet. Teenagers around the world today value stimulation, instant gratification and information and this in turn, changes the way brands need to position themselves.

Gen Z consumers are familiar with finding information and tech products, which means that brands need to appeal to this new wave of consumers by attaching a strong message to its product instead of trying to promote a meaningless item.

There are good ways to do this – see Nike – and terrible ways to achieve this – think Pepsi’s PR disaster with Kendall Jenner.

Among the top 10 brands that Gen Z strongly identify with, all have been documented to make efforts to appeal to digitally dependent consumers through apps, viral ad campaigns and a strong social media voice.

Nike has released a stream of buzzy marketing collateral such as its “Pro-hijab campaign” and using high profile Asian celebrities to promote products (Kiss My Airs). Consulting firm Accenture found that more Americans are streaming shows through Playstation Vue and Netflix, making cable TV almost obsolete.

Southeast Asia’s young population is young, over 70% are under 40 years of age and experiencing a surge in spending power – set to contribute 34% to consumption growth by 2030, compared with the global figure of 25%.

A maturing consumer demographic, combined with flexibility to spend means that Southeast Asia’s Gen Z are ones brands have the opportunity to target early, especially knowing the trends overseas.

Google “It’s Lit’ report can be found here.

Wal-Mart Stores Inc. is in talks to buy online discount retailer Jet.com Inc, reports Wall Street Journal. 

A deal could give Wal-Mart’s ecommerce efforts a much-needed jolt as the world’s largest retailer seeks to grow beyond its brick-and-mortar storefronts with speedy home delivery from a network of massive suburban warehouses.

Although Wal-Mart has not announced how much it would pay for the startup, it is speculated that Jet could be valued at $3 billion. This would make it Wal-Mart’s biggest acquisition since buying South African retailer, Massmart Holdings for $2.3 billion in 2o1o.

This is a sign that Wal-Mart is willing to spend big to compete with Amazon and save itself from “traditional retailer death” plaguing legacy businesses.

However, industry analysts are questioning the slightly odd decision.

“I’m struggling with the math of why you would pay this much money for this business model at this particular time,” says Bryan Gidenberg, an analyst at Kantar Retail.

Jet is barely a year old and was set on going up against Amazon itself. A part of its early growth strategy relied on taking orders for products it didn’t sell and placing orders on behalf of its customers on other sites, often selling the items below what it paid while absorbing steep shipping costs. Jet has since abandoned the practice.

Wal-Mart has scrambled to keep pace with Amazon, which overtook Wal-Mart by market capitalization a year ago and now sports a market value that is 50% larger.

Wal-Mart’s ecommerce sales reached nearly $14 billion, or 3% of its $482 billion in annual revenue last year. Amazon’s revenue was $107 billion last year, including its Web-services business.

Wal-Mart Chief Executive Doug McMillon acknowledged his company’s ecommerce growth “is too slow” and that the company needed to expand the number of products sold on its site and give third parties more access to its website.
For Jet, a takeover by Wal-Mart would demonstrate the challenges of attempting to go it alone in the hypercompetitive ecommerce market. Jet has yet to prove that its unique pricing and supply chain model is sustainable.A version of this appeared in The Wall Street Journal on August 3. Read the full version here