Amid Upheaval, Retail Focus Shifts Toward Gen A Consumers And Supply Chain

Store expansion plans around Europe could be on hold as retailers deal with a raft of new challenges, from the supply chain chaos of U.S. tariffs to the rapid rise of artificial intelligence, ongoing cost pressures to the arrival of a new consumer group as more Generation A shoppers hit their teens.

Those were the key topics as the great and good of global retail met for the annual city-hopping World Retail Congress last week at London’s Hilton on Park Lane, as retail groups weigh up whether now is the time to stick or twist.

While in New York in January at the National Retail Federation's Big Show, many major U.S. retail chains had pledged store expansions. But in London, the talk largely bypassed store plans in favour of margin calls, metrics and mobility as retailers sought ways to maintain profitability among a whole set of new challenges.

Real estate discussions focused on alternative strategies, such as U.S. partners Authentic Brands Group and Saks Global setting out plans for branded residences under their 50-50 joint venture, Authentic Luxury Group, in the Middle East and Asia Pacific. 

But above all, retailers were left in no doubt that connecting with not just Gen Z but also its usurper, the Gen A cohort, was vital to their businesses as yesterday's kids become today's consumers.

“The shift is real. And it’s not incremental, it’s transformational,” The Estée Lauder Companies EMEA President Nadine Graf said as she outlined the change from Gen Z to Gen A, which generally consists of consumers born between 2010 and 2024.

“It requires a rethink about how we interact with the consumer and how we drive growth,” she said. “This is a fundamental change, because they are not just digital-first, but social-native and discovery-led. More than 90% are on TikTok, so [TikTok Shop] has become No 1 for beauty. They are also super experimental.”

Graf said Estée Lauder needed to adapt, and as a result, “We’re changing pretty much every brand in our company.”

“No 1 is distribution. The reality is we need to be where the consumer is, even if we don’t like them being there,” she said. “We sell through all sorts of our own and third-party stores, but we have shifted significantly to selling on TikTok and Amazon Premium in the U.S. There are no channels any longer.”

But that will also mean getting product to market, and retailers have faced enormous challenges ever since the pandemic, with a series of major supply chain disruptions and now tariffs threatening to derail established supply routes, leading many to consider where they make, store and distribute merchandise.

With huge potential strategy shifts in logistics, India could be the big winner in the post-tariff fallout, at the expense of some Southeast Asian countries, said Ken Pilot, founder of New York-based Ken Pilot Ventures. U.S. shortages could also provide an opportunity for brands to buy their way into North America.

“My big concern is Southeast Asia. I think they will feel a bit of a bump. When you look at our big ally, the UK, having tariffs of 10%, perhaps we’ll see Vietnam finish up at 25% to 30%,” he said. “I can see India being the big winner and a lot more production moving to India. However, the challenge now is with this tariff decrease, everyone is going to want to get a boat, and prices for shipping might go to pandemic levels.”

Ian Bailey, chairman of Australia’s Kmart private label brand Anko Global, said that for most brands, now is a good time to be looking at opportunities in other markets or market share in the U.S., because he expects there to be empty shelves due to tariff shortages.

“We were a world that focused on one supply chain, but we are diversifying. And to do that, we will probably have to consolidate and go narrower and deeper for our core suppliers and go from there,” he said. “We need to think about a supply chain that can cope with shocks.

“We’re entering a world of winners and losers, and we’ll see some companies really get on the front foot and see this as an opportunity and others get very defensive and hunker down and not change, which is very risky,” Bailey predicted.

Global adviser EY predicted that retailers will need to focus on repurposing physical and digital spaces to deliver more service-based offerings. Although the company said that it expects continued online sales growth, it predicted that physical stores will continue to play a vital role in driving revenue.

“Repurposing the store and measuring their success from an omnichannel perspective will be more important. We see retailers repurposing store space into community hubs, click-and-collect hubs, piloting rental, resale and repair services, and more,” EY Global, EMEIA and Nordics Retail Leader Malin Andrée said.