Gen Alpha Is Coming to Change the Face of Retail

In this world, Benjamin Franklin once said, nothing is certain except death and taxes. Today, though, there is a third invariable truth: that at any given moment, a Sephora near you is being graced by a gaggle of savvy, ambitious tweens. As their Golden Gooses plod across the glossy white floors, fellow store-goers can observe 13 year olds scoop up Drunk Elephant bronzing drops and Rare Beauty liquid blush — high-end skin-care and beauty products already beloved by shoppers three times their age. Kids these days, onlookers might mumble.

But for today's tweens, this Sephora craze isn't a flash-in-the-pan trend, like Bath & Body Works' formative glitter spray may have been for millennials. Instead, it represents the very essence of Generation Alpha: a digitally native demographic that's projected to have the biggest spending power in history. By 2025, this cohort is set to be the largest generation ever, at over 2 billion in size.

By sociological definition, most members of Gen Alpha are (or will be) the children of millennials, with birthdays between the years 2010 and 2025. At around 13, the "Sephora tweens" are the oldest of the group, while the youngest members have yet to be born. And according to sociologist Mark McCrindle, who is credited with coining the term, Gen Alpha already has brand influence beyond its years, with habits set to soon change, well, everything.

"By 2029, when the oldest Gen Alphas enter into adulthood and the youngest Gen Alphas reach the age of five, their economic footprint will reach more than $5.46 trillion," McCrindle wrote in a recent report. "This means that organizations today should be thinking about the future consumer in Gen Alpha."

So, what, exactly, can brands and retailers expect from Gen Alpha in both the short- and long-term, and how can they start preparing for their rise—today?

<p>Photo: Craig Barritt/Getty Images for Drunk Elephant</p>

Photo: Craig Barritt/Getty Images for Drunk Elephant

How is Gen Alpha different from previous generations?

Compared to aging demographics like Gen Z and millennials (and of course, Gen X and Baby Boomers), Gen Alpha is the first fully "phygital-first generation." Cassandra Napoli, a senior strategist for WGSN Insight, explains this to mean they will grow up living fluidly between the boundaries of reality and fantasy, between IRL and URL.

As children of the "sharenting" generation (millennials and Gen X who take to social platforms to share every moment of their lives), they're also the first to be documented digitally since birth. Some Alphas, even, have had their own Instagram accounts since before they were born, and they're now aging into tween- and teenage-dom while battling the reality of having their entire lives recorded on the internet.

"The technological shifts as a generational group comes of age are what really sets one generation apart from the next, and for Gen Alpha, they are the first to be growing up in a world where the metaverse is coming of age alongside them," says Napoli.

Just like Gen Z were the first group to group up alongside social media, imparting long-term implications on their sense of self and wellbeing, Gen Alpha may just spend the rest of their lives reckoning with AI, and the ways in which it's set to impact everything from socialization and education to the workplace.

Abigail Bailey, managing editor at consumer-insights consultancy Coller Davis & Co., predicts that while millennials and Gen Z were highly influenced by rampant trend culture and social media at the expense of their mental and financial health, Alpha will take back control.

"The youngest consumers will be more discerning with their time, money and attention," says Bailey, "finding it cringe to be too over-exposed online or too on-trend."

Amika's Roblox experience.<p>Photo: Courtesy of Amika</p>
Amika's Roblox experience.

Photo: Courtesy of Amika

What can brands expect from Gen Alpha in the immediate future?

"Alphas are individualistic, hyper-empathetic and wellness-oriented, like their millennial parents," says Napoli. "They are the most diverse and inclusive generation to ever exist."

Keenly climate aware, Gen Alpha will prioritize sustainability, from material innovations to in-person formats that prioritize human connection. Environmental factors will be top of mind as the climate crisis intensifies in their lifetimes. Napoli points out that ecosystem collapse could start costing $2.7 trillion annually by 2030, and by the time the youngest Alpha is 45 in 2070, it's estimated that the economic cost of climate chaos will reach $14.5 trillion in the U.S. alone.

Gen Alpha will be eager to cope with this darkness around them, and Bailey recommends that brands look toward fun and lighthearted initiatives that aid Alphas in becoming proactive about their own happiness. Alpha's favorite prestige beauty brands, like Starface and Glow Recipe, already have this strategy down pat, with bright, colorful packaging and playful messaging that, psychologically, help energize a weary consumer.

There is also the concept of personalization, a tenet of the same digital technology in which Gen Alpha has and will grow up immersed. Their ability to seamlessly tailor an experience, or even product, to their unique specifications will directly inform their purchasing patterns. And as AI and AR democratize the creative process, Bailey says, Alphas will expect to be able to customize products from their smartphones. Brands angling to get ahead can start tapping into this priority now.

"Alphas will want to vote on product drops and have a say in product development," says Bailey. "They will expect ownership of some sort when staying loyal to a brand — membership models will need to adjust."

For something of a sneak peek into a distinctly Alphian future, Napoli recommends that retailers begin paying attention to what she calls "Gen Zalpha," the aforementioned Sephora tweens, born between 2008 and 2014, who technically straddle Gen Z and Gen Alpha. Zalphas, she says, will be the first group to come of age with the ability to make real money online, whether that's as a creator or in gaming worlds, like Roblox. Brands should already take note, as these financial projections have the potential to rewrite norms around college ambitions, careers and life goals, but around comprehensive approaches to brand marketing, too.

It's not entirely surprising that some brands, especially those geared toward tweens and teens, are deliberately targeting Gen Zalpha. Take accessories retailer Claire's, which, in October 2022, launched a Roblox experience with digital products in which players could complete retail jobs for in-game currency to be used for avatar purchases. (Beauty brands like Amika, Elf, Fenty Beauty and Essence cosmetics have also launched Roblox games.) This Gen Zalpha push extended into partnerships, too: In December 2022, Claire's named super-stylist, designer and creative director Nicola Formichetti as its creative director in residence, teaming up with V Magazine to publish its first issue created by Gen Zalpha, available for purchase in-store.

How can brands begin preparing for Gen Alpha's rise — starting now?

First, brands need to take a solid look at their platforms and channels and ensure that strategies aren't just elegant, but authentic enough to keep up with Alpha's rigid digital expectations. If Alpha's attention is on platforms like Roblox, for example, then brands should establish a presence there, but not as a box-check. As Bailey explains, the novelty will wear off with Alphas, and brands will have to provide true value and utility to gain traction.

Technically speaking, don't expect Alphas to be checking emails for discounts or announcements, but rather looking to be DMed on Instagram or in a messenger community, like Geneva.

"They're extremely comfortable with everything being connected," says Bailey.

Brick-and-mortar operations, then, should have the same capabilities as online marketplaces, especially in regard to knowing exactly what is in the store and where. If they can't find information about a brand or product first, Bailey says, it doesn't exist.

Within media and entertainment, pop culture is expected to drive the purchase. When Alphas stream content, they will expect to be able to buy what the characters are wearing right then and there. Bailey offers the example of summer phenomenon "Barbie": Instead of branded merchandise, retailers should consider a "Barbie" costume-design store, with dupes aplenty.

Finally, Bailey predicts that Gen Alpha will be talking to AI and large language models (LLMs) the way older generations talked to Google, and businesses will need new infrastructure to make sure information is correct and up to date. Her recommendation? Businesses should begin training their own AI and LLMs, like ChatGPT, immediately, and then prepare to plug it into larger models — like what an "intranet" was when the internet first came out.

After Gen Alpha, what comes next?

Enter: Gen Beta.

Born between the mid-2020s and 2040 as the kids of the chronically online Gen Z, the Betas will be AI-first, which is already shaping how they live, learn, work and — most relevantly to this piece — shop. We may not know this group yet, but Napoli explains that we can already foresee what kind of world they will inherit. The brands that understand their behavior now, albeit from a macro level, will be better prepared to court this future consumer.

The Betas, she says, could be the smallest generation yet due to a number of factors, including a rise in education and more women in the workplace. Napoli explains that this could have a range of secondary effects, like the need for more care infrastructure amid a rapidly aging population, as well as new benefits, like fewer carbon emissions by 2055 and a 10% jump in per capita income by the time the eldest Betas enter their 30s.

Until then, though, brands have Gen Alpha to contend with, and they're a fickle customer; look no further than your nearest Sephora for first-hand evidence. This isn't a bad thing, though, and the sooner retailers understand this, the better poised for the future they will be. As Bailey says: "A Gen Alpha future looks like true technical proficiency, creativity and originality from brands and retailers, who will need to step up to meet their elevated expectations."

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