Consumer Behavior

Delivering on holiday shipping expectations: How to win over millennials, Gen Z

As the holiday shopping season kicks off, retailers must understand the unique preferences of millennials and Gen Z to capture their business. Both generations prioritize fast, free shipping, sustainability and easy returns.

Photo: Adobe Stock

November 29, 2024 by Dan Spitale — Vice President, UPS Capital

The holiday shopping season is upon us, and the retail industry is bracing for its busiest time of the year. Forecasts for 2024 anticipate seasonal retail sales will surge to $1.3 trillion, a nearly 5% increase over the previous year.

While millennials are predicted to spend the most during this period, a new generation is emerging as a powerful player: Gen Z. As this cohort enters the workforce and gains economic power, their shopping behaviors are beginning to impact the retail landscape.

In this article, we'll examine the commonalities between these influential generations to gain insights into their holiday shopping habits. We'll also provide actionable tips for retailers to effectively cater to their needs and position themselves for success.

Defining Millennials and Gen Z

Before diving into their preferences, it's helpful to first understand the fundamentals of these generations. Millennials (born 1981-1996) and Gen Z (born 1997-2012) are defined by their birth years, but it's their life stages that truly set them apart.

Millennials, having established careers and often navigating major life milestones like marriage, homeownership, and parenthood, typically possess higher spendable income. This enables them to make larger purchases, often for entire households. In contrast, Gen Z, still in school or early in their careers, generally has less disposable income and tends to favor individual purchases.

Spotlighting sustainability

The retail industry's rapid growth has raised environmental concerns, fueled by elements like increasing transportation emissions and packaging waste. In response, consumers are placing a greater emphasis on sustainability during their purchasing decisions.

In a recent survey, 80% of millennials and 77% of Gen Z stated that buying from brands that prioritize sustainability is important to them this holiday season, especially over "fast fashion" brands.

Retailers can implement sustainable practices to meet this growing demand, such as using recyclable shipping and packaging materials or partnering with environmentally responsible shipping carriers. By taking these steps, brands can demonstrate their commitment to sustainability and attract eco-conscious consumers.

Demanding fast, free shipping

The price for shipping is top-of-mind for consumers this holiday season. Over a third of millennials (38%) and Gen Z (43%) find high shipping costs to be the most frustrating aspect of shopping seasonal sales. Free shipping is also a pivotal factor driving purchase decisions for both generations, with over 80% considering it the most influential offering. Moreover, over 30% of each generation would abandon their carts due to limited or expensive shipping options.

Beyond free shipping, speed is also imperative. Over half of millennials (57%) and Gen Z (59%) view same-day delivery as a promotion that impacts their buying choices. Additionally, a considerable amount of both generations (43% millennials; 51% Gen Z) are willing to pay a small fee for expedited shipping during peak shopping events like Black Friday and Cyber Monday. This preference for faster delivery stems from a desire for guaranteed delivery dates, ensuring that holiday gifts arrive on time.

To capitalize on these trends, retailers should highlight their shipping promotions and transparent delivery timelines to build customer trust and boost sales. Offering free shipping above a certain order threshold can effectively reduce cart abandonment, particularly among price-conscious consumers. Also, providing affordable expedited shipping options for the last-minute shoppers can help brands stand out during this competitive shopping period.

Expecting simple returns

Younger generations have high expectations for generous return policies. More than half of millennials (54%) and nearly 40% of Gen Z consider free returns a critical factor in their purchase decisions.

While offering free and easy returns can significantly improve customer satisfaction, it can also present logistical challenges for retailers. Partnering with a third-party logistics provider can help alleviate these burdens. 3PLs offer the expertise and infrastructure needed to efficiently handle returns for brands, from receiving and evaluating items to restocking them. Outsourcing this complex process helps streamline operations, reduce costs, and free up resources to focus on more strategic business activities.

Building loyalty of younger generations

As the holiday shopping season kicks off, retailers must understand the unique preferences of millennials and Gen Z to capture their business. Both generations prioritize fast, free shipping, sustainability, and easy returns.

By tailoring business and marketing strategies to meet these expectations, brands can not only drive holiday sales but also foster long-term loyalty among these high-purchasing-power customers. As the retail landscape continues to evolve, understanding and adapting to the needs of younger generations will be critical for sustained success.

About Dan Spitale

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Dan Spitale is a Vice President at UPS Capital and brings over two decades of commercial sales and marketing experience in financial services and logistics to UPS Capital. He leads UPS Capital's global sales organization and has led customer advocacy efforts as Head of Customer Journey and New Channel Partner Acquisition. He holds a bachelor’s degree from Purdue University and a master’s degree in executive leadership from the University of Notre Dame. Dan resides in Marietta, GA, and enjoys spending time with his wife and son, hitting the gym, cooking, and reading.

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