The holiday season is a time when retail executives and parents alike try to figure out what the kids want. For Gen Z and Gen Alpha, the two youngest generations, it’s not just about the latest toys, but also about the shopping experience itself. The oldest Gen Alphas are now learning to drive, and retailers are starting to shift their focus from Gen Z to the next generation.
According to Matt Britton, founder of AI consumer intelligence platform Suzy, Gen Alpha is “going to be known as the AI generation” because they’re the first to grow up with AI in their households. This exposure to AI is “rewiring their brains” and will make them distinct from previous generations, Britton said.
Understanding Gen Alpha
Gen Alpha is not a monolithic group, and there are different cohorts with different preferences within the demographic.
“There’s not one solution for all Gen Alphas, and the same goes for Gen Z,” he said. Retailers need to understand these differences to effectively connect with young shoppers.
This holiday season, retailers should keep in mind that Gen Z and Gen Alpha are price-sensitive, digitally savvy, and enthusiastic about physical retail experiences. They also wield significant influence on household purchases, despite having limited financial resources of their own.
The Role of AI in Retail
AI is becoming increasingly important in retail, particularly for Gen Z and Gen Alpha. Matt Britton notes that the traditional method of searching on Google, seeing an ad on Instagram, and then making a purchase on Amazon is no longer the primary way people shop. Instead, AI chatbots are taking over the role of discovery, engagement, and purchasing.
AI Transforms Retail
“The internet now has a new front door,” Britton said. Retailers need to invest in these new discovery channels to remain relevant. For example, Target launched an AI-powered holiday gift finder in 2025, and Kohl’s launched a similar tool earlier this year.
AI also reinforces the desire for personalized experiences among Gen Z and Gen Alpha. These groups have grown up with personalized recommendations and products, and they expect this level of customization. Hana Ben-Shabat, founder of Gen Z Planet, notes that anything that can tap into this desire for creation and personalization will likely resonate with young shoppers.
However, not all methods for connecting with Gen Z and Gen Alpha need to be driven by AI. Retailers can also invest in tools that allow kids to save products from social media sites and share them with their parents. This can be an effective way to cater to the needs of both children and their parents.
As the holiday season approaches, retailers would do well to remember that many Gen Alphas are still children. Catering to their parents, who are often millennials, can be just as important as pitching to the kids themselves.
Retailers should also be aware that Gen Alpha may not fully understand the dangers of AI, despite being exposed to it from a young age.
Physical Stores Offer Respite
Physical stores can also play a significant role in connecting with Gen Z and Gen Alpha. Despite the rise of e-commerce, many young shoppers still enjoy in-store shopping. In fact, a recent JLL study found that physical stores offer a way to make different choices, free from the influence of online algorithms.
Emily Albright Miller, executive vice president of retail design at JLL, notes that people are exhausted from the constant stream of online choices. “They’re using the large language model, but now they’re starting to realize it almost knows them a little too well,” she said. Physical stores provide a welcome respite from this online overload.
In stores, young shoppers can browse and experience different products without the constraints of online algorithms. This flexibility is particularly important for Gen Z, who are still figuring out their identities and trying on different personas.
JLL’s research also found that shoppers want different things from their online and in-store experiences. When shopping in person, they prioritize sensory and tactile experiences, as well as human connection. Retailers can create a welcoming atmosphere by incorporating elements like holiday playlists, decorations, and fragrances.
However, retailers should also be mindful of the potential for overstimulation in physical stores. JLL found that 72% of consumers left a store earlier than planned because they were overwhelmed, and this number jumps to 81% for the neurodivergent population.
Trends and Teen Spending
Piper Sandler’s teen survey listed Nike, Brandy Melville, and Coach as some of the most popular apparel and accessories brands for the cohort.
Nike recently launched a new fleece line marketed at young shoppers, while Coach has talked extensively about its efforts to court Gen Z through personalization and unique store experiences. Earning teens’ roughly $2,200 in annual spend requires staying on top of what’s hot, which is changing rapidly as young people become more connected to global trends.
As the holiday season approaches, retailers must be prepared to adapt and evolve to meet the changing needs and preferences of Gen Z and Gen Alpha.
According to the Piper Sandler survey, Sephora is the No. 1 beauty destination for teens, and E.l.f. Cosmetics is also doing well in this space by offering affordable dupes.
The survey also found that 80% of Gen Z shoppers have used AI to make a purchase in the last three months, and this number is likely to grow as AI becomes more integrated into retail. As retailers look to the future, they must consider how to balance the use of AI with the need for human connection and sensory experiences in physical stores.
The use of AI in retail is not without its challenges, however. Britton notes that AI doesn’t understand the emotional reasoning that drives purchases, and this can lead to a lack of authenticity in the shopping experience. “AI has never had its heart broken or felt envy or jealousy,” he said.
