Changing demographics isn't a new phenomenon in the consumer retail industry, but the rise of Generation Z as an economic force does introduce unique challenges for brands today. From a larger focus on mobile and digital channels to a heightened demand for bargains, Generation Z's shopping priorities are just coming into focus.

One of the most distinct characteristics of the next generation of consumers is their concern with how products are manufactured and distributed. Past generations have—to some extent—been able to overlook their favorite brands' sometimes ethically questionable production tactics, including issues relating to labor, the environment, and politics. Gen-Z shoppers increasingly show an interest in ethical shopping, and brands that can get behind this trend will be able to better engage tomorrow's leading consumer demographic.

Generation Z comes into its own

With all the ink being spilled about millennials, it's easy to overlook their successors. But Generation Z is just beginning to take shape as a shopper demographic, and they already have $44 billion in buying power behind them, according to the National Retail Federation. And that's before you take into account the additional $829 billion that their families spend on them. Gen-Z's numbers continue to grow, and inevitably, they will overtake millennials as the single largest consumer segment in the coming years.

There's a lot of money at stake here, and making a good impression during a generation's formative years could set brands on a successful course for years to come. The good news is that, despite all the hand-wringing about e-commerce and digital channels, Gen-Z, by and large, prefers to shop at brick-and-mortar locations. The NRF reported that 98 percent of the digitally native Generation Z still shop in-store. There's ample opportunity here for brands to engage this demographic in-person.

Appealing to ethical shoppers

There are countless scandals that have rocked consumer brands over the years that prove that whatever savings companies get from unethical manufacturing practices can easily get wiped out by the ensuing outcry from key buyers. A 2015 Mintel study revealed that 56 percent of U.S. shoppers will stop buying from companies they believe operate unethically. Furthermore, 35 percent will do so even when they have no other alternative available.

Millennials and Gen-Z purchasing decisions appear to be even more driven by brands' ethics, prioritizing companies that use sustainable production methods and fair labor practices. It's not enough to simply adhere to such ethical standards; companies need to align their messaging accordingly to establish a strong connection between the brand and the lifestyle.

Patagonia, for instance, broadcasts far and wide how it manages to produce its apparel while leaving behind the smallest environmental footprint possible. That message really resonates with the typical Patagonia shopper who spends a great deal of time outdoors.

Forbes contributor AJ Agrawal also highlighted companies that make social responsibility a core message in their brand story. Donating a portion of proceeds from each purchase to a charity or nonprofit is a relatively easy way to show Generation Z consumers that your brand doesn't just pay lip service to environmental or social issues. It could also be a deciding factor for shoppers choosing between brands offering two similarly priced products.

Acting ethically is important, and so is getting that message out at the ground level. That means clearly displaying that message in places shoppers can see it, whether it's an in-store display or product packaging. If your brand can establish an ethical identity with Generation Z shoppers today, you will be far better positioned to engage them as they grow into the largest consumer segment the world has ever seen.

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