Redesigning retail for the next generation

Across markets—from Seoul to London to New York—young consumers are reaching for clunkier, older tech: The original iPhone SE, with its physical home button and hazy-colored photos; point-and-shoot digital cameras; even new versions of decoupled technology, like offline MP3 players.

It’s tempting to accept these trends at face value and think, “We should double down on nostalgia!” Or, “Let’s bring back retro products!” Or even, “This has nothing to do with our business.” Instead, leaders need to look at the underlying need driving these behaviors in young people: a desire for a more human and connected world they didn’t get to experience, and a rebellion against automated, algorithmic pressure. This shift poses a critical challenge for brands and retailers—and an incredible opportunity for the future. For brands willing to reimagine themselves not just as sellers, but as enablers of identity, connection, and co-creation, there is an enormous opportunity to lead.

‍From chasing trends to building identities

Especially for this generation of customer, the constant pursuit of the next “it” thing—the next viral aesthetic, the next must-have product—has become exhausting.  For too long, filters and algorithm-driven feeds have pressured them to represent themselves in unrealistic ways that relate less to who they are and more to a perception of how society, their peers, and algorithms think they should be. Instead of trying to keep pace, they’re trying to discover, “What actually feels like me?”

Last year, we worked directly with a group of Gen Zs to test out a handful of AI product concepts focused on creativity, travel, and relationships. Across the board, they were clear: They do not want companies glossing over the awkward parts of growing up, building relationships, or exploring their own creativity. They crave real-life experiences that shape their sense of self, and help them foster new connections.

For customer-facing brands, this is a wake-up call. Brands of the future will serve as connectors, offering consumers an active role in co-creating content and programming. Instead of mass-market activations like yet another celebrity sneaker drop, they’ll invest in community-driven experiences like LEGO’s Ideas platform, which lets fans share what they’ve built, propose new ideas for bricksets, and vote on models built by fellow fans. The next wave of influence and brand building will come from enabling customers to co-author the future of their favorite brand and its products, sharing their identity to inform and build experiences for and with others. Younger customers are drawn back to brands that reflect their identities, because they feel they belong.

From points-of-sale to places to connect

For a long time, the industry narrative declared that physical retail was doomed, outpaced by the convenience of e-commerce, and compounded by the catastrophic disruption of a global pandemic. But now, consumers are increasingly seeking out in-person experiences, especially those with a community dimension. This shift is especially visible among younger consumers. In the last quarter of 2024, 88 percent of UK consumers visited a physical retail destination. Under-35s are leading this shift, making more than twice the number of in-person retail visits compared to those over 55. For them, shopping is no longer a solo, efficiency-driven task—it’s a social and immersive experience. Smart retailers are responding, going beyond maintaining established brick-and-mortar storefronts to re-imagine them as destinations, hubs of culture, connection, community, and value-add experiences beyond shopping. Why? Because physical retail isn’t about a customer journey that ends with a purchase anymore. The future of retail will reimagine methods for connecting with customers, and serve their needs in ways digital simply can’t replicate.

Digital-first and social media influencer brands like MyGlamm and Shein are making the leap to physical storefronts. Saint Laurent opened a sushi restaurant in its Rive Droite store. In addition to its workout gear, Lululemon has built a lifestyle brand through community engagement, in-store experiences, and digital fitness platforms. Sephora has kicked off its largest capital investment project since its founding—to transform its stores across North America—all 700 of them, and also partnered with IDEO to build the store of the future in Asia.

Meanwhile, for Printemps’ first opening in the US in its 160-year history, the French department store’s New York location launched with a façade that proclaimed, this is “not a department store.” Instead, it has been designed as a French apartment, a place where customers can peruse Printemps’ unique curation of French products, take a French class with other customers, or get a head massage while enjoying a glass of champagne with dishes created by Chef Gregory Gourdet. Retail spaces today are becoming third places for people to meet and share—blending hospitality, cultural relevance, and discovery.

From passive consumption to active co-creation

Young consumers are over the whirlpool of social media influencers whose product recommendations are bought and sold right off their screens. Since 2023, a movement rejecting influencer culture has been picking up steam (ironically tagged #deinfluencing). That same year, “authentic” was Merriam-Webster’s Word of the Year. In an interview IDEO conducted with Khoa-Nathan Ngo, member of #GoodforMEdia, a group at the Stanford Center for Youth and Mental Health and Wellbeing led by college-age students, we learned about the critical importance of companies directly involving young people in the development of new offers. Ngo argues that when their voices weren’t considered in the design of social media, for example, it “created a major crisis in terms of our mental health.”

In 2021, Lush Cosmetics boldly exited from major social media platforms, stating, “Social media is making it harder and harder for us to talk to each other directly. We are tired of fighting with algorithms." Bottega Veneta also decided to shutter its social media accounts, replacing them with a quarterly digital journal, trusting that meaningful engagement would come from content that is deeper, slower, more thoughtful, and curated. The result? The rallying of passionate customer fan accounts like @newbottega, which now rivals the brand’s original social media following, demonstrates that community-led advocacy can be just as powerful—if not more so—than brand-owned channels. One benefit of this approach is that it creates a deeper sense of trust and reciprocal engagement rather than a one-way push from the brand. While industry experts observed Bottega Veneta’s social media strategy skeptically, the brand entered Lyst’s ranking of the Top 10 hottest fashion brands for the first time in 2020—and has maintained its ranking in the Top 10 since.

Companies that want to continue to engage with the next generation need to eschew the traditional paradigm of the seller-buyer relationship and invite customers into a participatory role, inviting them to become true co-creators who help shape the future of the brand experience, offers, and engagements. In our partnership with Athleta, we brought together a council of women to co-design an equitable, inclusive, and sustainable model for omnichannel community-building that is unique and authentic to their brand and customers. This is a powerful example of a belief that IDEO has championed through our work; that people care about what they’ve had a hand in co-creating, and it’s the best way to create long-term brand loyalty and advocacy.  

From selling products to meeting needs

If community is the future of brand-building, then participation is the future of retail. Brands need to move beyond traditional omnichannel thinking to strategies that invite customers to directly shape brand meaning and value in real-time, through a living ecosystem of customer co-design touchpoints, both large and small.

The companies that win over this next generation won’t just sell products, they’ll actively invite them to shape what the brand stands for, how it shows up in the world, and how it delivers value. This goes beyond one-way engagement, to strategic collaboration that turns customer participation into a market advantage. For young shoppers, brand advocacy comes from feeling seen, heard, and influential. Businesses that meet these genuine needs will move beyond fleeting attention, unlocking lasting loyalty, sustainable growth, and entirely new avenues for continual innovation.

Looking to design new products or retail experiences of your own? Get in touch.