New research from Infinite Reality examined how retail is rapidly changing with Gen Z leading the way in regard to how consumers live, work, play and shop. However, many retailers and brands are failing to meet the demands of today’s Gen Z shopper.

Citing data from Shopify, authors of the report, titled “Retail’s Next Frontier: Immersive Experiences Will Transform E-commerce,” said the current e-commerce system is failing both brands and consumers. The report noted that online conversion rates average 2.5 to 3 percent, which is below the 20 to 40 percent rate of physical stores. Moreover, nearly 18 percent of items purchased online were returned in 2023. That’s about $247 billion in returns. That’s a problem.

In response, the report’s authors say retailers and brands need to engage Gen Z with the technologies these digital natives are embracing, which means offering more immersive shopping experiences. The authors of the report said consumers are ready for it, with 66 percent of respondents saying they would feel comfortable using an immersive shopping experience “where they could virtually interact with products.” This rate increases for younger consumers (72 percent) and gamers (80 percent). Younger consumers are driving most of the change in retail. “In-game shopping in Roblox, Fortnite and other virtual venues have gone from novelty to commonplace,” the report noted. “Amazon, MasterCard and others are rolling out AI-powered shopping services. Brands like Amazon, Ralph Lauren, Sam’s Club and dozens of others are experimenting with 3D websites.”