Welcome to the era of harmonic retail

By DeAnn Campbell, retail strategy and research, Harbor Retail

Since the first shopper traded a mammoth bone for a new flint, the backbone of retail has been customer service. While the tools we use to serve customers might change radically over the coming years, true evolution in the retail industry will chiefly come from how well service is delivered. The companies that are best at putting the shopper at the center of a harmonized, holistic experience will come out on top.

Over the past decade, omnichannel has been the buzzword most often used to describe the state of retail, with terms like "converged" or "unified" commerce beginning to take hold. However, these terms are not really accurate, as they imply similar behaviors and actions across channels. Shoppers today don't just understand that different channels will offer different experiences — they prefer it. It's an important way for consumers to control and personalize their own path to purchase.

"Harmonic retail" is the name we coined to describe the new era of retail we are entering. To use music as an analogy, the shopper is the melody, and all the musical notes (channels) that comprise a brand or retailer must flex to remain in harmony with the customer throughout his or her journey.

'Take It Easy' — The Eagles

Retailers are surrounded by a constant flow of innovation and advancement. Consequently, they often feel pressured to integrate new technology before stores can activate its value. Harmonic retail asks companies to shift focus away from an "urgency to adopt" mindset. It is far more important to curate any in-store technology solution to ensure it contributes to the harmonic retail ecosystem.

Technology should only enhance the human experience, either by enabling staff to divert time away from routine tasks and put it toward serving customers or by keeping a shopper's spark of inspiration lit by propelling him or her more efficiently toward enjoying the ultimate benefits of a purchase.

'A Change Is Gonna Come' — Sam Cooke

While the larger share of sales still occurs inside brick-and-mortar stores, e-commerce is growing at a greater velocity. Online sales are projected to grow 14.8% year over year, compared to brick-and-mortar growth of 1.9%.

Harmonic retail means that even though a majority of shoppers will continue to use brick-and-mortar as an important stop along their path to purchase, the e-commerce channel will become the primary embodiment of the retailer and the main point of transaction. But this by no means diminishes the importance of brick-and-mortar. Stores in different formats — showrooms, pop-ups, shop-in-shops, and even vending machines — create a halo effect that lifts overall sales. Data shows a consistent average 37% lift to online sales in areas where a physical location has opened.

This means brands and retailers must reconfigure their key performance indicators to measure sales across the full harmonic ecosystem rather than categorize them by channel. This will be a major mindset change for retailers that currently focus on sales per square foot in their physical stores.

'We Built This City' — Jefferson Starship

The core building blocks of harmonic retail can be categorized in four incremental groups that build upon one another to create a responsive, shopper-centric ecosystem:

Table stakes: Elements such as a robust e-commerce site, a mobile app, social media integration, a convenient checkout experience, clear navigation tools, home delivery, and a returns policy are now standard expectations shoppers have across the retail industry.

Renovation: Enhanced services such as seamless click-and-collect, personalized and community-centric merchandise curation, visual inspiration, trend awareness, and elevated customer service will level up a retailer's ability to harmonize with the customer.

Evolution: Self-service, cross-channel data analytics, and curbside pickup are some of the added features that will move retailers further toward Harmonic Retail.

Aspiration: Community outreach, alternative store formats, experiential engagement, and high employee expertise will complete the harmonic ecosystem centered around the customer.

'Happy' — Pharrell Williams

An important byproduct of the harmonic retail business model is an increase in lifetime customer value, which isn't just good for the customer — it's great for business, too. Focusing on building customer retention and loyalty brings a significant boost to a retailer's top line. Repeat customers spend 67% more in their third year with a retailer than in their first and spends 47% more than a first-time shopper during holidays. And add to that the increased profit margin from improved sell-through from predictive data acquired through longer-term customer relationships.

All told, the revenue of one repeat shopper is equal to five new shoppers. Given that population growth in the U.S. is at its lowest level since 1937, harmonic retail is a critical evolutionary step for brands and retailers.

'A Better Future' — David Bowie

Shopping patterns today defy age and ethnic groupings. Personalization, convenience, and intuitive technology are now a baseline expectation among consumers, giving them unprecedented power over retailers and brands.

The foundations of harmonic retail are already forming in the industry, and the pace of this sweeping change is accelerating at the speed of light. Using the harmonic framework as a guide to structuring your retail business to remain in tune with the customer will result in beautiful music, and the concert is just beginning.