Is the digital world finally overtaking the traditional dealership?

The digital world is extending the frontiers of knowledge. Global and local businesses alike are operating in a more digitally-focussed way, changing consumers’ approach towards buying goods. As with many retail sectors, automotive manufacturers need to make sure they are mirroring consumer trends by enhancing their online presence and increasing digitisation of their dealerships.

The reason for this is simple. With a multitude of channels at the touch of a button, consumers are now more informed and more demanding. The automotive industry, in particular, has been dramatically impacted by this.

For today’s car buyer the traditional adage of visiting a car dealership to see what options are available is quickly being replaced. Nowadays, a more transactional experience takes place.

These days, customers know not only what they want, but how much it should cost them - a result of online research beforehand.

The average number of visits to a dealership prior to purchase is down to one, proving that the dealership is the final stop prior to purchase, rather than part of the overall journey.

The industry is recognising the parallels with the shift to online that has been seen previously on the high street. In 2009, only 4 percent of all retail sales globally were made online. In today’s market, we’ve seen a dramatic rise, with leading retailers collecting over 50 percent of their revenues online.

Customers are tactile; they like to be able to touch, sit in and test drive before making a final decision on such a high value purchase. The fundamental difference between automotive and other retail sectors is that a visit to the dealership cannot be avoided.

This transformation in customer behaviour needs to be recognized and acknowledged by manufacturers and their networks. The landscape is changing almost daily. We are already seeing game-changing approaches such as Audi City, ‘Mercedes me’ and Rockar Hyundai.

Does this changing approach mean the beginning of the end for traditional car dealerships? Of course not.

Consistency is key through the entire customer journey.  Traditional dealerships need to reflect the online experience with the sales transaction becoming more like a high street retail store experience. Sales advisors need to be consultative, not directional, and car prices need to become completely transparent.  Retail stores would seem the obvious solution, but are they? With the high and restrictive cost of real estate in and around major urban areas, having your brand represented in a standalone dealership is becoming increasingly difficult. Arguably, the price of a unit in a retail complex would be favourable.

The customer variation also needs to be considered. Shopping centres such as Westfield, whose visitors are predominantly tourists and those using public transport, vary greatly with destination centres such as Bluewater, Cribbs Causeway and the Trafford Centre. These centres have easy accessibility, free parking, and good leisure facilities with a high footfall. Shoppers attending these sites are much more likely to be car-owners, making destination centres ideal locations for retail dealership stores.

In a previously unchartered territory for manufacturers, the question is how to approach developing retail stores? Should investment in high-tech 3D virtual reality simulation be made? Perhaps for the right high-end manufacturer this is the case, but for most stores there needs to be a combination of the physical automobiles with the digital configuration.

The key to success is understanding the merging of the so-called online and offline customer store. The transition needs to be seamless with the transactional experience being driven by a robust, easy to use website. Interactive screens, information screens and top quality videos are all essential. Above all else, they need to work seamlessly without any technological issues to create a holistic digital experience. There is also an argument that “omni-channel” should actually be a “single-channel” experience.

Collecting data from the initial website visit through to the store or showroom visit is vital. Understanding customer queries, knowing demographics and being able to predict trends ensure a full understanding and ability to meet the customers’ needs. Supplementing this with the ability to test drive all models and provide aftersales services will give you the ingredients for success.

The key to success is understanding the merging of the so-called online and offline customer store.

Key to the entire experience is the staff engagement. Fundamentally, they need to understand the retail environment and processes. They should guide the customers through the simple purchasing process, and have excellent product knowledge. The forceful sales-driven negotiation common in years gone by does not exist in any other advanced retail sector.

Retail stores should be seen as supplementary to the traditional dealership network, not as a way of replacing it. Research of location, competitors, customer base, customer behaviour and price points must not be underestimated. Big data drives today’s sales trends. Combining big data with an understanding of technological requirements and how to deliver optimum service allows you to successfully deliver the right experience for customers.  Automotive manufacturers and dealers that do not take a holistic approach, but instead look at each stage in the digital process as a unique standalone challenge, risk a disjointed and inferior end-result at vast expense.

Nick Reader

European Automotive Retail Networks Lead Delivering Retail Network Programs +420 602 248 967 Ask me a question
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