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Hail the retailer: the dealership is dead

If dealerships are to remain relevant, the relevancy of car showrooms must be reconsidered, writes Simon Moriarty, Operations Director at FITCH

In an age where we have a world of information at our fingertips, the relevancy of car showrooms has to be reconsidered. Consumers can research the details of any product online whenever and wherever they happen to be, so why should they take a trip to out of town showrooms?

This is backed up by research that reveals that dealership visits in most Western European markets have become much less frequent as part of the path to purchase, with buyers making one or two visits at most.

If dealerships are to remain relevant they need to provide an experience that caters for time-poor visitors who may already have extensively researched their potential purchase. Therefore, car brands have to be far more pro-active in engaging and enticing their audience.

As the car-buying process continues to evolve, dealerships must introduce radical and rapid change if they are to resonate with today’s car buyer.

On the decline: dealership visits – and test-drives

Toyota accessoriesToday, nobody spends a significant amount of money on a vehicle without exhaustive investigation on the web, where potential buyers seek to understand the differences in almost all aspects across the cars they desire. In fact, researching your dream car can be done almost entirely online, with a variety of informed and opinionated sources to choose from. Buyers can even get discounted rates from comparison sites.

The showroom visit is the final step on this journey, where buyers can justify their decision and test-drive their new car – although research shows that even the test-drive is on the decline.

The upshot of this is that traditional key sales tactics are no longer valid – the old adage, ‘75% more likely to buy if it’s been test driven’, no longer holds true.

What of the dealerships that exist today?

The automotive industry has been on the back foot as other sectors move quickly to embrace the new possibilities that digital can offer.

The industry has a mentality that’s very much stuck in the past, as dealers still operate on the assumption that potential customers will spend their valuable spare time making the effort to head out to showrooms for a hard sell and a dubious looking cup of coffee. Even online, manufacturer websites generally still have poor navigation and unclear information – a clear sign that what they really want is to bring you into their space, where they can be in control of the sale.

The solution?

Toyota customer loungeIt may seem obvious, but dealerships need to take themselves to the customer. The advent of ‘pop-up’ is beginning to be seen on a limited but ever more regular basis. Innovative car brands, such as Tesla, are beginning to appear in high footfall shopping centres and travel hubs, while test drives are being organised through brand spaces and connections to nearby car parks.

Gradually, we are seeing the forward-thinking car brands reacting to time-starved modern lifestyles, where the test drive with a 75% ‘buy rate’ comes to you. The Fiat Live Store in Brazil even allows a one-to-one consultation without the customer having to leave home. People can get an online tour of vehicles from consultants wearing head-mounted cameras as technologies such as Facebook’s Oculus Rift headsets gain more traction. In fact, visual technologies are evolving so fast they are increasingly able to give consumers a good experience of what a vehicle looks like inside and out.

Innovative brands are also reconfiguring the showroom to create more contemporary, welcoming environments, which are less of a male domain in line with the role of women as more significant decision makers on car purchases. Recent research reveals that women influence 80% of car purchases in the US.

The Lexus Intersect space in Tokyo, for example, focuses less on the vehicles and more on the whole Lexus lifestyle, from food to fashion. These are easily accessible retail spaces where the customer can fully experience the brand. The traditional, slick-suited salesman incentivised to deliver the hard sell is making way for more attentive and approachable assistants who can foster a relaxed dialogue and help support a longer-term relationship that, importantly, extends beyond the purchase.

Audi City in London has created a tech-enhanced space where visitors are encouraged to explore and configure their ideal car using touchscreens and multisensory displays. Staff guide the customer through a huge range of options, understanding their needs and explaining the implications of each choice. As the look and performance of cars becomes more and more similar, particularly in the C-segment, the showroom needs to highlight the importance of technological innovation and personalisation. This will become even more critical once the industry decides which way to jump on the connected car debate.

What next?

Slowly but surely the dealership process is being fundamentally reinvented. Just as supermarkets have segmented into superstores and convenience stores, so dealerships must consider how alternative sales formats can better reach their existing and potential audience.

A key part of this is the need to pro-actively begin a dialogue with customers long before they reach the showroom, and maintain it long after they have left. The service experience must be outstanding, and in an environment where the customer can get to know the brand and vice versa.

Above all, creating a reason to visit is key to the success of the dealership. Create a space where customers can dream, explore and locate; where they can meet and connect with the brand and get a taste for each manufacturer’s experience signature. This is what will drive sales – not bad coffee on an industrial estate.

Simon Moriarty

This article appeared in the Q2 2015 issue of Automotive Megatrends Magazine. Follow this link to download the full issue.

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