Driving Innovation from the Showroom to the City

As part of our bi-monthly thought piece collection for 2019, Account Director Alan Stickland discusses automotive retail…

Over the last few years, automotive retail has begun to change, not always at top speed, but increasingly in new and interesting ways.

We’re long used to hearing about how traditional brick-and-mortar retail has been impacted by online and mobile sales. To date though, automotive has been on a different curve. The ‘traditional’ dealer network model initially protected them from radical change, but is fast becoming a millstone. Franchisees will need to make costly investment with dwindling returns in what is an even more challenging marketplace.

A long-touted stat is that the customer generally visits the showroom 1.2 times before making a purchase – their research and decision making happens at home, online and with their peer groups.

The purchase journey dictates that customers have to close the deal in an intimidating car showroom environment. Partly in response to this, customers have started using digital to bring the journey back onto their terms.

We’ve seen this subtlety reflected by some of the more enlightened brands. Showroom experiences have been opened up to remove barriers between brand and customer. Processes have been altered to feel friendlier and put customers at the centre of every conversation.

This could prove to be too little, too late. With customers becoming less and less willing to go out of their way to visit out-of-town showroom enclaves, footfall there has nosedived. Showrooms are now a pure destination mission, only to be undertaken once all other options have been exhausted.

Rockar, Bluewater

In response to this, we’re seeing the rise of the shopping mall format. Building on promotional pop-up experiences, manufacturers are cementing their relationships with shopping mall landlords to increase and formalise their presence there.

The benefits are clear. With a functioning retail presence at a mall, the brands are taking retail to the customer instead of waiting for them at out-of-town locations. Here they can force an interaction with the customer, broaden their brand appeal and invite consideration from a new audience.

These stores are still novel and so they benefit from a halo effect that will surely plateau. In time, they will need to work harder and smarter to attract people, less as a brand pop up or exhibition stand and more as an integrated retail experience.

An early proponent was Tesla, who disrupted the market because they did not need to work out how to fit the mall format into a legacy dealer network. Their approach remains simple; stores are all about celebrating the car as the star, and rightfully so given that they are still such exotic beasts.

Tesla, Westfield

But the format itself never really got going until Rockar showed the European market what could be possible if they began by reconsidering the customer’s experience and designing a journey to reflect them.

Rockar combined a customer-friendly location and an open store design with two important innovations: an innovative staff model that rewarded experience and service over sales, and a digital sales tool that showed customers how affordable a new car could be. To this they added a super-convenient Aftersales offer that enabled customers to drop their car off for a service while they visited the cinema or did some shopping.

However, as brilliant as this was, the Rockar retail experience still felt one-dimensional, corporate and staid.

These lessons have been addressed by the brands opening the latest stores in Westfield, The Bullring, The Arndale Centre and at Lakeside (Seat, VW, Ford and Mitsubishi respectively). These are all warmer, more tactile and more inviting environments. The store design provides the customer with an intuitive journey and opportunities to play, explore and engage with a rich brand narrative. They are becoming multi-dimensional environments, reflecting and competing with the wider retail landscape around them.

So, where next?

One thing that should be certain is, as long as brands can reconcile the financial model, the shopping mall format is here to stay and likely to grow. The appetite from customers is there, landlords have sites to fill, and brands need to proactively generate new sales leads.

And as EV and Hybrid cars become more prevalent, customers will want knowledge and reassurance, giving automotive retailers a new reason to drive footfall to their spaces. In these instances the shopping mall would be an ideal format location.

We’ll surely see more copycats, with the mall format continuing to evolve before reaching maturity. Already we see interesting innovations such as anchor retailers bringing in automotive to share the burden of their baggy space (Next and Ford in Manchester’s Arndale Centre).

As car retailers secure more prestigious sites, we could also see this format evolve into a functioning and replicable flagship model. Based on a medium-sized, well-located mall store it would be close to the people, highly experiential and, with digital sales tools, have an effective way of selling cars.

It’s inevitable that some of these new stores will be more successful than others, as brands try and work out how to deliver them cost effectively and within their existing networks. But as ever, the winners in retail (automotive and beyond) will be the brands that fully commit to innovating around their customers, combining good stores, good locations, good processes and good people.

Read about our how we revitalised Nissan’s showroom here

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