Automotive Retail and Distribution Summit 2018 saw some of the sector’s key global players descend on Düsseldorf, Germany. Fresh from sharing ideas and hearing about her fellow guests’ plans at a time of immense change for the automotive sector, LEO Learning’s Sophie Miller reveals five lessons from the summit.
The automotive space, as everyone in the industry knows, is going through a significant transformation.
With this in mind, there was much to discuss at the recent 18th annual Automotive Retail and Distribution Summit in Düsseldorf. Here are five key talking points.
1) Businesses in the sector need to catch up with their products
Electrification, automation,connectivity and other new trends have changed the look and design of vehicles. But in many cases, the organisational infrastructure of the businesses selling them have the same key performance indicators as before: sell more units.
In Düsseldorf, almost everyone expressed their need to urgently put as much focus on their online offering to customers as they traditionally have for offline settings. Unfortunately, many manufacturers are struggling to match this desire with the technical infrastructure and agility required to make it happen.
Effective partnerships could have a key role to play in changing this. Rather than buying parts from the manufacturer they originally bought the vehicle from, customers are more likely to turn to suppliers who make the parts easily available online.
Amazon, which already has a huge customer footprint, is a shining example of this. As a customer, you can enter your vehicle registration into the search function and the parts specific to your model appear. It’s a customer-driven experience.
Today, Amazon don’t have a ‘service my car’ function, but as a customer-centric organisation it won’t be long until they do. This will open the retailers to competitors or a partner – either way, it will create a new way of working.
There seems to be some hesitation around this prospect, but it’s likely to become increasingly commonplace if businesses look pragmatically at meeting the automotive challenges of the future.
2) The retailer showroom – reshaped, not lost
If the traditional idea of a showroom as a one-stop shop of automotive business feels outdated, that doesn’t mean they need to be dispensed with entirely.
Buying a pair of shoes or a laptop might be much more convenient online. Buying a car, however, is a decision people make much less frequently at far greater expense. This is one reason why the popularity of showrooms endures.
The automotive sector has a great opportunity to rethink showrooms and make them far more modern, versatile and effective. Among retailers, the vision for how this might happen varies between:
- Service outlets for specialist adviceand support
- Experience centres, such as theme parks, secret cinema or VR headsets
- Pop-up stores offering an informal experience for people without being tied to one location
The best option for any particular brand depends on what they are trying to achieve. Experiences and stores based outside of a traditional sales environment are more likely to drive awareness than immediate sales.
Moving to a better model of salesrooms also depends on the retailer moving to a much stronger online presence.
In the new automotive landscape, the kind of approach that will see companies succeed is going to require a very different set of tactics and skillset from staff.
3) Key competencies will change
One way businesses could give customers a memorable experience would be by creating a coffee shop-style environment accompanied by product information. Think of the buzzy environment of an Apple store. The informal atmosphere encourages people to explore products and start conversations with each other and staff.
In this setting, hard sales skills would not only be unnecessary, but would also jar and probably put potential customers off.
At the moment, there is a lack of understanding of the people and skills that will be required in the future. Agility and relationship-building will be two essential elements for companies which successfully transform themselves. They will need to meet the expectations of customers who have multiple touch points with the brand.
As well as observing the importance of brand consistency across these touch points, the summit acknowledged that retailers have not bought into this change. In many cases, this is because it hasn’t yet been addressed at a strategic level.
4) Ownership of vehicles will be viewed completely differently
Think of the way people view mobile phones. They don’t worry too much about who owns the handset itself and where it comes from.
These customers usually expect their device to be upgraded every year or two as part of their contract. They also receive regular (and possibly automatic) updates to the software they use.
In the future, the way people ‘own’ cars is going to become much more fluid and flexible. The purchase of vehicles will be similar to a subscription model.
Customers will expect to be able to pay for and access vehicles as and when it suits them. This is comparable to the model of gym franchises, which are now giving customers pay-as-you-go access to their facilities.
Autonomous products bring another major question to the table. That’s because it’s uncertain whether the manufacturers, their partners or customers will own these vehicles.
5) Data will change the way the industry operates
Connectivity is going to give the industry a deluge of data about customers. Despite this imminent development, many organisations are unsure how to collect and use this data effectively (especially with the new GDPR regulations). The key challenges include:
- How to use data to benefit the customer
- Whether the manufacturers, retailers or another party owns the data
- The skills organisations will need in order to be able to align data with business goals
Additionally, there was a feeling among the Automotive Retail and Distribution Summit 2018 attendees that the industry can learn from the agricultural sector. Agriculture has typically had connected vehicles for years and has developed sophisticated approaches in this area.
How automotive brands are successfully planning for the future
During an interesting and productive few days, I noticed that the volume organisations are looking closely at subscription models, agility and online presence. The challenge for luxury brands, meanwhile, is to understand their position in this new marketplace.
Overall, I felt that the future is brightest for organisations who focus on their customer and embed their brand values, people, processes and strategy to a customer-centric approach. These automotive companies are forming processes to design, test, amend and deploy. What’s more, they seem to be looking forward and visioning the future in a practical way.