28 February 2017
With an increasing number of manufacturers putting marketing efforts behind their online sales initiatives, on our blog last week we asked whether the end of the car showroom could be near. In this week’s blog, Paul Daly delves further into the detail and looks at whether omnichannel retailing could genuinely be on the cards.
One of the most common discussion points we have when looking to the longer term future of motor retail, is the extent to which we will continue to trade from ‘bricks and mortar’ premises. Much has been made of the potential for web-based sales to change the existing business model, but to date their impact has been relatively limited and the business model remains broadly unchanged. For all the predictions of genuine omnichannel retailing, there appears to be a continual demand for larger physical dealership footprints and ever higher quality facilities. Perhaps, due to a combination of reasons, the concept of the modern dealership is here to stay for the foreseeable future. After all, a web-based model will always pose considerable challenges for a number of reasons:
- there is the existing part exchange to worry about – customers are looking for a hassle free transition into their new vehicle;
- this is a big ticket purchase where customers need to feel particularly confident in their choice of vehicle and supplier;
- the vehicle needs to be returned periodically for planned and unplanned maintenance, with a likely need for human interaction as a result;
- the product has a plethora of choices from simple colour through to size, design and options; thus lending itself to a physical examination and demonstration before purchase.
- the product cannot be easily returned in the way many other retail goods can if it does not meet the customer's requirements; and
- margins are narrow and the existing business model already leads to intense price competition.
Overall then, in my view the barriers to a genuine omnichannel experience remain high and unless there is a retail revolution around the corner they are likely to stay that way for a good while yet. Much like the long heralded arrival of Chinese cars, or the imminent takeover of fossil fuel cars with all things electric; it seems commentators always want something to worry about. In the meantime, the best retailers continue to quietly make a fantastic return on their investment whilst providing a superb customer experience for themselves and their franchise partners.
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