In a world where the retail market is softening, profit margins are shrinking and decent talent is hard to come by, it’s easy to see why a tighter focus must be put on profitability and performance…and why digital transformation in auto retail is crucial.
But is digital transformation possible?
I live in Southern California (I’ve lived here all my life). I’ve spent a good portion of my career managing dealerships and I’ve witnessed a lot of change in automotive retail over the years.
What I’m observing now is an industry that’s reluctant to change…and a world nearly passing by the dealership business model.
There’s an older dealership near my house who’s been at that location for decades. They are a low-volume store but they run lean without a huge overhead.
Right now, they’re building a brand new, huge facility. I drive by often and wonder, “Have they not looked around to notice that retail environments are contracting, not expanding?”
The future of customer mobility has never been more exciting or uncertain. With the challenges mentioned above, added to the major disruptors such as ride-sharing and autonomous vehicles, it’s not too difficult to imagine a world without large dealership facilities.
In order to succeed at digital transformation, dealers and manufacturers must think holistically about their operations strategy. Consumer behavior is driving retail change and it’s important to understand what those behaviors are so that retailers will have the best possible chance for survival.
Today’s ever-evolving consumer shopping behaviors are driven by:
- Channel-agnostic shopping journey.
The use of digital tools and channels during pre-sale, transaction, and post-sale.
- Expectation of a seamless experience.
Consumers display so-called omni-channel behavior and seek experiences that are as easy, fast and frictionless.
- Innovation as a new expectation.
There’s a growing demand for shopping experiences that transcend beyond excellence which are unique and satisfy a need to witness innovation.
- Easy access to information that matters.
Helpful relevant content throughout the digital shopping experience that bridges through to in-store employee/customer interactions.
Adapting operations to these behaviors is key.
Pro Tip: Use customer feedback to assist evolutionary change. This is very different than just catering to the customer’s needs. It is acting on what customers are asking for.
As digital transformation strategies emerge, deconstructing the organization and restructuring operations based on targeted goals will become commonplace.
We already see the need in the digital marketing goals for dealerships. As I interact with automotive retail leaders, I find most struggle with:
- Outdated platforms (websites).
- Too many solutions for problems they don’t have.
- Social media and where to focus attention.
- Nearly non-existent analysis of data (example: targeting ideal customers and proving ROI).
Digital transformation in auto retail expands on this idea of identifying struggles with current operations in order to transform processes that more easily fit today’s retail environment.
Is digital transformation in auto retail possible?
No one can answer that question but retailers.
I believe it is in theory but having spent 8 years providing tons of data showing that social media is vital to the future of dealership profits, only to have most dealers not take action, I’ve got serious concerns.
One thing I know for sure is that building a big, massive facility is not the answer.