CommentaryFeb 22nd, 2023

Retail is an experience, not a location


Retail is NOT a physical location. RETAIL IS AN EXPERIENCE. 

This statement may raise questions, prompt pushback, or lead to realizations.

Retail across all industries began to shift long ago. We can credit or fault disruptors like Amazon for pushing the boundaries and expanding the concept of retail to include digital experiences. But even Amazon has blurred the line between physical and digital with pick-up/drop-off hot spots and a few retail store outlets.

While I don't love the term "phygital," it conveys the idea that physical and digital are now blended and part of a single experience. Charles Dunstone, founder of Carphone Warehouse, stated that "the future of retail is the integration of internet and digital experiences and services with the retail network."

This is an interesting perspective, but what does it mean for automotive retail? The industry was already experiencing a significant shift, which was further disrupted by the global pandemic. This disruption was compounded by a significant supply shortage that caused inventory issues. As a result, we are now facing fast-moving customer expectations and shifting business models in the industry.

Despite the uncertain future, there are numerous paths to achieve greater value and opportunity. The questions become: what do we want to be, and how can we deliver it? 

We must develop core capabilities to flex our muscles and future-proof our business.

What could it look like?

Sometimes it's easier to look outside of our own industry for examples and benchmarks to understand the actual experience and benefits without getting caught up in what can and can't be done in our own business. In the world of the Future of Retail, I would like to bring up Disney, perhaps surprisingly. Not the Disney store in your local mall, but the Disney Park in Orlando. If you've been there in the last 5-10 years, you've probably noticed the advancements in personalizing the entire experience.

Here are a few highlights of what they provide (and the experiential capabilities):

  • A personalized trip plan that's tailored to you and your family's needs and desires, created before you even depart for the trip
  • Online and offline tools that work together to create a seamless experience
  • The ability to meet the characters of your choice and highlight certain themes and areas of the park that are your favorites
  • Suggestions on shows, pop-up meet-and-greets, and other immersive experiences to enhance the personalized engagement
  • A connected bracelet is given or worn upon entry to the park to accommodate location-based services (tracking, payment, selected experiences)
  • The ability to choose rides, preferred times of day, food selections, and other amenities in a planned and time-windowed preference
  • Overall communication, alerts, and updates to facilitate the desired experience throughout the day.

So, you say, that’s great, but what does that have to do with automotive retail or retail? I would suggest that this is exactly the future of the retail experience. Well, let’s break it down. It offers the basics of retail; goods and services available, shopping, buying, servicing, and experiences (that are very personalized). But it does it in a way that is so much more than transactional.

This retail experience is:

  • Personalized
  • Needs-based
  • Highly experiential
  • Immersive
  • Digital and Physical
  • Supportive
  • Memorable and ongoing (carries on after the original visit)
  • Interactive
  • …and extremely human-centric (despite all the bells and whistles, it is still focused on the people)

Is there anything in the experience above that we think should not be possible or available in an auto retail experience? While the cost of Disney is getting extremely expensive, we still pay 10x-20x that amount for a vehicle transaction. Shouldn't acquiring a vehicle be as engaging, personalized, easy, delightful, memorable, and immersive as described by a customer? That's what we want in auto retail, yet we often fall short of these capabilities and benefits. While we may all agree that some or all of these elements would be desirable and beneficial, the challenge is in figuring out how to achieve them.

So, what do we do?

While recognizing the need for change and transformation is crucial, it's even more critical to determine how we can seize this opportunity and make it beneficial to our long-term success. How can we future-proof our business?

I believe we need both a Mind Shift and a Business Shift.

We cannot improve or achieve what we do not measure or set as objectives. The traditional measures of success in the automotive retail industry focus too heavily on transactional events. While sales, profits, and margins are important, the focus needs to be updated. To drive the necessary change and successful future business models in auto retail, we need a mindset shift.

The following are some of the key areas where this shift is necessary:

  • Experience-driven, not transaction driven
  • Need Management over Lead Management
  • Personalized, not mass marketed
  • Customer-managed relationships (customer in control), not Customer Relationship Management (CRM)
  • Human-centric, not Product-centric
  • Omni-channel experiences, not one-channel events
  • Human-centric, not product-centric
  • Restructuring of Talent Management and compensation aimed at customers for life and experiences, not transactions.

These may sound obvious, but without these as objectives, supported measurements, and infused into our business model and business processes, they do not happen. These must become our North Star view of success and capabilities. They also need measurement, training, focus, and ongoing innovation and support.

Thus, next comes the business shift.

We are witnessing numerous pilots and experiments in new retail storefronts and immersive design, as demonstrated by Porsche. We are also observing new sales and demand management models, such as regional warehousing and agency sales models. Additionally, we are seeing a greater influx of technology beyond traditional dealer management systems.

As a dealer, it can be more effective to start with the customer and their current and future needs, rather than simply implementing massive business model shifts and new technologies. Customers desire mobility, personalized offerings that meet their journey needs, and an easy, trustworthy, and accessible process that fits their schedule and preferred channel.

Therefore, to truly understand the customer, we must capture all relevant data and insights possible, to be agile and flexible in assessing and executing against their needs. Although dealers currently possess a lot of data, we lack a clear and visible view into one customer, one journey, with multiple needs. Furthermore, our current business model and capabilities do not make it easy for us to proactively respond and offer solutions to those customer needs. Unless the customer engages us, we typically do not discover and meet their needs until it is too late.

Assuming that our goal and North Star is to enhance the customer experience beyond the basic transactional model of today, we need to align our data and insights, metrics and measures of success, people and training, processes and workflows, and tools and enablers to support that target operating model. Currently, a sequential, transactional, one-way experience is the norm, and trying to restructure outcomes from within that framework is ineffective. Instead, we must change the operating model and framework to align with the new definition of success.

This is a simple concept, but not easy to execute. It requires clear goals, alignment, and an agile, ever-transforming process.

Some of the key business shifts will include:

  • More insightful use of data
  • Processes and workflows focused on experience, not transactions
  • New key metrics and objectives instilled and measured
  • Talent Management and Reward structure in line with the objectives
  • Building of agile capabilities aimed at customer experience and mobility access for customer
  • A defined Target Operating Model to address the “to be” state
  • …there is much more to continually do, but it does start with getting a clear vision of “your customer experience” and how you can deliver against that.

Just start, and keep going. Never stop. Customers evolve. Their expectations grow. The industry of mobility is continuously transforming. We must continue to become “platforms of mobility access meeting customer needs wherever, and however, their personal journey requires it.”

Steve Jobs said, “you’ve got to start with the customer experience and work backward for the technology.”

I fully agree but would only add:

“Start with defining your customer experience North Star, then build out the tools and processes to support it.”

And never stop. The timing and delivery of your customer’s experience will be an ever-lasting, continuous journey, and one built as an enterprise capability (a muscle you can flex), not as a project, one-time program, or technology.

Dennis is the Head of Automotive Industry, Innovation & Transformation at Capgemini Invent. An innovative strategist and transformer, Dennis’ experience includes driving brand and customer strategy into market and profit realization. 

Dennis is a change artist who creates tangible business value through ideation and visioning, creative marketing strategies and process implementations, strategic business transformation and customer understanding and delivery.

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