Codeweavers

23/01/19

Automotive

Who could dealers collaborate with for shared success?

Shaun Harris, Sales Director Codeweavers.

Yes, it is a quirky title, but the whole idea in changing times is to encourage dealers to start thinking ‘out of the box’. So who might dealers collaborate with to help drive and share online and showroom footfall? It’s all about creating a broader customer (or potential customer experience) even if their primary reason for visiting was not to buy a car!

In making this statement, I do so on the basis that it is important to take a look at the wider operating environment to see what is happening, good and bad and see what we might learn. Following my own advice, I’ve been looking at High St retailing. Like it or not, I cant help feeling we can’t ignore the reality that what is happening there could start to be a greater factor in car retailing. Here is what I found and my observations;

2019 is set to be another tough year for retailers, or so some interesting research in Retail Gazette suggests:

• Over 175,000 jobs are set to be shed from the UK’s retail industry
• A further 23,000 shops are expected to close this year
• And (importantly) 62 percent of major UK property owners and investors think that e-commerce is disrupting the commercial real estate industry and is having a ‘profound effect’ on their decision-making

The findings were part of an annual report (published today 21/01/19) surveying over 400 major property owners and investors from around the world, each with more than £200 million of assets under management.

Having been involved with Woolworths, I have first-hand experience of watching a business failing to embrace change. What I saw then and what is even more abundantly clear is the ‘Amazon Effect’ and its impact on our High Streets and shopping centres. When it comes to car retailing, I don’t believe that our market is immune from such rapid change.

Progress cannot be stopped, so, in a Darwinian manner, it is how the industry adapts that matters. Last year, motor retailers switched onto the potential of used cars to offset a falling new car market. However, I suggest that the digital challenge is more profound than simply a change in new v used. The industry needs a better solution.

Returning to that retail research, it appears that all is lost for the High street. 78 percent of UK property owners are moving towards experiential retailing to tap into the growing trend of experience-led shopping. So could motor retailers follow the same path? It certainly has merit. To succeed, bricks-and-mortar spaces (the showroom) need to adapt to a very different usage approach, mixing leisure and lifestyle factors, according to the research; but, are car retailers ready for this?

I think they could look to collaborate with like-minded businesses, where there is the capacity for a shared gain, as the way forward. It is all about a willingness to share that potential opportunity.

When it comes to collaboration, there are rational levels; BMW and Daimler combining their mobility businesses into one equally-owned joint venture late in 2018, but arguably more interesting was Toyota’s collaboration with Pizza Hut, Amazon, Mazda, Uber and Chinese ride-hailing business Didi Chuxing when it announced its electric concept vehicle last year.

For car dealers, collaboration ought to come naturally given the importance of relationships, such as those with manufacturers and finance providers. However, the evidence often suggests that these ‘partnerships’ fall well short of true collaboration. The desire by both parties to exert control can become a source of stress and disruption. The latter being entirely inappropriate when other disruptors are waiting in the wings.

At the very least, adversarial partnerships can add time, cost and confusion and in a low margin business such as car retailing, these are inappropriate.

The way forward has to be in considering the strengths and weaknesses of the dealer model and doing it honestly and then looking to see how the business ‘bricks’ real estate and the appeal of cars and its customers could be leveraged by others. Conversely, what businesses have access to potential customers, technology, marketing/CRM expertise, customer care and potential footfall that could benefit the dealer?

At the heart of this is the customer. The age-old debate about ‘who owns the customer?’ is probably well and truly over; the customer owns with whom they choose to work. This may have been helped by GDPR, but in reality, it is a combination of regulatory, technology and cultural changes that have changed things. Success in business B2c and B2B will increasingly be about ‘hooking up’ with like-minded businesses to delight the customer and make it easy for them to access the products and services they want when they want them.

Over the last decade, at Codeweavers we have benefitted from genuine collaboration with a range of partners across the distribution chain. The impact has been to make that chain work more effectively’; less friction, less cost, greater speed and fewer breakdowns.

The traditional car retailing and manufacturing sector knows that a series of established and emerging disruptors have their eyes on the market. Without any significant barriers to entry, armed with a better technology and service experience, they can thrive if the incumbents fail to address their shortfalls. Finding the right bedfellows can help to reinvigorate retailers, but this will only succeed if the spirit of collaboration is shared in every way.

The starting point for collaboration is less who and more how and why could this work for us both? With some lateral thinking, the opportunities for better customer experience and a mutual win-win are surely there?

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