Will auto
retail need
to evolve
in an age
of online
sales?
The car dealership typology as we
know it is an endangered species.
KPMG’s Global Automotive
Executive Survey 2019 found
that almost half of the industry’s
leaders believe that between 30 to
50 per cent of car dealerships will
be closed by 2030.
The report sites factors
such as the shift from physical
retail stores to digital channels,
the rise of ride hailing and a
decrease in interest in car owner-
ship among younger consumers
in mature markets.
This decline in brick-and-
mortar automotive stores isn’t
terminal, however; as the authors
outline, the challenges now are
‘how to reinvent, reimagine and
eventually rebuild and reorganize
existing structures and how to
identify new revenue streams
for retailers’. For KMPG, any
successful new strategy neces-
sarily includes ‘small customer
touchpoints, where a seamless
brand experience and brand path
is top priority’.
What might such spaces
look like? We profiled a standout
example in Lexus’s latest Inter-
sect venue in New York in Frame- This hybrid restaurant-
cum-embassy, parked between
Chelsea Market and the local
Soho House, certainly makes
a much stronger case for urban
consumers to spend time with
the brand than any peripheral,
product-stuffed showroom.
Another example opened
in the centre of Oslo at the end of
2019, the first European location
of young Swedish automaker
Polestar. As the business only
offers cars on a full-service
subscription model, the customer
relationship is far more focused
on the wider brand entity and less
fixated on the product than that
with legacy car makers. As such
its venues need to work doubly
hard to convince customers that
the brand is a partner that can
fulfil their desires for the latest
innovations, design excellence
and high levels of convenience.
And not once, but in perpetuity.
‘The Polestar Space is
our way of changing the face of
automotive retail,’ says Jonathan
Goodman, chief operations
officer at Polestar. ‘With no
salesmen and no vehicles on the
forecourt, there is no hard sell,
no requirement to shift stock and
an entirely customer-focused
journey.’
Without the imperative
to chase commissions or shift
prebuilt units, staff can concen-
trate on helping visitors use a
range of retail technologies to
explore and spec their potential
vehicle. Central to this is an
‘atelier’ table that recognizes
an RFID tag in individual trim
modules, allowing custom-
ers to create a material mood
board that will automatically be
digitized and uploaded to their
account. Polestar recognizes that
its customers have a developed
interest in subjects such as design
and technology, which is why it
hosts in-store talks. You’re more
likely to spend time in a Polestar
Space learning about architecture
than kicking tires.
Perhaps the surest sign
that automotive makers will
retain an interest in brick-and-
mortar venues came from Tesla’s
2019 missteps. The brand set
an early precedent for elevating
the car buying experience with
its Bang & Olufsen-esque stores
in heavy-foot-traffic city-centre
and mall locations. But last year
it announced that it would close
many of its locations in favour
of pushing digital sales, passing
on the savings to customers.
CEO Elon Musk had previously
revealed that 78 per cent of all
orders for its Model 3 were placed
online. But after shares took a hit
and analysts questioned whether
the average consumer was ready
for this zero-touch approach, the
company backtracked, commit-
ting to retaining about half of its
stores and even raising the price
of its vehicles by three per cent to
pay for it. PM3
Since it only offers cars via
subscriptions, Polestar focuses more
on forging customer allegiance than
on the hard sell in its showrooms.
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20 Business of Design