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10 emerging considerations to shape the design of the next generation of automotive retailing

autos_0906_32googlemobile06 I currently have the opportunity of working with one of the major automotive manufacturers to define the next generation of their retail dealerships. We have been anticipating their challenge for a while.

Not only is the automotive retail model a bit stale to begin with, but the emerging economic conditions have certainly changed everything in their domain. Whether by plan or by attrition, there certainly will be many fewer dealerships out there. The product portfolio of every manufacturer is getting smaller. Investment in events, advertising and marketing is shrinking, and even the major North American auto shows were much smaller in content and attendance this year.

Our charge is to accept that these symptoms are, in fact, the new fundamentals of the marketplace, and that the dealership of the future must have a significantly smaller footprint. This original mission, borne of current circumstance, pressure or opportunity, seems tactical compared to the potential richness that we see in the long turn of subject. I feel comfortable however that as the conversation continues we will all find a way to broaden our perspective and lengthen our view.

I am looking ahead like this because I am fascinated and interested in the tangential and circumstantial influences that appear even before my research begins.

A couple of examples that have appeared in random readings over the past couple of days—

  • “Plan B” is the expression that many of us have used to describe a fallback position when the primary goal becomes unattainable. In a nice exploration of the impact of the economy on these alternative dreams in the New York Times today, David Segal quotes a Miami real estate investor. “I got rid of everything luxurious,” he says. “I drive a Ford pickup truck. I used to drive a BMW 5 Series, and I was going to upgrade from there, to the 6 Series convertible.”
  • Ben Terrett, in his blog, Noisy Decent Graphics, admits to hating cars. But he is tuned to an awareness of how media might affect purchasing decisions. He’s announced a project, he calls “the long car purchase.” He describes his plan like this—“So under The Long Car Purchase I'm going to note down all the significant interactions I have with car advertising and branding over four years (or whatever) and then maybe we'll see a picture build up of how that affects my purchase. Maybe we won't. It's an experiment.”
  • The google-izing of the industry seems to be a frequent evocation for exploration of new models for the business. Jeff Jarvis challenged the industry in an article in the new issue of Business Week. He offers the Goggle design process as a remedy for the disconnect between Detroit and drivers and suggests a radical redesign for the business. Rita McGrath took up the subject in her Harvard Business blog, but then her colleague, Bill Taylor, suggested she and Jarvis both ought to look elsewhere.

This is a very small but, I’d say, typical sample. They are mostly about the products themselves, but what implications might these random readings have on the design of the dealership and the retail business?

For the moment, I make the assumption that the current, emerging and enduring economic conditions generate these conditions—

  • Buying a car is going to take more time
  • Car manufacturers will bend to greater consideration of the customer (choice) than the car (production)
  • The retail business must become more pull than push

Here, then, are ten emerging considerations for a new business model, ten considerations that can shape a program for a new kind of dealership design.

  1. Build a new cache around products that did not have charm before. How can I arrive at this event in a Ford pickup and not lose the attention and associated credibility I did when I arrived in a BMW 6? Manufacturer’s ads, local dealer’s ads, and the dealer’s sales people all contribute to the success of brand transitions.
  2. Become a place of learning rather than a place of selling. The emerging electric and hybrid technologies are unfamiliar. There’s a lot of lore out there about sustainability, environmentalism, fuel consumption and emissions, cost of ownership, etc. The last place many people would think to look for credible information and instruction is the dealership. How does this transformation from creepiness to credibility take place?
  3. Make it a ceremony not a transaction. Delivery is a nominal process, mostly. It may have achieved its height in those fantasy Saturn commercials, where the hand-off of the keys was an emotional event. Ceremony and ritual imply shared values, time, community, culture and other factors not currently expressed in, say, the Toyotathon.
  4. Accommodate personalizing, resist packaging. Dealership economics as well as production efficiencies have meant that we’ve had to take what someone else imagined for us rather than what we wanted or needed. Each of the articles I cited above imply a significant devaluation of what you chose for me and a real value associated with what I can make for myself.
  5. Utility is the new luxury. Satisfaction of what I need and what I need to get done feels really rich right now. More than that is corrupt.
  6. Eliminate the lot. The car lot has never been a good experience, and ought to be abolished. It is a huge burden on the dealer’s business, is an environmental nightmare and community blight, and is irrelevant when time is on my side. I remember a phrase from sitting in a demo vehicle with my Dad when I was a kid—“We’ll build your car and it will be delivered in six weeks.” I want my next car from the factory and built for me, not from the lot. You, dealer, should be happy.
  7. Sell experiences not products, but experiences beyond the product. In the convention of asking what business are we really in, the car becomes defined as a vessel of navigation, entertainment, business, and socialization as well as carrying the associations (performance, sex, utility) that have defined brands for ages. Ignoring for a moment the threats associated with on-board technologies, the fact of the matter is that while moving from place to place, the car is place—living room, game room, office—and contains all of the experience associated with its extended functionality.
  8. Consider the implications of conditional ownership. As the world urbanizes, more will have the options that allow Ben Terrett to hate, or not have, a car. Hyundai, in these ugly times, even offers a conditional ownership model—lose your job and we’ll take back your car. ZipCar, and others, offer a model that looks like rentals, but feels different. Should conventional ownership stand outside of this model. Can I come in for an update to my technology, for example? Who will do this—the dealership or the technology brand?
  9. Consider the implications of a multi-point relationship. Remember those relatively silly secondary branded vehicles—the Eddie Bauer Edition? Remember the building expectations for “Intel Inside” for cars? As a car is embedded with utilities for navigation, communication, entertainment, safety, comfort and other user-defined attributes, realize that others may make or shape the brand image and the associated relationship experience.
  10. It’s not about you, it’s about the embedded brands. Jarvis complains about the radio and Tarrett seeks an audio satisfaction, while iPhone delivers communication, entertainment, socialization, connection, information and so very much more. The iPhone advertises content and utility—“need a cab in an unfamiliar city?”—not the iPhone itself. What are the experiential utilities in the cars you are selling?

I am sure we’ll return to these and other subjects as our conversation continues. In the meantime, what are you looking for?

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Thoroughly modern

From the Detroit Free Press In an excellent post on his blog, Landscape + Urbanism, Jason King recalls his work with an AIA SDAT recently addressing this recurring theme in these posts on the "Detroit dilemma."

The initial report of the team, continuing themes from the 1994 Mayor's Land Use Task Force, is worth a review. It's available on the AIA web site.

"We hope for better things...it will arise from the ashes"

A pothole in Obama’s stimulus plan?

mser I have a feeling that this type of post is emerging in many places across the country—expressions of deep concern over the “use it or lose it” provision of Obama’s economic stimulus plan that seems to take out all of the greening of America vision and potential for change that seemed to be at the core of the plan as it was initially discussed.

Mayors and governors have brought forth lists of projects seeking funding under the plan announced by Obama in early December. My understanding of the plan, and my hope for all of us, was what seemed to be the broadening of the term, infrastructure, with a list of focus areas including energy efficient public buildings, renovated and connected schools, broadband extensions and a major thrust in medical technology development.

Mr. Obama’s remarks showcased his ambition to expand the definition of traditional work programs for the middle class, like infrastructure projects to repair roads and bridges, to include new-era jobs in technology and so-called green jobs that reduce energy use and global warming emissions. “We need action — and action now,” Mr. Obama said in an address broadcast Saturday morning on radio and YouTube. (NYT)

Indeed, beyond his outline in his address, the program known as the Obama-Biden Plan for economic recovery, there is much that speaks to a future of, and derived from, a focus on sustainable approaches to development.

However, in a provision of the plan meant to encourage speed of response and of recovery, the President-Elect proposed a use-it-or-lose-it condition. States and cities, now scrambling to develop “shovel-ready” projects, are demonstrating that there has been no vision in their thinking and no green in their planning.

The Unites States Conference of Mayors has proposed a “Main Street Economic Recovery Plan” plan that pushes the stimulus to $180 billion. In its top-ten list of priorities, their stimulus for green jobs amounts to little more than 5% and schools modernization little more than 8% of the total. Most of the rest can be considered to be buried in concrete (road construction) or going down the sewer (water and wastewater projects).

My own state and city, the home of the collapsing auto company, where we’ve wished for a leadership to a transformed economy for decades, seems still unable to get it. Detroit’s long list in the Conference of Mayor’s recommendations totals almost a billion dollars (a desperate city and less than one-half of one percent of the country’s urban vision???).

Almost every project on the list supports streets and bridges, places where graft seems to find a home and certainly places where no vestige of a new-era economy, a knowledge economy, or a future can be found. I can’t find a mention of “green,” or “sustainable,” or “environment,” and under “energy” I find things like remote meter reading. The contempt heaped on the automobile industry (Tom Friedman calls it a “giant wealth-destruction machine”) in Congress seems extensible to the political and civic leadership as well.

I deeply hope that “use-it-or-lose-it” will have added filters of vision, responsibility, and sustainability. I find myself in the same anxiety as Tom Friedman. “If we allow this money to be spent on pork, it will be the end of us.”

A reason to support the auto companies

One of the reasons frequently cited for the bailout of the American car manufacturers was the strategic, and perhaps nostalgic, role they played/play in national security and defense. Someone asked: Who builds the tanks these days? I don't really know, but here's some of the past. 408478188_cc7a6ee886_ovia things magazine