“Retail 3.0” Presents Wider, Tougher Landscape for Dealers

Aimee Canlas

The future of automotive retailing is being shaped by evolving consumer needs and by changing technology, spurred by the increasing adoption of mobile devices in addition to the entry of younger consumers into the market, suggests John Humphrey, J.D. Power’s senior vice president of global automotive operations.

Humphrey discussed both opportunities and challenges that will face automotive retailers now and in the future during his global automotive outlook that kicked off our 2012 International Automotive Roundtable held at the Wynn Hotel in Las Vegas last week.

He pointed out that the proportion of Generation X and Generation Y vehicle buyers* in the U.S. market has been steadily increasing since 2000, and is expected to reach 42% of the market in 2015. These two demographic groups display characteristics that may make it particularly challenging for dealers to build customer relationships, loyalty and retention.

For example, Gen X and Gen Y buyers prefer to receive post-sale information about vehicle controls and features through online video or text, rather than by phone or a visit to a dealership. (Click on: How Do Buyers Want to Learn About Their New-Vehicle Features and Controls?) In addition, these younger customers are more likely to use non-dealer service facilities than are older buyers, and tend to be more critical of and less satisfied with dealership service.

Auto Shoppers Use Different Platforms and Websites in their Searches

At the same time, Humphrey said the use of mobile devices and tablet computers is growing among vehicle buyers, as is the propensity of buyers to visit a third-party automotive site rather than an OEM site or dealer site during the shopping process. Cross-shopping also is increasing.

These changes have led to what Humphrey terms, “Retail 3.0,” which is defined by an environment where smartphones, such as iPhones, and apps provide fast access to mobile information and knowledge, which contributes to greater transparency, and where social media furthers customer power during the shopping process.

What are the Prospects in a “Retail 3.0” Environment?

The challenges that dealers are likely to encounter during the Retail 3.0 era include brand management, performance/price transparency and further increases in cross-shopping. However, this new environment also brings opportunities such as the ability to reduce ad spending and foster greater productivity and innovation in customer engagement.

In his summary, Humphrey stressed to industry participants, especially retailers, that although change is inevitable, the fundamentals still matter, and dealers will need to continue to focus on elements such as dealer treatment, brand image, inventory and price.Aimee Canlas, senior manager of media relations at J.D. Power and Associates

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