The Advent of Digital Retailing and the Impact on Global Car Dealership Structures

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The Advent of Digital Retailing and the Impact on Global Car Dealership Structures
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By 2016, Automakers are Expected to Open more than 100 Digital Showroom/Lifestyle Stores Globally

Executive Summary—Key Findings

Original equipment manufacturers (OEMs) are expected to open more than xx digital showrooms/lifestyle stores globally by 2016, with car retailing mutating from retail experience into brand experience.
1. The more than xx digital showrooms and lifestyle stores being opened by OEMs globally will be strategically located in city centers. Digital showrooms feature digital tools specifically aimed at enhancing both the retail and brand experience; they have limited on-floor physical inventory. Lifestyle stores focus on offering a strong brand experience through lifestyle-related concepts of art, fashion, music, food, and design.
2. Around 20 to xx% of the conventional dealership space will give way to digital technology like gamification, augmented reality, and 3D technology.
3. European OEMs are leading the way in terms of digitization in retailing—a major element considered for all of their future retailing programs. North American OEMs are still evaluating the retailing scenario and will mainly improve in-store digitization over the coming years.
4. Audi, JLR, and Nissan have already launched diverse digital showroom concepts, as well as digitally revamping existing showrooms for retail and after-sales purposes. In the United States, OEMs such as Lexus and GM-Cadillac approach digitization mainly in existing showrooms, encouraging the existing sales force to apply digital means.
5. The expiration of the EU's block exemption regulations is seen as an opportunity to restructure dealership networks, to eliminate underperforming dealers, and to cease multi-brand retailing. Restructuring will include digitization of showrooms in strategic locations to capitalize on the halo effect of digital showrooms.

6. By end of this decade, xx% of sales leads will originate from digital means rather than through traditional channels such as walk-ins, cold calls, or leaflets.
7. Unlike Europe, North American OEMs and dealers are pursuing digitization models through existing stores. Significant investments are being made to update store technology, train staff, and digitally integrate various aspects of the car-retailing process.
8. In the franchise law environment, digitization of car retailing will entail a collaborative approach between OEMs and dealer groups in North America with limited opportunities for OEM-owned flagship stores.
9. Investments of $xx million to $xxbillion are expected from several OEMs and selected dealer groups to improve in-store digitization in Europe and North America by 2016. Average digital marketing spending is expected to reach xx% of the marketing and advertising budgets of dealerships and automotive OEMs in Europe.
10. Soft digitization technologies such as digital tools, signage, and kiosks have seen strong growth alongside traditional marketing tools in the recent past. Future stores will exemplify advanced features in retailing and after-sales services such as high-level car configurators, 3-D displays, augmented reality, virtual test drives, holographic simulations, remote car diagnostics,online service/repair booking, and assisted repair.
11. The advent of digitization has led to the development of new and additional performance indicators, the introduction of innovative sales strategies, and both cost reductions and additions in up-front investments. New key performance indicators (KPIs), such as brand awareness, digital engagement of customers, customer age, lead response time, and vehicle configurability satisfaction will be of increasing importance.

Automotive Dealership Segmentation

Conventional Dealership
Definition: A car-retailing outlet that follows the traditional model of showcasing physical inventory, with the majority of its sales activity happening offline.
Ownership Structure: US—Mostly owned and operated by an independent business or dealer chain under the franchise model Europe—Both OEM and independent business owned; typically operated by an independent business or dealer group.
E.g., AutoNation, Inchcape

Digital Showroom
Definition: Digital showrooms feature digital tools specifically aimed at enhancing both the retail and brand experience. They have limited on-floor physical inventory and may or may not be involved in actual sales transactions.
Ownership Structure: US—No existing store Europe—Owned by OEM and operated by an independent business or dealer group.
E.g., Audi City London, Audi City Beijing

Lifestyle Store
Definition: Lifestyle stores offer a strong automotive brand experience through lifestyle-related concepts of art, fashion, music, design, food, and technology. The store is not centered around the actual sales transaction of a car.
Ownership Structure: US—Upcoming (to be owned by OEMs) Europe—Exclusively owned by OEMs.
E.g., Lexus Tokyo, L' Atelier Renault Paris

Pop-up Store
Definition: Pop-up stores are temporary stores with 3D visuals and QR codes at high-traffic locations that are used, for example, to draw the public's attention to a new car model.
Ownership Structure: US—Upcoming (to be owned by OEMs) Europe—Exclusively owned by OEMs.
E.g., Mini Westfield London (2012)

Automotive Digital Retail Formats

New purchasing behaviors of an increasingly technology-savvy customer base, urbanization, and social media trends have led to the creation of omni-channel retail solutions within the automotive industry.
- Digital Showroom
- OEM/Dealer's Online Store : OEM/Dealer websites facilitate xx hrs online sales with car configurators, visualization tools, and online chats. E.g. Tesla, Dacia, Ford, Fiat
- Independent Online Store : Websites offering customers a huge database for multiple car brands along with online financing and insurance. E.g. eBay Motors
Executive Summary
Research Scope, Objectives, Background, and Methodology
Definitions and Segmentations
Definitions of Selected Terms Used in the Study
Abbreviations and Acronyms Used
Definition of Digital in Retailing
Automotive Dealership Segmentation
Digital Retailing in the Automotive Industry—Europe and North America
Overview of Channels of Retailing in the Automotive Industry
Degree of Digitization in Car Retailing
Digitization—US vs. EU Automotive Industry
Global New Car Online Retail—Forecast

Global New Car Online Retail—Scenario Analysis
Digital Retailing Focus of Key OEMs
Global Outlook of In-store Digitization in Car Showrooms
Key Future Characteristics of Dealerships by Geographic Region
Geographic Segmentation of Dealerships: A Future Scenario
Structure of a Future Channel Network in a Mega City
Data Mining to Drive Sales and Support of OEMs
Conventional versus Digital Setup
Impact of Digitization on Car Retailing—KPI Analysis
Future Digital Marketing Linked to Digital Retailing
From Digital Marketing to Digital Retailing
Impact of Digitization on Car Retailing—KPIs
KPI Significance by Vehicle Store Type
KPIs—Audi City London Case Study
Digital Retailing (Europe)
Current Digital Car Retailing Trends in Europe
European Dealer Regulatory Environment—Block Exemption Strategy
Impact of Block Exemption Strategy
Change in Sales Per Main Dealer in the UK
Trend Analysis of Off-store Digital Sales Generation
Leading Digital Vendors and Integrators for In-Store Digitization
Example of Digital Showroom
Example of Lifestyle Stores

Digitization in Car Showrooms—Europe
Automotive Digital Retail Stores in the UK
Selected Cities as Targets for Digital Retailing—Example of London
Case Study: Audi City London
Case Study: Mercedes-Benz
Case Study: BMW
Case Study: BMW's Changing Composition of Showrooms
Case Study: Fiat Mirafiori Outlet Italy
Case Study: Dacia
Case Study: IBM Intelligent Commerce Experience (ICE)
Digital Retailing (North America)
Current Digital Car Retailing Trends in North America
US Sales per Dealership for Key OEMs
US Dealer Franchise Laws: Key Challenges Posed to OEMs
US Franchise Laws and Impact on Digitization
Franchise Law Case Study: Tesla Motors
OEM and Dealer Digital Investment and Fulfillment Structure

Trend Analysis of Off-store Digital Sales Generation
Off-store Digital Lead Generation Channels Comparative Analysis
Off-store Digital Lead Generation Channels Discussion
Internet Sales Growth of Key US Dealerships
US Mega Regions and Impact on Digital Showroom Development
New York City the Right Fit for 1st Wave of Digital Showrooms
Digital Showroom Structure Scenario Analysis
In-store Digitization Key Value Chain Participants
In-store Digitization Case Study: Tesla Motors
In-store Digitization Case Study: Apple Genius Model in Automotive
Case Study: Google's Online Automotive Retailing
Key OEM and Dealer Group Digitization Investments
Key Findings and Future Outlook—Europe and North America
Conclusions and Future Outlook
Appendix

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