future of car retailing frost sullivan
TRANSCRIPT
New Mega Trends New Mega Trends New Mega Trends New Mega Trends Impact of Mega Trends on Future of Car RetailingImpact of Mega Trends on Future of Car RetailingImpact of Mega Trends on Future of Car RetailingImpact of Mega Trends on Future of Car Retailing
Analyst Briefing Analyst Briefing Analyst Briefing Analyst Briefing –––– 8888thththth of May 2013 of May 2013 of May 2013 of May 2013
Sarwant Singh and Julia SainiSarwant Singh and Julia SainiSarwant Singh and Julia SainiSarwant Singh and Julia Saini
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Today’s PresentersToday’s PresentersToday’s PresentersToday’s Presenters
Sarwant Sarwant Sarwant Sarwant SinghSinghSinghSinghSenior Partner
Frost & Sullivan
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Julia SainiJulia SainiJulia SainiJulia SainiDirector Growth ConsultingFrost & Sullivan
1. Conventional dealership2. eBay, Amazon or other on-line hyper market3. City centre digital flagship store
1. Conventional dealership2. eBay, Amazon or other on-line hyper market3. City centre digital flagship store4. OEMs web-site (ordered and financed on-line)
3
Mega Trends Driving The Future of RetailingMega Trends Driving The Future of RetailingMega Trends Driving The Future of RetailingMega Trends Driving The Future of Retailing
UrbanisationUrbanisationUrbanisationUrbanisationConnectivity and Connectivity and Connectivity and Connectivity and
ConvergenceConvergenceConvergenceConvergence Bricks & ClicksBricks & ClicksBricks & ClicksBricks & Clicks Social TrendsSocial TrendsSocial TrendsSocial Trends1111 2222 3333 4444
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There Will be 35 Mega Cities Globally By 2025 Demanding For Unique
Space Solutions
By 2025, each person will have a minimum of five connected devices
By 2025, 20% of retail will happen through
online channels
Demographic composition will
change: 2.4 Billion Gen Y Population, around 52% from Asia alone
What does this mean for Car Retailing?What does this mean for Car Retailing?What does this mean for Car Retailing?What does this mean for Car Retailing?
There will be emphasis on developing flagship retail stores in heart of
city centres
Connectivity will revolutionize car retailing as buyers become multi-channel shoppers, and
OEMs /Franchises use an Omni channel strategy
OEMs will experiment with new business
strategies amalgamating ‘Bricks’ and ‘Clicks’
The next generation young car buyers will
prefer collaborative consumption and
targeted digital marketing
Mega Trend :Mega Trend :Mega Trend :Mega Trend :
Bricks and Clicks Bricks and Clicks Bricks and Clicks Bricks and Clicks ––––Global Outlook on Global Outlook on Global Outlook on Global Outlook on
Retailing Retailing Retailing Retailing (Automotive and Non(Automotive and Non(Automotive and Non(Automotive and Non----
Bricks and Clicks Bricks and Clicks Bricks and Clicks Bricks and Clicks ––––Global Outlook on Global Outlook on Global Outlook on Global Outlook on
Retailing Retailing Retailing Retailing (Automotive and Non(Automotive and Non(Automotive and Non(Automotive and Non----
automotive)automotive)automotive)automotive)
5
$11.8 $11.8 $11.8 $11.8 TrillionTrillionTrillionTrillion
$23 $23 $23 $23 TrillionTrillionTrillionTrillion
$18.7$18.7$18.7$18.7TrillionTrillionTrillionTrillion
81%81%81%81%24%
18%
China
$1.30
Trillion
United Kingdom
$0.21
Trillion
25%
15%
10%
Bricks and Clicks: Bricks and Clicks: Bricks and Clicks: Bricks and Clicks: Global Online Retail Sales To Account for 16.6% of Total Global Online Retail Sales To Account for 16.6% of Total Global Online Retail Sales To Account for 16.6% of Total Global Online Retail Sales To Account for 16.6% of Total Retail Sales by Retail Sales by Retail Sales by Retail Sales by 2020 and up to 25% in countries like US2020 and up to 25% in countries like US2020 and up to 25% in countries like US2020 and up to 25% in countries like US
$18.7$18.7$18.7$18.7TrillionTrillionTrillionTrillion
$11.25 $11.25 $11.25 $11.25 TrillionTrillionTrillionTrillion
$4.3$4.3$4.3$4.3TrillionTrillionTrillionTrillion
$0.55 $0.55 $0.55 $0.55 TrillionTrillionTrillionTrillion
Online SalesOnline SalesOnline SalesOnline Sales NonNonNonNon----Online SalesOnline SalesOnline SalesOnline Sales
5%5%5%5%
95%95%95%95%
19%19%19%19%
6
2011201120112011 2025202520252025
United States
$1.32
Trillion
24%
Germany
$0.09
Trillion
Japan
$0.17
Trillion
10%
Source: Frost & Sullivan analysis.
Global: Media and Entertainment Global: Media and Entertainment Global: Media and Entertainment Global: Media and Entertainment Products to Experience the Highest Products to Experience the Highest Products to Experience the Highest Products to Experience the Highest Online Sales Penetration at 82% by 2025Online Sales Penetration at 82% by 2025Online Sales Penetration at 82% by 2025Online Sales Penetration at 82% by 2025
Electronics Electronics Electronics Electronics salessalessalessales
Apparels Apparels Apparels Apparels & Accessories sales& Accessories sales& Accessories sales& Accessories sales
Media and EntertainmentMedia and EntertainmentMedia and EntertainmentMedia and Entertainment1111
2011201120112011 2025202520252025
24%24%24%24% 60%60%60%60%
15%15%15%15% 38%38%38%38%
Top Product Top Product Top Product Top Product CategoriesCategoriesCategoriesCategories
54%54%54%54% 82%82%82%82%
76%76%76%76%
85%85%85%85%
46%46%46%46%
40%40%40%40%
62%62%62%62%
18%18%18%18%
OnlineOnlineOnlineOnline NonNonNonNon----OnlineOnlineOnlineOnline OnlineOnlineOnlineOnline NonNonNonNon----OnlineOnlineOnlineOnline
Source: Frost & Sullivan Analysis
Apparels Apparels Apparels Apparels & Accessories sales& Accessories sales& Accessories sales& Accessories sales
Food Food Food Food & Beverages sales& Beverages sales& Beverages sales& Beverages sales
15%15%15%15% 38%38%38%38%
5555%%%% 25%25%25%25%
$0.55 Trillion $4.3 TrillionTotal Online Retail SalesTotal Online Retail SalesTotal Online Retail SalesTotal Online Retail Sales
Health/Wellness/Beauty Health/Wellness/Beauty Health/Wellness/Beauty Health/Wellness/Beauty salessalessalessales
Home Home Home Home & Garden sales& Garden sales& Garden sales& Garden sales 7%7%7%7% 15%15%15%15%
4444%%%% 22%22%22%22%
Total retailTotal retailTotal retailTotal retail 5555%%%% 19%19%19%19%
85%85%85%85%
95%95%95%95%
93%93%93%93%
96%96%96%96%
95%95%95%95%
62%62%62%62%
75%75%75%75%
85%85%85%85%
78%78%78%78%
81%81%81%81%
$11.8 Trillion $23 TrillionTotal Total Total Total Retail Retail Retail Retail SalesSalesSalesSales
1Books, Music and Videos
Retailers to Shrink Store Size by 15Retailers to Shrink Store Size by 15Retailers to Shrink Store Size by 15Retailers to Shrink Store Size by 15----20% by 202020% by 202020% by 202020% by 2020
15%15%15%15%----20202020% % % % smaller smaller smaller smaller
BigBigBigBig----BoxBoxBoxBoxSmallSmallSmallSmall----BoxBoxBoxBox
88
Examples of Small Format Stores in United StatesExamples of Small Format Stores in United StatesExamples of Small Format Stores in United StatesExamples of Small Format Stores in United States
WalWalWalWal----Mart Mart Mart Mart ExpressExpressExpressExpress City TargetCity TargetCity TargetCity Target Tesco Fresh ‘n’ EasyTesco Fresh ‘n’ EasyTesco Fresh ‘n’ EasyTesco Fresh ‘n’ EasyBestBestBestBest----Buy MobileBuy MobileBuy MobileBuy Mobile
Source: Frost & Sullivan analysis.
Era of Era of Era of Era of ContractionContractionContractionContraction
Bricks and Clicks: Impact of Bricks and Clicks on Store FormatsBricks and Clicks: Impact of Bricks and Clicks on Store FormatsBricks and Clicks: Impact of Bricks and Clicks on Store FormatsBricks and Clicks: Impact of Bricks and Clicks on Store FormatsRetail Formats Are Becoming Smaller and Unique With More Emphasis Being Placed on the
Concept and Urban Location of the Store
100000
120000
140000
Av
era
ge S
tore
Siz
e (
Sq
ft)
Club Warehouses
Hypermarkets
Store Format Average
Size
Grocery Store: Small market for
basic groceries
8,000
Convenience Store: A small
store selling basic items and
over-the-counter medicines
10,000
Supermarket: Large-size grocery
and basic items
80,000
Era of ExpansionEra of ExpansionEra of ExpansionEra of Expansion
Evolution of Retail Formats, Global, 1970Evolution of Retail Formats, Global, 1970Evolution of Retail Formats, Global, 1970Evolution of Retail Formats, Global, 1970––––2012201220122012
9
0
20000
40000
60000
80000
100000
Pre-1970s 1970s 1980s 1990s 2000 2010 2011 2012
Av
era
ge S
tore
Siz
e (
Sq
ft)
Grocery Stores
Convenience Stores
Supermarkets
Club Warehouses
Concept Stores
Express Stores
Club Warehouse: Large store
selling only bulk quantities (e.g.
Sam’s Club)
100,000
Hypermarket: Large stores
combining a supermarket and a
department store (e.g., Carrefour
in UK; Wal-Mart Supercenter in
United States)
120,000
Concept Stores: Small- to
medium-sized manufacturer
stores (e.g., Apple)
50,000
Express Store: Small
convenience stores (e.g., Wal-
Mart Express)
12,000
Source: RetailNet and Frost & Sullivan Analysis.
in China Plans 1000 Augmented Reality Stores. Car Retailers Can use this Technology for building Pop Up Stores in
Airports, Events or other places to market new models
“Unlimited Yihaodian” stores (1,200 square meters) use unused city spaces and stock around 1,000 items.
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Future ofFuture ofFuture ofFuture ofRetailing in the Retailing in the Retailing in the Retailing in the
Automotive IndustryAutomotive IndustryAutomotive IndustryAutomotive Industry
Future ofFuture ofFuture ofFuture ofRetailing in the Retailing in the Retailing in the Retailing in the
Automotive IndustryAutomotive IndustryAutomotive IndustryAutomotive Industry
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Evolution of Bricks and Clicks Model in New Car RetailingEvolution of Bricks and Clicks Model in New Car RetailingEvolution of Bricks and Clicks Model in New Car RetailingEvolution of Bricks and Clicks Model in New Car RetailingRetail Retail Retail Retail Model Will Evolve From a Single/Multiple Channel to an Integrated Cross Model Will Evolve From a Single/Multiple Channel to an Integrated Cross Model Will Evolve From a Single/Multiple Channel to an Integrated Cross Model Will Evolve From a Single/Multiple Channel to an Integrated Cross
Channel Channel Channel Channel ModelModelModelModel
Conventional dealership modelConventional dealership modelConventional dealership modelConventional dealership model Online car Online car Online car Online car configuratorconfiguratorconfiguratorconfigurator
Google searchGoogle searchGoogle searchGoogle search Mobile AppsMobile AppsMobile AppsMobile Apps
Bricks (preBricks (preBricks (preBricks (pre----2000)2000)2000)2000) +Advent of Clicks (+Advent of Clicks (+Advent of Clicks (+Advent of Clicks (postpostpostpost----2010201020102010))))
Source: Frost & Sullivan analysis.
Interactive StoresInteractive StoresInteractive StoresInteractive Stores(motion sensor displays)(motion sensor displays)(motion sensor displays)(motion sensor displays)
Mobile StoresMobile StoresMobile StoresMobile Stores((((Ambient mobile retail)Ambient mobile retail)Ambient mobile retail)Ambient mobile retail)
Flagship storesFlagship storesFlagship storesFlagship stores(modern retail)(modern retail)(modern retail)(modern retail)
The Future The Future The Future The Future ---- Bricks and Clicks (2015 and Bricks and Clicks (2015 and Bricks and Clicks (2015 and Bricks and Clicks (2015 and Beyond)Beyond)Beyond)Beyond)
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OEMs to invest in flagship stores in major cities to boost brand image
In-store, online and mobile to integrate creating a ‘Omni channel’ shopping experience for
2011201120112011Before Before Before Before ClicksClicksClicksClicks
2015201520152015After After After After ClicksClicksClicksClicks
Macro Macro Macro Macro to Micro Implicationto Micro Implicationto Micro Implicationto Micro Implication
Flagship stores
Single-Channel Auto Retail Omnichannel (click based retail)
Big-box FormatCar Showrooms
As automotive retailers adopt the bricks and clicks As automotive retailers adopt the bricks and clicks As automotive retailers adopt the bricks and clicks As automotive retailers adopt the bricks and clicks approach, showroomsapproach, showroomsapproach, showroomsapproach, showrooms will reduce in size, retailing will become will reduce in size, retailing will become will reduce in size, retailing will become will reduce in size, retailing will become
omnichannel, and marketing increasingly digitalomnichannel, and marketing increasingly digitalomnichannel, and marketing increasingly digitalomnichannel, and marketing increasingly digital
In-store, online and mobile to integrate creating a ‘Omni channel’ shopping experience for new car buyers
M-Payment Users to increase by 16 percent exceeding the 1 billion mark by 2025
Single-Channel Auto Retail Omnichannel (click based retail)
Car loan financing at dealerships Online Leasing /Finance
New Marketing Solutions through new ‘social’ and interactive platforms at public places using kiosks
TV ads and Campaigns Social Media and Digital Campaigns
Source: Frost & Sullivan analysis.
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Evolutionary Vs. Revolutionary Approach to eRetailingEvolutionary Vs. Revolutionary Approach to eRetailingEvolutionary Vs. Revolutionary Approach to eRetailingEvolutionary Vs. Revolutionary Approach to eRetailing
Evolutionary Approach(Bricks and Click Hybrid Approach)
Revolutionary Approach(New Omni Channel Model )
DefinitionApproach followed by established brands in the market who already have a “bricks” network
Strategy followed by new market entrants without established network - leverage the online model to attract customers
Consumers Mostly positioned to existing customer baseAttracts internet savvy customers - early adopters of eRetailing industry, Gen Y or even baby boomer generation
Source: Frost & Sullivan analysis.
Attracts internet savvy customers - early adopters of eRetailing industry, Gen Y or even baby boomer generation
Volume salesLow volume sales through eRetailing and webstore concepts e.g. Audi City by Audi, Smart car sales via Taobao mall in China
Limited volume sales through eRetailing and flagship store strategy to create product awareness and enhance sales e.g. Tesla stores, BMWi cars exclusively to be sold online
Futuristic View
Traditional OEMs to promote eRetailing for most of product line (following success of present day online car sales of niche variants)
Entire process associated with the lifecycle of the product will be online, both sales (Buying process, Financing, Insurance) and after sales (Service checks, booking etc.)
The Dealership of the Future The Dealership of the Future The Dealership of the Future The Dealership of the Future –––– The Unlimited Urban Digital The Unlimited Urban Digital The Unlimited Urban Digital The Unlimited Urban Digital StoreStoreStoreStore
“UNLIMITED”
STORE
Social media
integration –
Sharing of
Information on
Blogs, Twitter, Faceb
ookUrban meeting
Point
Virtually
Unlimited
Retail Space
Unlimited Model
Display
Infinite
Configurations
SOCIALLY
CONNECTED
Real-time
Customer
Feedback Forum
Images and logos are only for representation Source: Frost & Sullivan analysis.
PERSONALISED
CUSTOMIZED
Tablets/Gesture
Recognition, Holog
raphic Projection
Global Live
Brand Shows
Retail Space
Configuration
Preference
Storing &
Sharing across
Devices
Virtual Vehicle on Board
Experience
Urban
Cyber Store Customer
Relationship
Managers
Personalized and
Unique
ConfigurationsDIGITALLY
INTEGRATED
Digital Vehicle
Launches
‘Customer 360’
Fully Digital,
Retail-Style Cyberstore
One-stop Experience
for Entire Model Range
Case Study : Audi City Digital Car ShowroomCase Study : Audi City Digital Car ShowroomCase Study : Audi City Digital Car ShowroomCase Study : Audi City Digital Car ShowroomAudi to open 20 digital stores bringing further innovations like simulators , holographic Audi to open 20 digital stores bringing further innovations like simulators , holographic Audi to open 20 digital stores bringing further innovations like simulators , holographic Audi to open 20 digital stores bringing further innovations like simulators , holographic
technology and connecting stores globallytechnology and connecting stores globallytechnology and connecting stores globallytechnology and connecting stores globally
Gamification, Augmented
Reality Offers Tailor-made
services
Specially Trained Dealer
Personnel Interactivity
Flagship Store
Highly personalized
customer dialogue
Images and logos are only for representation Source: Frost & Sullivan analysis.
1. YES2. NO1. YES2. NO3. MAYBE
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Case Study : Audi City Digital Car Showroom:Case Study : Audi City Digital Car Showroom:Case Study : Audi City Digital Car Showroom:Case Study : Audi City Digital Car Showroom:Audi sees a huge change in both hard and soft KPIsAudi sees a huge change in both hard and soft KPIsAudi sees a huge change in both hard and soft KPIsAudi sees a huge change in both hard and soft KPIs
70% of customers bought an Audi without a test drive70% of customers bought an Audi without a test drive70% of customers bought an Audi without a test drive70% of customers bought an Audi without a test drive
• 70% increase in new car sales
• Increase in optional equipment sales - 15 to 20% of vehicle price
• Average transaction price higher than in average dealership
• High acquisition of first time Audi buyers
• Decline in average age of customer
Hard KPIs
• Decline in average age of customer
• Sales consistent across all models and full line up
• 70% of buyers buying cars without test drive
• Traffic into dealerships very very high (expected)
• Average time spend by customer at Audi store much higher than conventional dealership
• Better quality leads and easier follow ups through integrated social media strategy
Soft KPIs
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Structure of a Future Channel Network in A Mega CityStructure of a Future Channel Network in A Mega CityStructure of a Future Channel Network in A Mega CityStructure of a Future Channel Network in A Mega CityThe Flagship City Store to have a ‘halo effect’ creating a future hub and The Flagship City Store to have a ‘halo effect’ creating a future hub and The Flagship City Store to have a ‘halo effect’ creating a future hub and The Flagship City Store to have a ‘halo effect’ creating a future hub and
spoke model, becoming the centre of the universespoke model, becoming the centre of the universespoke model, becoming the centre of the universespoke model, becoming the centre of the universe
Current Structure Typical Premium OEM
(2013)
Future Structure With The Flagship Store
(2020)
19
X
Key Takeaways on Future of Car RetailingKey Takeaways on Future of Car RetailingKey Takeaways on Future of Car RetailingKey Takeaways on Future of Car RetailingEverything from the product to the inEverything from the product to the inEverything from the product to the inEverything from the product to the in----store experience can be customised and personalised store experience can be customised and personalised store experience can be customised and personalised store experience can be customised and personalised
by the OEMs to offer by the OEMs to offer by the OEMs to offer by the OEMs to offer realrealrealreal----time customisation tools time customisation tools time customisation tools time customisation tools to their customersto their customersto their customersto their customers
20 percent of the dealership space will give way to digital technology like
About 100 Flagship stores to be opened by OEMs globally by 2015/16
About four million new cars globally expected to be sold online by 2020.
Online vehicle parts purchasing is expected to grow multifold.
Vehicle servicing is expected to benefit from audio-video report format.
20 percent of the dealership space will give way to digital technology like Gamification, Augmented Reality and 3D technology.
1. Conventional dealership
2. eBay, Amazon or other on-line hyper market3. City centre digital flagship store4. OEMs web-site (ordered and financed on-line)
21
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Future of Urban Mobility 3.0 Event – 19 and 20 June 2013
2 Day Event with First Day hosted in House of Parliament as a Parliamentary Debate
http://www.urbanmobility.gilcommunity.com/
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Contact Contact Contact Contact InformationInformationInformationInformation
Sarwant SinghPartner & Practice Director, Visionary Innovation
Research Group and Automotive & Transportation
(+44) 2079157843
Sarwant SinghPartner & Practice Director, Visionary Innovation
Research Group and Automotive & Transportation
(+44) 2079157843
Julia SainiDirector Growth Consulting, Automotive &
Transportation
(+44) 2079157850
Julia SainiDirector Growth Consulting, Automotive &
Transportation
(+44) 2079157850
25
Katja FeickCorporate Communications, Automotive &
Transportation
(+49) (0) 69 7703343
Katja FeickCorporate Communications, Automotive &
Transportation
(+49) (0) 69 7703343