As we all learn to navigate through the myriad of changes thrust upon us by the pandemic, every industry has been forced to re-evaluate how they do business, and automotive retail is no different. Fortunately, the idea of adapting to change is not a new concept in the automotive industry. From the time the first “horseless carriage” was brought to Canada in 1907, to the oil embargo of the 1970’s resulting in better fuel efficiences, to car-sharing services, and most recently the push to provide an all-electric lineup, the industry has always adjusted and reinvented itself to suit the needs of the market.
As with most retail, the focus has shifted to convenience and, particularly now, limiting the in-person time we spend shopping. This change was already underway, and the pandemic has only caused it to accelerate. Potential buyers have had the ability to build their dream car on a website for some time, but the practice of booking a test drive or service appointment online has also now become the norm. Dealerships have shifted from being the place you go to learn about a new vehicle to being the place you go to pick up or service your car.
Now, this doesn’t mean the dealership itself becomes irrelevant - quite the opposite. Dealership design helps create the experience that every potential customer will have and essentially sells them on their brand choice. What’s new is that a one-size-fits-all scenario is no longer as successful in today’s environment.
Auto malls with large lots and multiple dealerships converging in a single geographic area have been the norm found in suburban areas and this model has been very successful there. Seen where land is more affordable and maintaining a small footprint is not as important, this format draws potential buyers to a specific area of town that allows them to experience a wide variety of product through a collective of brands. The area itself becomes a destination.
Moving to a denser urban environment makes this auto mall format less effective as property is much more cost prohibitive and harder to come by. Here we’re seeing the industry shift to placing dealerships into the direct path of the potential customer. This can look like smaller experience-based locations, possibly within a shopping mall such as Tesla’s location at the Yorkdale Shopping Centre, or within the podium of a multi-storey building on a busy downtown street. This leased space approach places the dealership in daily view of potential customers as they pass by. It also significantly lowers the dealer's initial capital investment and increases their speed to market.
These smaller locations focus more on the experience of the customer and can be designed to reflect nuances within the neighborhood they reside in to build a sense of community. Meanwhile, a centralized service centre and body shop could be conveniently located offsite and serve multiple neighbourhood dealerships. A benefit of the more compact urban dealership model is that the potential customers will build a relationship with the brand through a variety of passive experiences that are not as easily facilitated within a destination dealership model.
While having a car dealership within a mall is not a new concept, the idea of focusing on the experiential components of the retail space and de-emphasizing the service garage facilities is. The days of driving from dealership to dealership are fading and customer loyalty to a specific brand has become second to the experiences that are had and shared while car shopping. Reimagining what a dealership is for and focusing on what the customer experience will be is more important than ever. Whether you’re adding VR technology so customers can test drive their dream car or adding a playground for young families to use while their car is serviced, the focus for automotive retailers should be on understanding the evolving needs of your customer base. Creating innovative environments and locations that help reinforce brand identity flows naturally from there, and these types of spaces will help modern dealerships thrive in this age of e-commerce.