“In two weeks from catwalk to the retail store”- despite 150,000 employees, market launch speedster, Zara, have highlighted its continual strengths- the agility of a start-up and not relying solely on a well synchronized supply chain. Instead, its development is based on mature rollout skills, driven by open innovation networks and sustainable retail enablement. In order to drive digitalization in an agile manner, and ensure the commitment of retailers; how can the automotive industry learn from retailers, like Zara, and capitalize on centrally driven initiatives?
From vast changes in automotive retail, new business models, sales formats, through to digital dealerships and beyond. The launch of our blog series, “The Retail Offensive”, has discussed the most recent developments around digitalization in the automotive retail business and has identified the opportunities for manufacturers and dealers.
Whether it be robotic process automation or manufacturer-driven online direct sales platforms, the topics discussed in our blog series follow a certain sales path. Firstly, they would be implemented within centrally driven OEM initiatives, and then move onto national sales companies before ultimately ending up with the retailers. However, 70%* of these promising transformation ambitions fail. The reason is a lack of positioning at management level (63%*), insufficient employee involvement (56%*), and unstructured, slow change and rollout approaches (47%*).
Therefore, the key question of this seventh blog post is: “How can car manufacturers ensure that centrally-driven initiatives can be carried out across all three sales levels, all the way to the retailers, in a structured, agile and sustainable manner?”.
In order to successfully roll out centrally driven initiatives and secure sustainable retail acceptance, we will discuss four dimensions of transformation:
- Positioning and relevance of digital ambitions at retail level
Although manufacturers in the automotive industry are putting digitalization at the top of their agenda, the perceived urgency for change is still low at the retail level. This impacts both the culture and ways of working. The digital maturity level of only 26.4%* across German car dealerships, highlights this point. The cultural challenges can be attributed, to the lack of acceptance and support from the retailers’ executive teams. “A fish rots from the head down”, a sales manager from a dealership recently said on this topic.
And yet, the chances of success of digital transformations could be six times higher* if management’s commitment was secured. Car manufacturers, in particular, should be responsible for setting up a structured change management system across all three sales levels. This would successfully position and drive central, digital initiatives in the automotive retail sector, and include all stakeholders involved.
Most of all, this means that centrally approved target pictures would be placed in direct relevance with the retailers. Only when mutual benefits are apparent will the acceptance by management and employees in the retail sector be achieved. Subsequently this will create a fundamental foundation for sustainable cultural change and the dissolution of traditional ways of thinking.
- Agile testing of functional prototypes
The timeframe in which new centrally driven initiatives are required is becoming increasingly shorter and the pressure to innovate is rising due to digitalization. In the past, analysis, conception, tests and production used to take place in separate processes within closed, top-down led development teams. This included lengthy development cycles and committee approvals. Such a project approach has since become obsolete in today’s market.
Car manufacturers can learn from start-ups and agile giants such as Amazon, who utilize multidisciplinary teams to constantly, and quickly identify new optimization potentials and initiate them before they are ready for market. They act via open exchange networks, in short innovation sprints. Prototypes are then developed in real time and after a fast idea prioritization and concretization phase, they are tested in pilot markets and constantly improved through iterative feedback loops (“trial and error”).
This recurring pattern benefits from a rapid learning curve, due to the test and learn environment driven by end users. This means that market readiness is achieved within a very short time and initiatives can be successfully rolled out globally after the initial local adaptation and development.
This offers greater potential to integrate dealers and customers into the agile design cycle. Dealers not only have the most direct contact with the customer but can also represent end users themselves and thus, provide valuable suggestions for improvement (e.g. through reality checks for tablet-based sales in retail).
- Constant, multidisciplinary empowerment of retailers using new learning formats
Despite their front-facing position to the (end) customer, retailers are unfortunately often the last to be informed. “We hadn’t had any training to date, nor was anything on electromobility communicated to us,” the same sales manager mentioned during a joint workshop. This lack of technical expertise instantly reduces customer confidence and discredits the reputation of retailers. This automatically reduces the morale for retail staff. The figures confirm that only 20%* of dealers are satisfied with the support provided to them from the manufacturers.
Car manufacturers must promote new ways of cooperation, especially in the informative, technological and process-related retail development sphere. This applies to understanding professional empowerment in connection with products, current measures and trends as well as often neglected brand strategic impulses. On top of this, the focus should be on finding concrete ways to develop the dealers’ knowledge.
With new training formats supported by digitalization, such as digital and interactive learning platforms, retailers can be trained faster, more effectively and independent of location. Training mechanisms that are regularly updated, learned and accepted by retailers act as crucial components for the implementation of central initiatives.
- Ensuring sustainable transformation through steering systems
The biggest challenge in the context of digital transformations is sustainable manifestation. Digital transformations often fail due to the lack of ongoing drive and as an effect this makes the network involved to fall back into old patterns. This then inevitably drives up the costs. In order to prevent this, the following four aspects must be considered:
- The development of a clear, KPI-based performance measurement that can derive adequate countermeasures.
- Anchoring the centrally driven initiatives in both the goals and incentive models, thus making it clear to all manufacturing and retail employees.
- Recruitment of “change agents” on-site who guide and drive force behind the centrally driven initiatives. Field sales representatives of national sales companies are ideally suited as ambassadors of digital initiatives, as they are the existing link between manufacturers and retailers.
- An exchange platform between manufacturer, markets and retailers, to allow for continuous improvement of implemented measures and distribution of success stories, also after the rollout.
Building on this blog post, we will discuss retail empowerment and development in greater detail in our final article in this blog series.
Alan Mattapour is part of the Customer Experience Team at Capgemini Consulting. He combines management consulting experience from digital transformations of marketing, retail and sales with expertise in brand-centric service and customer engagement innovation. He has cross-industry expertise in areas such as financial services and automotive.
In Future Sales & Retail, Alan works with leading automotive manufacturers to develop targeted programs to develop the retail network while supporting the global rollout across all sales levels. Furthermore, he has successfully designed and implemented brand-centric customer ecosystem strategies within the financial services sector.