Auto Revolution 2019: As Digital Retailing Picks Up Steam, Automotive Dealers Need To Initiate Strategic Planning

“Digital strategies do not have to assume an all-or-nothing situation. What we are seeing is that different consumers make different commitments to how far they take the digital path toward a vehicle purchase. The key for automakers and dealers -- along with other automotive stakeholders -- is to make sure a digital presence is available to meet consumers wherever they want to be in the process.” — Chris Sutton, J.D. Power

While most car buying transactions are still closed on site at dealerships, there is increasing evidence that consumers are exploring their digital options across the buying options. It is for this reason that it is not too early to begin planning now to prepare for the emergence of digital retailing in the automotive sector, says Chris Sutton, Vice President of Automotive Retail and J.D. Power in a podcast interview for journalists covering the Auto Revolution 2019 conference Las Vegas on October 23-24.

“It is a trend that is just emerging, but we are already beginning to see automakers, dealers, and strategic partners recognize that there's a segment of customers who want to do more of their car buying business through digital channels. Whether consumers are selecting a vehicle online or negotiating -- and even arranging financing -- on websites or mobile apps, it is a segment of the market that is growing. Collectively, the industry needs to figure out how it can meet the needs of those people,” says Sutton.

Chris Sutton, J.D. Power

Chris Sutton, J.D. Power

The rise of digital retailing in automotive should come as no surprise. There is hardly any aspect of consumers lives today that is not affected by online shopping. As online experiences mature, and consumers develop higher levels of trust in their ability to execute complex transactions online, it is only a question of time before it becomes an important part of the vehicle purchasing experience.

“Cars are complex big ticket items for most consumers. A lot is at stake when you purchase a car or truck. That explains why dealerships have been able to hang on to their traditional processes and relationships with consumers for so long,” explains Sutton.

But that is all beginning to change.

“Several factors are a play. The relationship that consumers have with their vehicles is different today than it was a generation or two ago. Today's customer might be a little more dispassionate about their vehicles. For many young buyers vehicles are seen as more of a commodity compared to older customers. This attitude removes a major barrier to exploring buying options online,” he says.

Digital Retailing Not an “All-or-Nothing” Proposition

The bigger point, however, is that the digital retailing trend is evolving through the car buying process.

“Digital strategies do not have to assume an all-or-nothing situation. What we are seeing is that different consumers make different commitments to how far they take the digital path toward a vehicle purchase. The key for automakers and dealers -- along with other automotive stakeholders -- is to make sure a digital presence is available to meet consumers wherever they want to be in the process,” Sutton says. 

Digital strategies should start by creating convenient and intuitive research tools for early stage buyers exploring their options. This should be linked to the ability to research, compare and contrast ancillary products and services -- such as finance and insurance offerings -- that can be bundled with a potential purchase.

“I would be surprised if over the next few years, mastering these basic digital aspects of the car buying experience do not become differentiators -- and eventually competitive requirements -- for the industry. Dealers that are able to execute this aspect of the business better are going to be able to establish a competitive advantage for themselves in the market,” Sutton predicts.

Digital Retailing Action Plan

To prepare for this digital future, Sutton is advising his clients to take a proactive approach to strategic planning to lay the foundations for success.

“You don’t have to boil the ocean right away. I think a good first step is to establish immediate objectives within reasonable timelines to make progress toward opening digital channels of engagement. I think it's fair -- from a dealership perspective -- to establish some competencies and address a couple items at a time over a 12 to 18 month period,” he says.

As the industry develops its digital strategies, it will be critical to ensure that it is integrated with their physical facilities, and the processes that are in place when customers -- who started their buyting journey online -- enter the dealership for an in-person visit.

“The integration from a technology perspective is ultimately what's going to drive the best customer user experience. Without that, I think you're going to have a frustrated customer. Dealers have to figure out how to establish continuity and visibility in the process so that they are able to see what the customer has done online and incorporate that into the ultimate buying experience.

For more information including registration for the J.D. Power Auto Revolution 2019 event you can visit:

https://www.jdpowerautorevolution.com/ehome/autorevolution2019/about