hy ironically NEV players restore the importance of Physical Automotive Retail in China.<\/p>\n\n <\/div>\n\n \n\n <\/div>\n \t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
Almost precisely two years ago, we at Berylls China took a close look on how \u2018Physical Automotive Retail\u2019 would need to change in order to defy the \u2018Retail Apocalypse\u2019. We recommended an approach based on flexibility, moving on from all-in-one-formats. We showed new ways to get it right: enhance customer experience, increase market exploitation, and as a bonus, keep facility costs manageable.<\/p>\n
So, a swift reaction by German OEMs should be top of their CEOs\u2019 agendas, in order to win back customer approval for their electric models and compete more effectively with China\u2019s NEV start-ups. The following sales numbers in 2021 show the dramatically changing composition of China\u2019s NEV market:<\/p>\n
But then COVID came. And it came to stay. And while it stayed, it changed, without mercy, all aspects of both our personal and professional lifestyles. As we all know, this was the era of any technology serving remote interactions and there was no exception for Automotive Retail. For instance, during the first lockdowns in China, Automotive retailers quickly established virtual showroom tours and virtual \u2018on-demand\u2019 test drives using short video snippets to introduce their cars while customers could not actually pay them a physical visit.<\/p>\n
Of course, it is not all COVID, and people\u2019s lifestyles were anyways changing in an increasingly digitalized world. Convenience and flexibility became top issues for consumers. Many OEMs had recognized this already ahead of the pandemic and proclaimed that the digital channel\/online domain will become the primary customer journey channel, triggering any interaction between OEM and customers. Also, digitalization of the entire customer journey plays an essential part on most OEMs\u2019 journey towards direct sales.<\/p>\n
So, it seemed to be all set, that the once primary physical channel will (finally) lose its importance and become only a supporting channel of the digital domain, reduced to pure fulfillment purposes (e.g., payment is still done at dealerships in China).<\/p>\n
Not surprisingly, this narrative has its followers, and we see that OEMs globally (not only in China) try to focus on the digital part. As a side effect they are forgetting to exploit the potential which the physical domain still offers with its emotionalizing and differentiating unique customer experiences. OEMs start huge transformation programs towards digitalization and dedicate large resources for online campaign management, performance marketing, lead flow management. It seems to be all about pushing the right content, online (!), to the right person, online (!), and expecting this to be exciting enough to create a strong enough interest to lead to a test drive.<\/p>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t
Dr. Jan Burgard<\/p>\n
Berylls Group CEO<\/p>\n
jan.burgard@berylls.com<\/p>\n <\/div>\n
Willy Wang<\/p>\n
Managing Director China<\/p>\n
willy.wang@berylls.com<\/p>\n <\/div>\n
Hongtao Wei<\/p>\n
Associate Partner<\/p>\n
hongtao.wei@berylls.com<\/p>\n <\/div>\n
Soleiman Mansouri<\/p>\n
Associate Partner<\/p>\n
soleiman.mansouri@berylls.com<\/p>\n <\/div>\n
Lois Yang<\/p>\n
Lead Analyst<\/p>\n
lois.yang@berylls.com<\/p>\n <\/div>\n
From our perspective, this is quite a loss as the physical channel still offers substantial power for business development, lead generation, and ultimately sales conversion. A recent Berylls analysis of customer data revealed that more than 50% of qualified leads are still generated during showroom visits. In other words, more than 50% of leads are in risk to be lost if the physical touchpoint is forgotten.<\/p>\n
Now, people tend to argue that successful new EV players are \u2018changing the game\u2019 by fully focusing on digital channels and direct sales. We would beg to differ. Matter of fact, successful NEV players in China are very fast and eager to create physical outlets in order to drive their sales (as seen in the examples of NIO and Xpeng). These players are rapidly increasing their physical footprint. And they do this not only in big cities, but also in lower-tiered smaller cities. In particular for NIO, setting up a strong physical presence is an integral part of its strategy of creating customer stickiness throughout the entire journey.<\/p>\n
Even Tesla relies heavily on physical presence. The brand operates 49 Tesla stores in Greater China. However, it has another regional footprint, focusing heavily on Yangtze Delta (Shanghai, Jiangsu, and Zhejiang Province) and Pearl Delta (Guangdong Province).<\/p>\n
Thus, it\u2019s absolutely wrong to say that NEV buyers are \u2018digital only\u2019 and don\u2019t care about a physical retail experience. Actually, they do care a lot.<\/p>\n
Nonetheless, in the advent of increasing digitalization and with the agent model on the horizon, traditional physical retail will no longer suffice as the point of sale, as we said already two years ago. It is not about building more 4S dealerships. For the physical domain to bloom and successfully co-exist with the online channel, it must change substantially.<\/p>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
Of course, incumbents have not stood still and done nothing \u2013 quite the opposite is true. First, most OEMs are adjusting and upgrading their current network landscape. For instance, they started to introduce different formats, they are making their retail outlets more attractive and luxurious, and put product experience at the forefront. This is a good first step as different formats allow outlet deployment in different geographic situations, but many more have to follow.<\/p>\n
Looking at the aforementioned dominance of the digital domain, it\u2019s clear that physical retail needs to provide full online-to-offline integration on an operational level. Currently, the digital and the physical domain are still too decoupled. Physical retail is understood as an extension of the digitalized journey to provide brand experience and emotionalization \u2013 and this is how it should act.<\/p>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
Here are few very operational examples and thoughts that support our opinion. Customers should always have the opportunity to download the APP in the retail store and store personnel should advise customer to download the APP, e.g., for more personalized experience and information. Customers should always be encouraged to check-in at the retail store via the APP upon entry. Customers should have the possibility not only to book test drives, but also have access to in-depth product and technology information and be alerted when certain models are available for experience and testing. APP information and retail store backends should be fully integrated, so that seamless experience and personalized recommendations can be provided as all customer data (incl. online and store visit history, product preferences etc.) are stored centrally and are accessible to all retail outlets. And finally, as customers nowadays don\u2019t only buy into a product, but more into a lifestyle (or often more accurately, a desirable representation of a lifestyle), retail outlets can become \u201ccommunity centers\u201d and \u201cowners\u2019 clubs\u201d offering dedicated and relevant experiences for customers and their affiliates.<\/p>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
And finally, no technological transformation of the point-of-sale is worth the effort, if one doesn\u2019t close the loop on the human and cultural level. This requires a change of mindset of the dealer personnel to, well, \u2018retail\u2019. Instead of applying the traditional sales-driven mindset, the new mindset needs to be service-oriented and customer-centric; it can no longer push products, it must include listening to and understanding customer needs and be at the side of the customer for the entire lifetime. Only with such a mindset change, a true transformation of physical retail operations can happen.<\/p>\n
Of course, such a change cannot happen overnight, and the targeted new reality of \u2018Automotive Retail\u2019 needs to be supported by, just to name a few<\/p>\n
It\u2019s probably good news that COVID was not able to change it all \u2013 or maybe it made it even clearer that a virtual test drive can\u2019t replace the thrill of an actual, real-world vehicle experience and that no video explanation can replace touching, feeling, and smelling a brand-new car.<\/p>\n
Brick-and-mortar dealerships remain important as they are going through strategic, operational, and cultural transformations to stay relevant. This is the Physical Automotive Retail Renaissance.<\/p>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t Dr. Jan Burgard<\/p>\n Dr. Jan Burgard (1973) is CEO of Berylls Group, an international group of companies providing professional services to the automotive industry.<\/p>\n His responsibilities include accelerating the transformation of luxury and premium OEMs, with a particular focus on digitalization, big data, connectivity and artificial intelligence. Dr. Jan Burgard is also responsible for the implementation of digital products at Berylls and is a proven expert for the Chinese market.<\/p>\n Dr. Jan Burgard started his career at the investment bank MAN GROUP in New York. He developed a passion for the automotive industry during stopovers at an American consultancy and as manager at a German premium manufacturer. In October 2011, he became a founding partner of Berylls Strategy Advisors. The top management consultancy was the origin of today’s Group and continues to be the professional nucleus of the Group.<\/p>\n After studying business administration and economics, he earned his doctorate with a thesis on virtual product development in the automotive industry.<\/p>\n<\/div>\n <\/div>\n <\/div>\n\n Willy Wang<\/p>\n Willy Lu Wang (1981) joined Berylls Strategy Advisors in 2017. He started his career participating in the graduate program of Audi focusing on production planning. After stations at another strategy consultancy as well as being the strategy director for a German Tier-1 supplier, he is now responsible for the China business at Berylls.<\/p>\n He has a broad consulting focus working for all clients in China, whether they are JVs, WOFEs or pure local players. He is also responsible for the development of AI and Big Data products dedicated towards the Chinese market further strengthening the Berylls End-to-End strategy and product development capabilities.<\/p>\n Wang studied Electronics & Information Technology with focus on Systems and Software Engineering and Control Theory at Karlsruhe Institute of Technology.<\/p>\n<\/div>\n <\/div>\n <\/div>\n\n Hongtao Wei<\/p>\n Hongtao Wei (1988), Associate Partner, joined Berylls Strategy Advisors in 2015, an international strategy consultancy specializing in the automotive industry, where he focuses on all issues related to the Chinese automotive market. In addition to Western manufacturers in China, his clients also include Chinese OEMs, investors, provincial governments, and state-owned enterprises.<\/p>\n He has profound expert knowledge in the areas of sales and aftersales. His other areas of expertise include digitalization, connectivity, and turnaround management.<\/p>\n He studied Sinology, Economics and Statistics at the Ludwig-Maximilians-Universit\u00e4t in Munich.<\/p>\n<\/div>\n <\/div>\n <\/div>\n\n Soleiman Mansouri<\/p>\n Soleiman joined the Berylls Group in March 2022. He has set his focus on customer-centrist solutions, gaining experience in Product- and Corporate Strategy, Consulting with the focus on the OEM business. His Automotive career started with digitalization of the Aftersales of an US OEM in Europe and took him to China to the leading German OEM group, heading the Product and Portfolio department. He gained intensive consulting experience with one of the top management consulting firms and as a freelance consultant. Before joining Berylls, he was the Director Go-to-Market of one of the top Chinese OEMs supporting their entrance into the EU market. Soleiman is a graduated M.A.\/MBA in International Business from the University of Hamburg and ECUST\/Shanghai.<\/p>\n Soleiman joined the Berylls Group in March 2022 and is part of the Asia-team, responsible for supporting all players in a successful market entrance. Also, provides profound expertise of customer-centric Product Marketing and Portfolio Strategy approaches to our clients.<\/p>\n Soleiman is expert in customer-centric Product-\/Portfolio Strategy, Go-To-Market, Corporate Strategy and Entrepreneurship.<\/p>\n<\/div>\n <\/div>\n <\/div>\n\n <\/div>\n Quo Vadis, China: The renaissance of Physical Retail in Automotive? Munich, July 2022 W hy ironically NEV players restore the importance of Physical Automotive Retail in China. Almost precisely two years ago, we at Berylls China took a close look on how \u2018Physical Automotive Retail\u2019 would need to change in order to defy the \u2018Retail […]<\/p>\n","protected":false},"author":22,"featured_media":20345,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[85],"tags":[],"class_list":["post-36274","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-featured-insights-en"],"acf":[],"yoast_head":"\nAbout the authors<\/h5>\n <\/div>\n \n