Six key recommendations for retailers to be thinking about now, from Daksh Gupta and Nathan Coe
In our most recent webinar, our CEO, Nathan Coe was joined by Daksh Gupta, CEO of Marshall Motor Group. Nathan kicked things off by asking Daksh to reflect on the last six months, his experiences and what the key learnings have been for Marshall. Daksh was quick to highlight, as many have, that it has been a very intense period with the team having to adapt quickly and do things they’ve never needed to do previously, such as resourcing a business with completely different structures once lockdown was lifted.
A number of key themes emerged, in particular the drive to increasing efficiency and productivity, using data to understand demand to identify opportunities and having a focus on the things you can control. Here’s six key insights from the discussion for you to be thinking about right now.
1: Utilise opportunities for better, more productive ways of working
Whilst the past few months have and will continue to be extremely challenging, Daksh was keen to focus on the positives that have been created by new ways of working that the pandemic has forced upon the industry. In particular, the move towards more appointments from customers, which has caused massive efficiencies to be created in the services department. This is something Marshall have tried to achieve for some time, but the situation has created demand for such a service to help it take off.
Daksh also reveals that a dramatic change in internal communications methods and strategies have improved productivity and communication throughout the business with the use of platforms such as Zoom and Teams. An example Daksh gives is helping to bring group heads from across the business to communicate on a more regular basis, rather than at monthly face to face meetings, which has allowed the overall business to become more agile. He also points to the use of these communication tools as a means to better communicate with all of the Marshall team, helping to create more transparency across the business.
2: Use technology to drive efficiencies and improve the customer experience
Nathan then moved on to ask how and if Marshall will continue with the business changes it has already implemented because of COVID-19. With efficiencies being key to a retailer’s operation, Daksh revealed that he will be keeping many of the changes, such as appointments and the shift in communications strategy in place in a post COVID-19 world.
When asked about the importance of new systems and technology in driving productivity he expressed his view that there is no doubt in his mind that systems will play a significant part in driving retailer productivity and customer experience. He states that “There is a lot to do on this important topic, customers hate the experience with us today because of the level of paperwork we need to complete which is driven by many external third parties, our people do as well. We need to use technology to simplify all of this for the benefit of our customers.”
3: Simplify your business and empower your own people to drive productivity
Daksh went on to talk about the volume of sales to number of sales executive ratios. He pointed out that the ratio has been declining in recent years but that in the last few months that ratio has “gone through the roof” as a result of staggering numbers of buyers coming back into the business and of course the pent up buyer demand. Nathan picked up on this, and shared an example of US based retailers which, by automating many of its processes, had increased its sales to sales executive ratio to 18 cars vs the US national average of 11 cars.
With productivity so high, Daksh is keen to make sure the industry doesn’t lose some of the learnings it’s had in the last six months. He is firm in his conviction that key to realising this in the future is by allowing line managers and general managers to do “what they are great at” rather than form filling and reporting, allowing them to manage their teams, driving enquiries and doing what is important for customers. Daksh said “we, as retailers, should do what we are good at, manufacturers are great and making cars, so let them do what they are great at”. The more retailers can do to simplify their own business’ and focus on what they are good at, the better.
4: Use data and insight to understand customer demand and behaviour to identify opportunities
Picking up on the unprecedented situation with pricing and demand, Nathan asked Daksh why he believes we have seen such a surge in demand and prices and, perhaps more importantly, does he see these factors changing in the near term. Daksh stated that everything starts with new cars as there is a downstream impact on used cars. With car factories closed for two months, supply of new cars has been low. Whilst buyers on PCP’s (the most popular way to buy a new car) who have come up for renewal from 23rd March to the end of May haven’t bought their next car, opting to continue with extensions on their finance package. This has pushed the volume of used cars coming to the market back, but still with a lack of supply of new cars in this period. This has caused a surge in demand for nearly new cars for Marshall as well as contributing to the overall surge in demand and pricing we have seen for used cars.
He points out that this is supported by Auto Trader’s pricing data which indicated a 6.1% increase in used car prices in August and a 7% increase in transaction volumes in September. Adding to the demand created by the lack of new car stock and “revenge buying” is the increase in the UK population’s savings, which has risen from £6 billion to £36 billion. This increase in disposable income for many has translated to a lot of buyers opting to upgrade to a more premium vehicle, something Daksh has seen in premium new and used car sales figures. Along with this, Daksh highlights the surge in new drivers now coming to the market driving sales of used cars. Read more about that in our analysis of new, first time drivers entering the market. All of this combined is creating the perfect tail wind for the industry right now.
5: Local lockdowns are currently having little impact on demand
The conversation then moved to the looming threat of increasing numbers of local lockdowns. Nathan referenced Auto Trader’s analysis, which reveals that these local restrictions have had little impact on sales in impacted areas. Marshall’s experience of this supports the analysis with their retailers in Leicester at the time of the local lockdown only seeing minor impacts, indicating that any future local lockdowns are unlikely to significantly impact local demand.
6: Focus on the things you can control
Looking to the near future, Daksh’s priorities for his retailers are less on a cost basis and more on driving productivity and efficiency. Key to this for all retailers is to push sales of segment two and three vehicles over time, because electrification is coming and in the next 10 – 15 years there will be increased pressure on aftersales.
The main focus on a drive to productivity and efficiency is selling more cars through the same people, which will require more desirable stock, and in particular, used stock.
Looking ahead to September’s results, Daksh reveals that the market is looking to be down by 3-4% which was surprising given all the positives we have seen with demand. However, he quickly highlights that the quality of sales has been much higher and the traditional end of month push for sales has not happened largely due to supply. With demand so high, margins are also higher, so whilst sales volumes might see a slight dip, profitability will remain high which means there is little cause for concern.
Daksh concludes with an optimistic outlook for the automotive industry by suggesting we should all focus on the things we can control…“We can’t control the economy, we can’t control COVID-19. So, what we must do is concentrate on doing brilliant things in our business, which is what we’ll do.”
The discussion is now available to watch in full, any time on demand. Click here to watch it.