An observation of the first week back: How was it for you?
On opening day in England at the beginning of June leads across our platform were up 108% YoY. Retailers for the most part are telling me that they are now experiencing the results of pent up demand, that had built up over the period dealers were forced to closed.
Marc Thornborough
It’s been interesting hearing the commentary from our customers about what they’ve experienced in the build up to this week and what’s changed since reopening. Many have taken advantage of the lockdown period, using it to adapt their sales processes and get retail ready, ahead of a new era of consumer expectations. Some have been quick in enabling customers to transact online and choose home delivery services prior to this week and more recently have welcomed customers back to the showroom by appointment to view vehicles or collect them. Several retailers had completely closed their business until the week prior to reopening, when they entered their showrooms for the first time to prepare their business and vehicles to meet the new guidelines before reopening.
In this first week back, I’ve picked up on 3 key observations that many of you may share. I’ve provided my view on each of these observations below.
Customers are trying to bypass safety precautions, to achieve the experience they want
Customers adopting an appointment only approach are finding efficiencies and success
Restocking is a concern for many customers
Customers want to bypass safety precautions, to get the experience they want
In the consumer research we undertook in May regarding buyer attitudes, it showed that around 40% of car buyers were uncomfortable turning up to a physical showroom following COVID-19, whilst 16% felt very comfortable in visiting a showroom. I believe this week retailers have experienced the latter group, descending upon forecourts as soon as they were able to do so. The dealers I’ve spoken to have found this bittersweet, positive in that they’ve hit the ground running and demand is high, yet frustrating when customers turn up unannounced, especially in instances where there is an appointment only policy. Many have also reported that some customers refuse to follow the guidelines and safety precautions put into place when arriving on site. Turning up with families or groups despite being told not to, refusing to wear PPE or use hand sanitiser, handling carefully prepared vehicles and disregarding the hazard tapes have all been commonplace this week. Some consumers have even offered to ‘sign a waiver’ in their desperation for a test drive without a second thought for the safety and wellbeing of the dealer.
The time and effort you took to prepare your business, your people and your vehicles must seem like a waste of time, it seems like no matter what you did, people have just turned up anyway. But I’m confident that when this first wave of customers curtails, it will be replaced by the more cautious shopper and we shouldn’t lower standards or think that the measures we have put in place don’t matter. My father is in his late 70’s. I’ve been doing his shopping for him whilst he’s supposed to have been shielding as he is in the at-risk category. Yet it seems every time I speak to him over the phone, he’s nipped out to buy a newspaper or gone to the post office. And no matter how many times I chastise him, he thinks he’s immune. My point is people have different attitudes and outlooks to the virus and it’s likely that this first wave of customers are the least apprehensive about visiting a showroom or feel they’re immune, much like my father. But we should still be aiming to deliver the assurances and safety standards to meet the expectations of the most cautious car buyers. A significant 25% of consumers surveyed told us that they would perceive more value and were willing to pay more for a vehicle, where it was clearly communicated that safety precautions had been taken by the dealer. Therefore, dealers that go above and beyond and shout about their safety measures will be the ones to benefit the most.
Appointment only success
Many retailers have been telling me about the success of their appointment only systems since reopening. Appointment only policies are nothing new but have for the most part, only been in place for smaller dealers or single site operators.
A large independent retailer with 200 cars implemented it for the first time this week. They have seen a big increase in the volume of customers transacting purely online with home delivery or opting to collect from the showroom. However, most people enquiring still want to view the car or test drive it and these customers are offered a time slot. Fortunately for this customer they have a busy pre-booked appointment calendar and buyers enquiring are finding they must wait 3 or 4 days before a slot becomes available. This is often met with impatience or fear of missing out, which increases urgency and commitment from the customer. In these instances, a deposit or reservation fee can be taken to secure the vehicle until the appointment date. So far this week, all bar one car reserved with a fee has gone on to a successful sale. They also said this policy saves a significant amount of time for them as the need for an appointment filtered out the time wasters and allowed them to focus on customers in a position to buy today.
This particular independent has had plans to implement online transactions over the next few years prior to the COVID-19 outbreak, but the period of closure has forced them to accelerate these plans. Going forward they plan to keep these new procedures in place and in their own words “Both the staff and the customers love this new way of working, so it’s here to stay”.
Even more interesting was of the 45 sales done so far this week, not one had been reduced in price or been discounted at point of sale. This is exceptionally encouraging and backs up our recent poll result from our latest dealer webinar. Where we asked several hundred dealers, now their showrooms were fully re-open, what was their short-term policy on pricing?
Our survey suggested this week that dealers were taking a sensible approach to pricing upon reopening their showrooms.
Restocking concerns
The biggest concern registered this week by customers is replacing these sold vehicles and knowing what to replace them with. Retailers can’t sell empty space but buying the wrong stock or paying too much for it, will lead to cars sitting on forecourts for 100+ days eating profit, just to fill an empty space.
So just as retailers are taking a sensible approach to pricing, it’s great to see them not panicking over stocking. As with any market following a period of closure, initial demand will be high as larger volumes of buyers enter the market at the same time. Wholesale prices will rise for a period with supply being limited but should quickly settle down to a more stable level as the market trades its way out of the lockdown.
I’m seeing more and more retailers using data and insight tools to understand what’s right for them, to back up their intuition and experience with up to date and accurate information on what to stock. Then once they know what to buy, understanding where they can buy these cars from whilst the auction halls are still closed.
My outlook beyond this week for the remainder of the year
I believe retailers right now have a window of opportunity. That wave of pent up demand is now crashing on our customers shores and many are seeing increased enquiry levels, sales and efficiency improvements in their business. But we must ask how long will this last?
No one knows exactly. Many “experts” are forecasting a downturn later this year, a looming recession when the economic impact of this devasting pandemic will really be felt. At present there’s still liquidity in the market, government financial support, interruption loans and grants, plus individuals are still receiving financial assistance with the job retention scheme. This won’t last, more and more redundancies are being announced and there will be a hangover to follow once the financial support stops. Retailers should be taking advantage of this period and preparing for any downturn, if and when that comes.
The good news is that I believe retailers have shown they can get through the worst of this, they’re resilient, adaptable and flexible, and our research shows that more people are thinking about buying cars than ever before with 54% of our users looking to buy a vehicle in the next year, while 36% want to buy in the next 3 months. The announcement this week that all passengers on public transport must wear a facemask will only strengthen those numbers as more consumers look to secure their personal safe space.
This week has proved that retailers can deliver the experience customers want. How they choose to buy from retailers in the future is the key.