Trader Tales

Litton: Now is the time for an investment in retail

6 years ago

littonAT THE height of the economic crisis, there was a forum page on Pistonheads chronicling car dealers who were going out of business on what seemed like a daily basis.

Victims were not exclusively mainstream brands – there were German casualties too – but often these were bad news stories swept under the carpet by manufacturer-brokered takeovers.

The decision by BMW to rebate their Chinese network $820m for 2014 sales volume bonus shortfalls reminds me of those dark times. No doubt Chinese dealers command greater power of their manufacturer partners, but German manufacturers in particular need to be reminded of their obligation to their network profitability.

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Franchised motor retailing stands on the edge of a precipice; we are witnessing a seismic shift in customer buying behaviour which threatens to undermine retail environments as we know them. Without dealer profitability, manufacturers risk losing partner investment in developing creative and innovative retailing environments which could counter the risk of online channels.

LeasePlan Go recently aired a television advert directed squarely at traditional franchised dealers, offering a one-stop shop monthly rental for all elements of car ownership. I visited their site and most of the high street brands are represented. If you combined their comprehensive product offering, with the zany creative of a site like Lingscars, I would genuinely fear the competition.

In these days of empty high street shops, who will be the first to bring maintained lease deals to a former Phones4U or Comet store? There is no reason for LeasePlan Go not to attack these dormant locations. Low rent, no stock, limited cost base and aggravation; car manufacturers are so desperate for the volume these sources represent, they would be hard pressed to introduce supply mechanisms to reduce the impact on retailer groups.

Product specialists are designed to cover experiential inadequacies, but their introduction is like bringing a knife to a gun fight. The time for investment in retail is now. Not just in locations, but in ideas, thinking and execution.

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James Litton

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