Your customers are no longer yours

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This may not be what you want to hear, but it is what you need to hear. Retail customers no longer have any allegiance when it comes to shopping and buying products. None.

This goes for commodity brands as well as luxury brands. Admit it, wouldn’t you buy a Rolex or an iPad from the inside of somebody’s trenchcoat if you knew for a fact it were authentic and carried a manufacturer’s warranty? Even if it isn’t a trenchcoat, it could just as easily be an automobile trunk, swap meet, Best Buy, eBay, Amazon or RockBottom.com. In fact, many manufacturers now have shopping carts on their homepage so you can buy from them — sometimes directly or sometimes through a dealer fulfillment mechanism like Shopatron. What blasphemy is next?

Previously well-defined product channels are now being blown away by heretics willing to challenge the older formalized business doctrines. A “little guy” manufacturer with a fresh new product doesn’t need a Big Box distributor anymore to get to the market.

Worse, a “big guy” manufacturer with an expensive, low-margin product can skip the dealer entirely. The traditional methods of distribution and “push-pull” marketing to true-believers are definitely blurred and confusing many parochial brick-and-mortar dealers.

Metric OEMs are trying to convert more local followers for their brands. The recession has reduced the number of dealerships by one-third, but the actual number of franchises has not decreased, forcing a consolidation of more metric brands under fewer rooftops.

Mega-malls Emerge
This retail cornucopia means the bigger and more financially strong dealers will become multi-brand mega malls. So much for the metric mantra of single-branded dealerships and focused customer service — it didn’t work! If the Harley dealers gravitate more toward a carefully orchestrated brand experience and the metric OEMs move to the opposite end of the scale with mega-powersports centers, this leaves the independent, chain and cyberspace dealers to fill in the gaps. The Pep Boys of powersports? You may call them the “cockroaches of retail,” but they not only survive when things get tough, they thrive!

Holy cats, we are becoming the auto industry! New unit dealers are evolving to become either small and exclusive or huge and impersonal. Because customers honestly don’t care where they buy a car now, they likewise don’t care where they buy a motorcycle. Or a jacket. Or tires. Or oil. If it’s convenient, time-saving and price-competitive, customers will take advantage of it.

The chain stores have become more convenient. E-tailers are more predictive and competitive. The Internet is squeezing prices, and will continue to as long as excess products continue to be shoved into the pipeline by manufacturers who “need to keep their factories open.”

I told you it’s not what you wanted to hear. So what’s the answer for traditional dealers?

Quit waiting for the “second coming” of the Baby Boomers. Stop being traditional. Buckle down and specialize. You can no longer be all things to all people. Confess your sins, seriously face your strengths and dump your weaknesses.

“Get involved … or get out,” were the words spoken by the late John Wyckoff in the pages of Dealernews more than 20 years ago. Customers haven’t lost their desire to belong to a family. Yet in the absence of the faith in your local brand (which could have built local retail allegiance), it has become all about the money — saving money, that is.

Recycling, re-purposing, do-it-yourself, thriftiness and renewed-retro are all hot terms right now because it makes us feel unique, different and economically sensitive. The recession re-centered us away from the traditional channels, so it appears for a few years we will be seeking out new forms of moto-life where no man or business has gone before.

There is a Way
My question to dealers: Can you help us find our way in this lucre-driven wilderness? Neo-Darwinism is taking over the faith we used to have in our dealers. Now the dinosaur dealers are dying off and new smaller and more flexible business life forms are evolving.

Is your store facing the music now or are you still denying something is seriously wrong? Do you need more product lines? Or do you need fewer product lines, better floor-traffic drivers, improved customer service, superior e-blast abilities, totally renewed and convenient shopping hours, drop-shipping services, a bigger mailing list, more emphasis on P&A, more emphasis on used bikes, less emphasis on P&A or used bikes, a more functional website, pick-up and delivery services, weekly club meetings, tech seminars, and an MSF instructor hookup?

Do you need to reduce the headcount of your congregation or bring in some more evangelically-inspired employees? Look for the light now coming from a different direction than in the past.

Channel agnostic buyers will not reward your faith in the old way of doing business. Will your store see a new light, or will you get buried by the changing channels? Look to the auto industry as an example of accelerated evolution, for we aren’t far behind its rate of fragmented retail specialization. Can a franchised powersports dealership still remain all things to all enthusiasts in this day and age? Faith in the old business testaments is wearing thinner every day.

This story originally appeared in the Dealernews August 2011 issue.