Mercedes Cuts Dealers in Europe, Starbucks Leaves Russia, Oh ‘SNAP’s Earnings

May 24, 2022
It’s a brand-spanking-new Tuesday to make some trouble as we take a look across Auto Retail, marketing, and all retail this morning. From big moves in Europe that give us warning, to the consumer mindset regarding social media ad platforms, we’re leaning in with Auto Dealers so that we can all lean-into our teams and communities today.
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Mercedes cutting Dealerships and transitioning more into and ‘agency’ model in Europe

  • Will cut 10% worldwide and 20% in Germany ISO fewer large showrooms in ‘mature’ markets’
  • Agency model major changes means fixed pricing and OEM owned inventory
  • OEM executes the financial transaction
  • Take Away: Although legislation and lawmaking are significantly different in the US, studying this situation is beneficial for US Dealers as we navigate and shape the developing ‘normal’

Starbucks is permanently pulling out of Russia

  • Opened the first of its 130 Russian stores in 2007
  • Will continue to pay its 2000 employees (partners) for six months
  • Other companies considering divesting or pulling out altogether include Marriott, Burger King, and Yum Brands (Pizza Hut, Taco Bell, Pizza Hut)
  • Take Away: Business changes and decisions need to be made, but you can always choose to take care of your people

SNAP issues revenue warning noting a faster than expected market deterioration

  • Since late April, "the macroeconomic environment has deteriorated further and faster than anticipated. As a result, we believe it is likely that we will report revenue and adjusted EBITDA below the low end of our Q2 2022 guidance range,"
  • Just last month forecasted 20-25% revenue growth and says they are still growing YoY, but did not disclose specifics
  • "Like many companies, we continue to face rising inflation and interest rates, supply chain shortages and labor disruptions, platform policy changes, the impact of the war in Ukraine, and more,"
  • Take Away: Short term marketers only deploy direct response. Time and data shows that those who keep a steady diet of brand-first marketing in the mix gain market share. This includes Auto!

New font, who dis’? Instagram executes a brand refresh

  • New gradient to express vibrancy
  • New font ‘Instagram Sans’ is a mix of pixel perfect and hand drawn to communicate Insta’s heritage
  • Marketing to look “content - foreward” to celebrate creativity, simplicity and self-expression

Paul Daly  0:25  

What's up, troublemakers? I'm in Minneapolis, Minnesota at V con 2022 at US Bank Stadium trying to bring all this goodness back to the automotive industry. This is a conference around web 3.0. think blockchain cryptocurrency and guess what? At first glance, you might think all it's just a bunch of people having fun. This is a bunch of savvy entrepreneurs learning how to operate in the new world that is upon us. Not only we're talking about consumer experience transactions security in a way that I haven't heard at all, in automotive, guess what? It's going to be important to our lives as retailers, and as business people and as entrepreneurs. Yeah, there's a lot of fun stuff going on to a lot of great activations, and a lot of great ways to have a conference. Look, I think all of us are sick of the same old conferences in automotive. So I'm going to steal everything I can from all over here, bring it back to Kyle on the team, so we can bring it to you very, very soon. Just wanted to bring some of this energy back to you and let you know that there's gonna be a lot more information coming soon. And there's no way automotive should be the trailing indicator, we should be the leading indicator in retail. Yo, let's start off going. We talked this early this morning. We're like, we're really ready for tuesday. Talking about changes in Europe Starbucks's out of Russian Oh, snap, snaps a little trouble. Go to people who isn't who I need, they stopped

Kyle Mountsier  1:44  

feel like when they see tightening down the hat. I don't know what it is about it. But it's like it just has to be. Right.

Paul Daly  1:52  

Like there's like adjusting your helmet.

Kyle Mountsier  1:54  

There's an element of play that's required after hearing and seeing that that video and what we are planning what we're doing what I what we're encouraged about around asotu and around the automotive industry. And it's just that like, like, alright, gametime. Let's

Paul Daly  2:11  

go. It's like a quarterback right? They grabbed their facemask, and they just shifted on their SNAP in the morning. We saw our podcast stats this morning, and you were like somebody found the podcast yesterday, we've had some random days where all of a sudden, just hundreds of new downloads hit in one day, meaning someone found it or multiple people found it, and then went back and listened to, you know, several episodes at once. And we are again tracking our biggest month ever in the podcast, or even on last month, we increase podcasts, listen to 20%. And right now with seven episodes left, we're already even with last month. So I am excited that people are excited

Kyle Mountsier  2:50  

about I want to thank the listeners, the people that come every single day that either watch or listen to the podcast. Like it's encouraging just to know that there's someone on the other side saying, hey, there's some valuable information. We love communicating with you. We get a lot of emails, so and just encouragement and feedback or questions. We actually got one last week on the email. And on the podcast where it's like, Hey, I had a had a thought about something that you said, and I might push back on that or I might encourage you in this way. And so email us at crew at a cio.com we actually read those we respond to them. And we want to hear about like, what are your thoughts on what we're talking about? Because a siloed conversation is no conversation at all. That's right.

Paul Daly  3:32  

It isn't. It's an echo chamber and video that you just saw that we played was from my time at V Con last week. We talked about it a little bit yesterday. And you know, we have a tendency Kyle to get in trouble when we start talking about what we believe in. Because Because yes, Eric, we are with you strap up and buckle up. He says it's going to be a great Tuesday ride, no doubt. You know, we tend to get in trouble. And people ask us to explain what we mean by that when we have the pushback t shirt. Liza is like can you explain what that means a little bit? Right? Because it's not, it comes across as aggressive. Actually, I tend not to wear that shirt on when I fly. Because I don't want people to label me. Like someone it's like I dare you to push me Oh, no, no, but and the pushback mentality is like, hey, there are barbarians at the gate. We need to gather together so that we can kind of lean in as a group and move forward. Right? It's not necessarily pushed back. It's like let's not get pushed around by these market forces. Let's instead like in you know, resolve to do good together and move forward. So in that last video when you know I'm like I think every I said I think everyone's sick of the same old automotive conferences. What we mean by that is tired, right? Like getting a little bored. It's getting a little stale, right? It's been the same way for 20 years, maybe more than 20 years. And our hope in changing it up and bringing a soda con to the table and like trying to expand everybody's horizons, meaning that if you do run another conference, did you hear that system noise? No. Good. I'm all self conscious now. But if if you do run another conference, it's not our intention to like crap on you. It's our intention to call you forward and saying, like, make yours better, right? Yeah. Because we can't like we can't get only 100 at our 100 people

Kyle Mountsier  5:23  

at one conference. That's that's only a little bitty part of the industry, right? And so we want everyone to kind of update. You know, I was thinking about this. I was like, interestingly enough, whenever you get we get close to a conference, this conversation always stirs up of like, what are you excited about of the conference? Right? And everybody always go, I want to see this person in this person in the keynote or in the breakout session. I love Kevin Frey. Everyone's like, I always love Kevin fry. Fry. We did Kevin fries coming to a soda con.

Paul Daly  5:54  

Right. But you knew, but he's a diamond medallion holder, he's gonna naturally laugh forever. He hears that. Go ahead.

Kyle Mountsier  6:02  

But what what always comes back to is like, well, I love just being around the people and seeing the people. And that's what I really go to these things for, for engagement for the night after party. You're all that type of stuff. We we were starting to think through like what if people actually wanted to be at the event? What it was like, no, no, no, I don't want to do here. I want to be over

Paul Daly  6:25  

here. I want to be all right about this.

Kyle Mountsier  6:30  

Right. So that's, that's what we're trying to spark and encourage is like, no, what if people actually wanted to stay at the thing that there was so much engagement and activation? It provided all

Paul Daly  6:41  

the other stuff? Yes, exactly. That's what we're working on. And by the way, we have like 30 calls lined up this week with potential collaborators. By the way, we're done with sponsors, no sponsors at this event, we don't let them know you're going to put that on, it sounds really expensive. It is going to be really expensive. But we're looking for collaborators, we're looking for people who are willing to throw in their ideas and their energy and not just pay for their name on a banner, or just pay to just stand there behind their table and say, Can I scan your badge, right? Like, no, we don't want any of those people. And if you're tired of being those people, then it's time to be different people. So we have 30 calls lined up this week with potential collaborators, industry partners that are like, Yeah, we feel the same way you do, and we're ready to throw down. Let's get to it. If you want to be a collaborator, again, hit us up to the email at crew at a sotu.com and pay maybe there's a spot for it. Okay, that's why we're so excited. We're so excited. You can tell but we're excited. Yesterday was a day for us. When Kyle said to me this morning on our first call. He's like, I don't want to have days like yesterday, as much as possible. Right. And the reason he said that is because some days like us, Gary Vaynerchuk language that's clouds and dirt, clouds vision, this is what we're doing. This is where we're heading dirt. This is what we have to do to get there. And it was like man yesterday, was all up in the dirt

Kyle Mountsier  8:02  

all up in the dirt. It was like blocking and tackling task management, like people manage HR. Yeah, all of that's necessary, right? And everybody knows that about their business, that all of those things are necessary about doing business. And we have to do them. But sometimes they can feel just like yep, checked off a task. Yep. decided on whether what holidays we're going to be off as a company, right? And it's like, yeah, we have to do those things. But for visionaries for entrepreneurs is they're just like, have to go forward more. And so yeah, we're just talking about

Paul Daly  8:32  

that vision. Right. That's the that's the drains unless you know where it's heading. So like, everyone's got that stuff. Let's talk about a little bit of news.

Kyle Mountsier  8:39  

Let's get into it.

Paul Daly  8:41  

Oh, you sent me this, like, why don't you kick off this

Kyle Mountsier  8:43  

one. I got this message like three times yesterday. And then Steve Greenfield posted it. And I think actually a little over a week ago, Brian benstock was coming back from Europe and kind of gave some insight into this that this was happening. But But Mercedes has actually come out and stated that they are going to be cutting dealerships worldwide. So 10% worldwide, and 20%, specifically in Germany, which their German automaker, obviously. And they are looking to go with less with fewer large showrooms. So going more delivery mindset, they actually have have said like they want to go agency model over a franchise model. So if you know what agency model is, it's really how like brands like Apple implement their distribution strategy. So you get the product, you get a flat fee, you you have standardized pricing. So here's your pricing, here's the here's the dollar amount you get per sale, and then you have to execute the delivery model. And what's interesting is that the agency model still exercises the after sales service experience in that agency. So there's still a necessity for some level of of grassroots or ground level community impact, but it takes away that franchise level impact and so As the OEM is actually doing the front the the transaction. And so Mercedes is saying, like worldwide, we're pressing into that, which is concerning, but also an encouragement to dealers to be heads up about the way that your business is operating. Right. So there's a lot there. We could talk

Paul Daly  10:20  

a lot, we could unpack that for an hour for sure. The the element, I mean, obviously, European laws are a lot different regulate regulatory fight. Like it's all different in Europe, which is why Europe has always been kind of like, oh, that couldn't happen here. Right, because of the way laws are made. And like that's true, right? There's a lot of different legislative process, different laws in places that is more protections, however, and lobbying NAD and assuring active and for sure landscape, really advocating for the dealers. But this is definitely something to look at as an indicator of like, what things could come across the table. What ideas and thoughts could come across the table. Because even when you start thinking about the give and take when I when I this is the first time I've ever like thought through the agency model in automotive, I was just like, Okay, well, the OEM owns the inventory. Okay, you know what I mean? Like, there's certain things that seem like they would get a lot more efficient, if all of a sudden the OEM has a vested interest in you only having the right inventory on the lats or being able to move inventory around. So I'm just starting to think of like, okay, there's probably going to be some level of implementation of some of these thoughts and ideas and some iteration in the US at some point. So for me, it got me thinking around like, okay, let's not, let's not demonize everything, let's be open minded, and just think about what elements could be borrowed, right, could be hybrid implement, implemented. So obviously, very different. I think like Mercedes saying this, they do understand something very clear is that direct connection with the consumer is incredibly important. They sexually said it in the interview, they said, This will increase our direct connection with the consumer, meaning we will understand them better. Right. And so when we tie that back to us industry, it's like, no one understands their consumer better than dealers at the ground level. Again, that is the advantage, that will all be the advantage. Don't let that skip by

Kyle Mountsier  12:14  

you. That's the that's the encouragement, don't let it slip by you. Because if you just think that like doing transactions, and being done with it is going to is gonna keep you afloat, like you have to maintain customer relations, lifetime lifecycle management of a customer, and understand your community at a very, very in depth level. So being involved in community activities in, in, in chambers in all of that type of chambers of commerce, and understanding the way that your community lives, operates and breathes and integrates within your business is absolutely necessary for you being a vital part viable part of the distribution network of the OEMs.

Paul Daly  12:53  

Never when they say never outsource your core competency. There you go, that should be your core competency, I think, across the board, every dealer and that should be your core competency. Yeah, got a little global news who's staying in Europe for a minute, or over over across the pond for a minute. So Starbucks just announced that they are pulling out of Russia, they opened their first of 130 stores way back in 2007. And they've just, you know, decided like a lot of companies, similarly to McDonald's to say, hey, we're going to pull our business out of Russia because of what's going on and how it's going on. They did however, say that of our 2000 employees, two, they call them partners, 2000 partners, they're going to after they officially pull out they're gonna continue to pay them for six months to give them time to transition and find something else. So some other companies are divesting as well and considering pulling out like names like you know, Marriott that would be huge one. Burger King yum brands which is like Taco Bell, Pizza Hut, KFC, you know, all the health food. I've heard people say like, yes, you're about to become the healthiest population on the planet.

Kyle Mountsier  14:00  

Well, what's actually interesting about like, Burger King, McDonald's and yum brands, they actually have healthier foods worldwide than they do in the US. So if you ever do they really Yeah, it's pretty wild. Yeah. Like you like you go eat a McDonald's burger in in, in Asia, and you're actually getting one of the healthiest burgers you can get. I know. I didn't know that. Well.

Paul Daly  14:22  

Nice. Well, look, I think that you know, we don't spend too much time on this story. We just like to keep our head up what's going on in retail and across the world. Our takeaway for this is that basically, look, businesses change. business decisions have to be made. If you're in a dealer and industry partner, you know, sometimes you have to move people around. Sometimes you close departments, sometimes you shift, right? But that doesn't mean you can't always, always, always, always take care of people. treat them with dignity. Go and dig a little deeper to see how you can help them transition because I guarantee you everybody else in your organization is always watching and you can do a lot for your company culture by letting people know Oh, that they'll never be surprised without being completely taken care of. Yes,

Kyle Mountsier  15:05  

exactly. Yeah, a couple of Go ahead care for your people, and they'll care for your care for your business trends.

Paul Daly  15:11  

I see a trend in today's stories. So, next story, a lot of a lot of auto dealers advertise on Snapchat, right, owned by Snap Inc, they issued a revenue warning, saying, and it's not gonna be as good as we thought it was going to be. And that sent kind of everybody into a tizzy. No one knows exactly what what is actually going to be the result of that. But let's just last month, they were like, Yeah, we're pretty confident we're gonna see a 20 to 25% growth, which is sizable, right? And they're like, whoa, whoa, just a month later, like things change that they adjusted their EBITA their shares fell 31% and kind of drugged down alphabet and Amazon and Facebook. And and you know, and everybody kind of blamed snap for this. You know, they they, they quoted the CEO, I don't have his name in here. It says like many companies, we continue to face rising inflation and interest rates, everyone feels that supply chain shortages. I don't fully understand how that applies to snap, and labor disruptions, platform policy changes and the impact of the war in Ukraine. It sounds like they just kind of read the newspaper, I

Kyle Mountsier  16:15  

think, yeah, I think they read the newspaper put a bulleted list together and then and then explained a way Yeah, supply chain shortages. Sales Team is, is is bad, right? Yeah. Right,

Paul Daly  16:25  

right. Let's be honest, let's

Kyle Mountsier  16:27  

tell them what, what really is happening right now.

Paul Daly  16:29  

I mean, they could I guess, I'm thinking about a little more, right? The people who advertise, you know, definitely their company, if there's no nothing to sell, or no revenue, maybe that's what they're kind of citing indirectly. But they just kind of like balled it all. But no.

Kyle Mountsier  16:44  

Let me just throw this out.

Paul Daly  16:46  

I can already see this. This is like an Instagram reel in the making. Go

Kyle Mountsier  16:49  

ahead. Because here's the thing. Back when the pandemic started, it was like, all of this fear of like, nothing's gonna happen. Nobody's gonna buy anything. Everything's crashing to the ground. And like a month later, we were like, Come on, guy, calm, man. Like, let's do a thing, right. And all of a sudden, the automotive industry is like,

Paul Daly  17:11  

kicked full high year better than ever, right?

Kyle Mountsier  17:15  

We've been talking about this, like recession might coming inflation going up, you know, taxes not coming back, like they thought they would for about a month and a half now. Yep. What if we all just said, you know, what, like, What if every company in the world was just like, Why? Why are we listening to the news again?

Paul Daly  17:33  

Because if they did this two years, why don't we just like, press go on the gas, and just see what happens and just see what keep our heads up and react to the game?

Kyle Mountsier  17:43  

Because I think it might be really good if we did that, like let the private sector and commerce and retail drive the economy, like, instead of like fear mongering, I'm just like,

Paul Daly  17:55  

Yeah, I mean, I'm gonna go too far here. There's a printing, there's a printing of money issue. Let's be honest, we all know where inflation comes from, really, a business and an industry cannot create inflation, only the government can create inflation, period, because they're the ones that print money. So that's hard to get away from. But I fully agree with you. If we stop as a society at large paying so much attention to the news and the narrative, I bet we'd be a lot more successful and more without a doubt. But hey, it gives us something to talk about. When we talk about other stuff.

Kyle Mountsier  18:31  

Talk about one more fun thing. Let's talk about oh, yeah, we have this

Paul Daly  18:35  

new font, who does? We should we should be great. If there was enough of this news, we can do a segment called new font who this right but Instagram, our beloved Instagram just released a brand refresh yesterday, you can click through it in the show notes from looking at but they're introducing a new font called Instagram Sans, right. So there's no more of this like an Instagram real looking just like a tick tock real, because everybody uses the same font. It's an interesting font, I put it back on the screen for a second. It really is. This is an interesting font. And you look at these letters, and it's a mix of what what a designer called pixel perfect design, right? It's not hand drawn. It's very, you know, smooth and consistent, but it's also his hand drawn elements. And it interesting,

Kyle Mountsier  19:18  

they did like interesting, and oh, and it's very interesting to kind of it like shocks your brain just a little bit in like, Wait, what am I looking at in that letter or that, you know, or in that level? I mean, it's just it's a very interesting font. And it's a little bit you know, actually we were talking about this yesterday, how a lot of new design coming out is very like how do we match whimsy with professional and I think that they're trying to balance that is a good yes, I

Paul Daly  19:50  

didn't make that connection. Even some of the letters if you look at it a little closer, they actually connect, right like there'll be two two O's or an r and an E, and they'll connect. I mean We'll see, right the public has has really an opportunity to shoot this one down if it doesn't like it, because people just won't use it. But I think it's a cool way to distinguish, you know, what you're looking at, I think it's a pretty clever play. Instagram also talked about a few other things in their brand refresh. They refresh their gradient in their color scheme to be more vibrant, and all their marketing is going to be very creator centric, right. So you're talking full screen images with minimal minimalist, simple design over it to highlight the self expression that can be part of the platform.

Kyle Mountsier  20:33  

I think it's smart, it goes back to their roots and says, like, we're gonna set ourselves apart based on the originality of creators because, you know, there are multiple platforms that have taken and from their initial kind of core and exploded from it. And I think then going back is going to engage like the right people to be creating on the platform.

Paul Daly  20:55  

I love it. I love the pivoting and the shifting. Don't count him out. Don't count man. Don't count us out. Don't count automotive out. This is don't count him out Tuesday. We just rebranded it, hey, whatever it is, you know that you get to control the things you can control. So don't listen to the news and all that just care for people.

Transcribed by https://otter.ai