Omnichannel is the new DR, Mazda On Top, & Target Goes Bigger

November 10, 2022
We’ve got that Friday feeling as we ask the question if ‘omnichannel’ is the next retail auto buzzword. We also talk about Mazda’s claim to the top spot in 3 vehicle segment IIHS categories. One brand is also returning to brick and mortar with their customers.
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  • Omnichannel is quickly becoming the new buzzword as top dealer groups tout most customers begin or complete some of the deal online.
  • Brian Deboer, Lithia CEO, stated Driveway sales accounted for 4% of total revenue
  • Transactions are including test drives less and less
  • CEO David Hut of Asbury predicts 40-50% of all transactions will be completed through their Clicklane property in the next 2-3 years
  • Acceleride, Group1’s platform that utilizes the Roadster tool, saw 3 of 4 transactions in the group use some portion of the online journey in Sept.
  • All groups note that it is not just the online capacity, but also the compelling brand propositions surrounding the transaction.

  • Mazda brand proves to be the safest vehicles on the road, yet again, even with new testing procedures put in place.
  • Small Car performance is now predicated on a new side test crash rating
  • Brands like Subaru, typically highly rated, are having trouble keeping up with the new safety standards
  • Both the CX-5 and the CX-9 also got the “Good” tag, one only given to 2 vehicles in each of those segments
  • Currently only Mazda has proven it will be able to obtain the IIHS Top Safety Pick+ rating in 2023

  • With all the talk about retail going online over the last few years, Target is making its new stores a lot bigger
  • Includes 20k sq/ft more space, more open design, and a backroom expansion focused on fulfillment
  • “Target’s stores are at the heart of how we deliver for our guests, whether they browse the aisles, shop online or stop by for same-day services like Order Pickup and Drive Up,” said John Mulligan, executive vice president and chief operating officer, Target. “Guests and team members tell us they come to Target because they feel inspired, connected and welcomed.

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Paul Daly  00:28

Yo, we got that Friday feeling November 11. Today we're talking about is omni channel the new buzzword in automotive mods is crushing the safety. I was like that was a pun, but it wasn't intended and it just made myself laugh. It just got you. T. Because safety thing. Yeah. Okay, sorry. We're gonna talk about Target's larger store format as well. Welcome to Friday. Hope you're feeling like we are. Yeah, we will

Kyle Mountsier  01:06

call wheels up. How about that? No,

Paul Daly  01:10

I know, I'm excited to be let's not just wheels out by myself. I'm bringing the whole family to Palm Beach. So I know there's some residual weather, right like the hurricane hit. But it was a really big system. So it says it's moving up the coast right? There's definitely like, a lot of winds. And, you know, I asked you yesterday I was like, Can you fly over a tropical storm now? You're like, I don't really think so. So we'll we'll see how the plane goes. And, you know, we'll throw some peanuts and some iPads at the kids and we'll see if they notice.

Kyle Mountsier  01:40

That's all you gotta do. That's all you got it. But but there's no way

Paul Daly  01:44

over. I'm excited to live that Nashville life with direct flights everywhere. So I'm taking a direct flight today. So I already feel like Rockstar. There you go. You do because my overweight kids. I'm not even feeling a direct flight. I'm not doing a direct flight tomorrow with the fam.

Kyle Mountsier  01:58

I'm just gonna be angry when I get done. I do. Yeah.

Paul Daly  02:03

Yeah, well, I mean, look, the layover I have is not without much effort, or hopping in the car. We're driving from Syracuse to Philly to fly direct from Philly because I would rather drive for four hours in my own car under my own control than have to have a layover where it is not under my control. You can miss flights and it's different when you know when you're traveling by yourself. You're like this, please make a plane somewhere.

Kyle Mountsier  02:25

We're just gonna we're gonna lean in on this just real quick. So I feel like we got to do a little therapy. Have you missed a layover flights before? Has that happened in your life? Is that like,

Paul Daly  02:33

Is that No, I've never missed the layover flight. However, I have run full speed at least a mile and a half. At many airports. I shot like dude, you know, family speed family speed is way different than ball speed. Right? Like, I don't mind excusing yourself to the front of the plane, right? Just literally taking off full sprint, right out of the gate. Like come blowing out of the gate like the Thai fighter did out of the Deathstar. Right. That's how I felt and I'm never doing that with a family. You're just done. So yeah, I don't think it's therapy. It's just like that could happen. That's never gonna happen. Because I'm never gonna let that happen with a family. Love it.

Kyle Mountsier  03:10

Oh, man, we got some stuff to talk about today, we get on the you know, I love this first one. Because I tell you what, over the last couple of years, there's been I was actually thinking this morning didn't make the LinkedIn post, I was thinking about this, you know, we've gone through this, like, I feel like 17 1819 was all attribution. And then it sped up and it was like, you know, get your Google Analytics, right. And then it was digital retailing and then yeah, you know, go GA and all this type of stuff and snuck in there, but we never really explored it was this whole idea of omni channel and now we're hearing that kind of like, come come into the ecosystem. Again, we're hearing people going okay, I we still have this digital retailing thing, but it's a lot more about omni channel and automotive newsroom and the story. Yesterday, that was kind of all about how a lot of the public's are looking at their retail solutions. And all of them have done these like larger market brand plays specifically in use cars. And and they're looking at how omnichannel retailing and how much people are engaging with their property. So a lot of the public CEOs are saying, hey, look, more and more people are if not completing the deal online, they're actually doing some level of the deal online. So Brian de Bourgh Lithia CEO, and as you know, Lithia has driveway said even though only 4% of their revenue is is completely attributed to driveway where they are seeing people test driving less and less that they are storing some level of their transaction online or an or going in store than happening online. So it's an interesting like, you're starting to see people recognize that it's not just DRS everything digital retailing is everything. It's that it's a piece of A puzzle, you know, yeah, but that, you know, I

Paul Daly  05:02

heard somebody talk about it. Um, you know, you know, Joe pastel, right? Oh, Joe. Yeah. So what was it was for a while was he was his title head of product? What was he a cars inspired? Yeah, no, I can't remember. But he's got this he's got this mentality and he says when she tried to give everybody some context on like the level at which he operates, he said, the next generation of transactions is going to be about we and we love this word here and so do world collaborating with the customer, how they want to buy the car, I like and I think I'm omni channel and collaboration really worked well together because you think of like the the need is never identical, like how the customer prefers to go through the journey. And you know, when you look at Lithia, and you listen to a Brian says about like, hey, it was like, I can't remember like 37,000 transactions right online. And very few of them involve test drives. Right there a few of them evolve test drive, that really is an indicator that this omni channel approach. Like some people want this, some people want that and you better be able to deliver it all.

Kyle Mountsier  06:10

Yep, few more data points. So as Barry came out with click lane, right in the kind of like early, early pandemic timeline. So CEO David Hunt said they, they're predicting 40 to 50% of all their transactions will actually be completed through their click Lane property in the next two to three years accelerated which is group one similar platform, they utilize the Roadster tool to power accelerated, you know, as Barry's utilizing? Yeah, since I said roadster, I gotta say, as varies using the Google Google product suite, driveways, utilizing a lot of the auto phi, you know, API's and so you see all of them kind of utilizing a tool, but they saw three, so accelerated. So three out of every four transactions across the group utilize some portion of online journey, which is impressive because they have not pressed into 100% of their stores yet. Interestingly enough, all of the CEOs kind of had this feeling like, hey, it's not just the online capacity, but it's the it's the whole brand story that we're putting around this transaction or this opportunity that's actually contributing to the adherence to more online interactions across the customer base.

Paul Daly  07:25

Which is I mean real savvy because as we know, loyalty on a used car purchase is so much less than a new car purchase. Yeah purchase so you better have a great brand story and everything you do throughout the customer experience regardless of what happens Oh, I was trying to find my way to a segue there.

Kyle Mountsier  07:44

Speaking of great brand stories segue so coming from Mazda for eight years of the end of my retail experience, I know that Mazda first of all just has a look, if you really look into it, and you look at the words that they use, like Toyota and Mazda both do this really well right. Mazda has things like gym by E tie and you know just some really cool like brand stories the way they perceive cars but one of their prevailing brands stores over the last four or five years has been that they've consistently ranked extremely high on i H S Top Safety Pick and even top safety pick plus across the brand now they don't have to deal with trucks or anything like that. So they go from small car all the way up to large crossover utility vehicle. But just recently, the IHS has changed the way that side impact procedures have gone so the way that the the side impact comes in the speed at which it attacks the vehicle and they had already noted that the CX five and the CX nine CX five was the only one in its segment to actually get the good rating the CX nine was one of two vehicles to get the good rating and just recently now the Mazda three sedan and Mazda three hatchback both have gotten the good rating overall the only two of 11 vehicles tested in the segment to get the ratings so far crazy right like that's true that have always been in that good range yeah are now in the average rating and like Volvo have anything in that in that game so it's an average and then like even Kia is in the poor rating so wild what like people are just not

Paul Daly  09:29

so I wonder what the changes were? What are the changes do you know?

Kyle Mountsier  09:33

So the major changes the way the side impact crash rating is happening so you can see actually we're running a video right now like it's a pretty intense like it was moving T bone like wham right in the side of the vehicle. It's moving let's watch

Paul Daly  09:48

the inside crash test dummies all the airbags deploy.

Kyle Mountsier  09:52

Yeah. So just like how the neck how the body how the head impact and what the you know, the sensors around Those are impacted. So yeah, monster coming in strong?

Paul Daly  10:04

No kidding. Well, speaking of coming in strong segue. All right. So over the last years, I mean, five years, I'll say. But more specifically over the last three, and the last one year, we talked about the, like the death of retail, the death of in store in person, retail, people don't want to go in, people want to order online, people want to have it shipped, shipped to their house. With all that talk, target is starting to talk about its new concept store that it's been researching for years. And it's bigger than their existing stores.

Kyle Mountsier  10:38

Did you say bigger? Paul, you mean, establishment is going bigger

Paul Daly  10:44

20,000 square feet more space, they're saying it's going to have more of an open design. The back room, actually now this is where it starts to make sense. As I was like, read through this article eight, the back room is going to be a lot bigger, the space is going to be used to carry a wider variety of products in every store. And there is a massive focus on click and pick life right? ordered online, pick it up and they say you know the, the quote from the CEO says Target stores are at the heart of how we deliver for our guests, whether they browse the aisles shop online, or stop by for same day services, like order pickup and drive off. This is the EVP and chief operating officer he said guests and like this, and team members tell us they come to target because they feel inspired, connected and welcomed. So they're like, Okay, Amazon, you got to think we're gonna keep all of it in the store and make it really easy to get it same day pick it up. It makes sense. At first I was like, what? And then I was like,

Kyle Mountsier  11:43

Well, here's the thing. First of all, like Target does, they have a brand feeling that is attached to them first, like people that shop at Target, say, I shop at Target that is a through line.

Paul Daly  11:55

But also Walmart has a brand feeling to

Kyle Mountsier  11:59

you just different, I made videos about that. But not

Paul Daly  12:02

as many people say I shop at Walmart.

Kyle Mountsier  12:04

No, that's not like I shopped at Walmart, you know that nobody shot that on a corner. But it's interesting to me because they're really recognizing that they've got this network of fulfillment centers. And instead of just like creating hubs, or creating warehouse space, like Amazon has had to do, or you know, the little drop up situations, it's like, hey, look, we've already got a place that if we just get better at carrying a wide variety of products, a deeper level of inventory, like we can service those customers at a faster rate, because they're already driving past, they're already engaging with the brand, they know that it might actually be a quicker way to get the product that they're looking for. So it's a really smart move. And not just that, but Rican concepting. The entire inside retail experience, I think as Gen Z especially as we've heard, is returning to brick and mortar retail. If they're thinking about that as a big play to like, hey, look, we're going to reimagine the retail experience. It's an opportunity to grab massive market share.

Paul Daly  13:00

I'm personally a big fan of the brick and mortar retail experience. I love it too. I love it. If you go and click through on the links in the article and you see the picture, they have a massive drive thru lane that almost looks like a tollbooth, it's so long. And like two cars deep packing people in I will say this for all the target executives that are listening to this show. Train your order pickers to stay out of my way. Try to stay out of my way. I can't tell you how it because it's I almost feel like I'm back at home because I have a bunch of like young folks looking down at a screen and not really paying attention to what's going on around them because they got their big cart in front of them. And like the last I was the target literally one ran into me. One was blocking the middle of the aisle and then like I was like holding all the stuff and they were just standing they weren't paying attention because they're trying to pick their order. I don't know maybe their quota sign also it's

Kyle Mountsier  13:53

also target Kroger and anyone else that isn't Publix that are listening to the show. Take a look at the Publix app and how you tell it you're coming and once you pull up that Publix employee is already rolling out of the

Paul Daly  14:07

dough that's waiting. I don't know. We don't have public sector but the Wegmans people can look at the Publix thing too. Hey, well, that was enough. I think that's enough for Friday morning. If you're not ready to go, then you're not awake. I'm about to head into the car head to the airport, Kyle's coming tomorrow. Check us out modern retail conference. We'll be streaming from there last.



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