In the second part of our series on retail innovation, Canadian auto dealer visited the Hyundai Rockar store inside Europe’s largest mall in London, England to experience what some say could well be the future of automotive retail
You have to be in the right frame of mind to really appreciate what’s so transformative about the car shopping experience at Hyundai Rockar’s retail outlet in Westfield Stratford City in downtown London, England.
That’s because when you first set foot inside the modest retail store — located on the ground floor of Europe’s largest urban shopping centre — it doesn’t really stand out from any of the other 350 shops located there.
In fact, it fits in perfectly, sandwiched between the Virgin Media store on one side and a high-end tea shop on the other, and smack dab in the middle of dozens of other globally-recognizable retail brands.
And that’s exactly the point.
Many manufacturers are testing new retail models to learn if their next generation of customers will embrace buying cars at malls the same way they buy their smartphones, shoes and handbags. So far, it seems they will — and in droves.
The company’s founders say they set out to disrupt the car buying process when they started Rockar. Simon Dixon, the company’s CEO, built Dixon Motors into one of the largest dealer groups in the U.K. He sold it in 2004, and decided he wanted to come back to the industry to “turn car buying on its head.”
The whole vibe of the in-store and online marketing experience positions the company as a kind of “anti-dealership.” Rockar advertises that it is offering “a new way to buy a car” — including entirely online — and also something that sounds fun called “car happy payment plans.”
The Hyundai Rockar store we visited in Westfield Stratford City is a bright, well-lit, cheerful place, filled with non-commissioned Rockar Angels who can answer any product questions you might have — but will never put any pressure on you to buy a car.
“To be honest, the Rockar Angels don’t even need to like cars,” says Paul Stokes, CEO with Hyundai Rockar in an exclusive interview with Canadian auto dealer. “We try to recruit personality. We want people who are passionate about us.”
“Customers seem to love us,” says Oliver Walters, Leader, Hyundai Rockar, Westfield Stratford City as he led the Canadian auto dealer team through the store. Walters says the company carefully studies the feedback from customer exit surveys, and they generally get 10 out of 10.
“The comments that come in are about people that we employ in terms of how nice they are, but also the whole experience from start to finish,” says Walters. “They are able to come to the store, browse for free and not feel that pressure. Then they purchase on the website and come back to be greeted by one of our Angels as opposed to a store salesman, and they can pick up their car with ease.”
The Rockar Angels are also paid retail wages. While the company didn’t discuss how much they were paid, a recent recruitment advertisement was offering the jobs for £9.13 an hour for full and part-time positions, which is above the national minimum wage of £6.70 an hour — but still less than it would cost for a commissioned salesperson in a dealership.
You won’t find any service advisors, technicians, or F&I managers in this dealership, either. For customers with complaints or warranty questions, they are directed to an after sales centre accessible by phone or email.
So, those are the people running the dealership. What is the store experience like?
The facing of the store consists of a large Hyundai logo opposite the word “Rockar,” and inside there are only a handful of Hyundai vehicles on display. The walls are lined with ever-changing digital messaging touting product offers showing the monthly payments for various vehicles.
Visitors sit on comfortable, modern looking stools and browse oversized touchscreens built into ergonomically designed tables while they can access the company’s website to follow the simple steps emblazoned on the dealership’s walls: “Browse, Try, Like, Buy.”
And buy they do. Within six months, Rockar became the third largest Hyundai retailer in all of the U.K. The company says as many as 60 per cent of their customers leave the store and complete the purchase online later.
“I would say 90 per cent of people have done their research before walking into the store,” says Stokes. “Having said that, there are also a lot of customers who have come in and make an impulse buy. They look at the low deposit, affordability of monthly payments and they just go for it.”
Rockar doesn’t care where you buy the vehicle, and the vehicle buying experience on the company’s website is identical to the one on the touchscreen customers access in the mall. Building the software tools and setting up the validation needed to go from virtual tire kicking all the way to vehicle delivery is a big part of the Rockar innovation.
But as anti-dealership as it might appear on the surface, the company says it still operates with the same dealership franchise agreement as other U.K. dealers. “We have exactly the same distribution franchise agreement. From a sales perspective, we have exactly the same margin structure as any other Hyundai dealer in the U.K. We aren’t any different,” says Stokes.
The store does let its customers do lots of traditional dealership things, such as trading in their used vehicle, selecting and configuring a new one, test driving it, financing it, servicing it, and picking it up. For a small delivery fee, a customer can have a vehicle delivered to their house, freshly detailed and a Rockar Angel provides a proper vehicle delivery in their driveway. But Rockar has delivered vehicles all across the U.K., including to Scotland.
For vehicle service, customers park at the mall, drop off their keys, and go shopping. The service is done at a service centre operated about a kilometre away from the mall in Bromley-by-Bow.
It they want a test drive, customers can do that too from a special section of the mall’s parking lot located a short elevator ride up from the store where a full range of models are always available.
“We call it e-drive. You can drive for up to an hour, unaccompanied. We make it really simple for them. They book online, we hand them the keys and they go out on their own. If they have any feedback we help them, or they can continue their journey at home,” says Walters.
Data collection is key
Rockar — and Hyundai — are also able to gather extensive data about their customers. They use facial recognition software to tag anyone who walks in store as male or female, and it can take a rough approximation of their age, and know whether they’ve been in the store before. This information is compiled, analyzed and fed back to Hyundai where they can assess trends.
They can also instantly assess the impact of the offers on digital signage and if it’s not getting the results they expected, they can change it instantly.
The mall-based approach appears to be attracting new buyers to the Hyundai brand.
Hyundai’s average customer in the U.K. is 57. At the Rockar store it’s 39, and the average age of female buyers is 34. “58 per cent our customers that buy are female. Why? It’s just the environment. It’s not threatening and it’s not intimidating,” says Stokes.
Can it be profitable?
Industry experts, and even some Hyundai dealers we spoke to in Canada, have their doubts that the dealership operating the way Rockar has set it up can make money.
They only sell new vehicles, accept customer trades and send them directly to wholesale, they finance vehicles, but don’t offer insurance products — often a high source of margin for dealers.
Stokes says their research found salespeople had better knowledge of insurance products than they did of vehicle financing.
“I can tell you why; it’s because they’re paid more from it so it’s in their interest to learn more about it. You’re paid more in selling the paint protection, which is a crazy situation to be in. You are working for a car manufacturing company.”
Stokes said they couldn’t divulge finances, but indicated they were growing, expanding and looking to add even more outlets. The company announced it is also opening a Rockar Jaguar Land Rover store in October in the same mall.
In a recent interview with AMOnline, Dixon said the company is now in talks with other manufacturers to expand the Rockar model, and is looking to work with other dealerships who want to license their innovative software systems that enable online vehicle sales.
Reaction from local Hyundai dealers?
But how do other franchised Hyundai dealers feel about having a Rockar store open near them? “When we opened, there was a bit of a pushback, like ‘why are you doing this?’” says Stokes.
“Talk to any Hyundai dealer in this area now in our surrounding geographical area and they will tell you they think this is great.”
Stokes says nearby Hyundai dealers report they have increased their own market share. “Is that a coincidence? I don’t know. But what that says to the manufacturers is that more people are seeing their product.”
One thing driving automotive retail disruption in Europe is the shrinking number of dealerships, with many more projected to close in the years ahead.
Industry research by ICDP suggests as many as a quarter of European dealerships could close by 2020, so new forms of vehicle sales and distribution will be necessary.
If the Rockar model works in Europe, can it work in Canada? What type of battle can we expect for the first OEM that takes a run at establishing it in a mall near you?
Time will tell.