Exploring the viability of micro-outlet formats


Publication Number: Management Briefing 145

Author: Pascal Haubenreisser

Date: January 09, 2018

Tags: New vehicles, Used vehicles, Dealers, Channel strategy

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Consideration of how retail and aftersales channels are changing and will continue to change in the future is at the core of ICDP’s research, and an area we have been tracking from a number of different angles.  In this piece of research, we looked at new physical formats – micro-outlets – which in a growing number of cases have been implemented by car manufacturers in collaboration with their dealers.  Despite these usually being temporary formats, their location close to other forms of retail means that they can potentially reach higher numbers of possible buyers when compared to traditional dealerships.  This has been recognised by many players recently, resulting in the launch of a number of new initiatives such as the Opel Cayu store concept in Germany, or the Volvo Studio in Milan, opened both in the second half of 2017.  However, the location and specific fit-out required for micro-outlets translates into a high level of upfront investment, especially the outlets and their systems need to be integrated with other channels and formats.  This raises questions on the one hand over whether these outlets should have an ‘active’ selling role, and on the other hand over the extent to which OEM financial backing can be justified for formats which are usually operated by dealers.  For this research, we spoke to a number of operators, including dealers, OEMs and service providers across the EU-5 markets to gain insights, and combined this with secondary material to create a financial model to examine the preconditions for viability of micro-outlet formats.

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