As dealerships reopen for business, The Presidio Group thinks their immediate focus should be on creating an environment in which customers feel safe. Sales will follow.
“We believe in the short term there will be changes within the dealership from a safety perspective that are easily implemented without significant lead time or cost,” says Presidio president George Karolis.
Even though COVID-19 has accelerated the move to a digital dealership, bigger changes in dealership design won’t happen immediately.
Dealers around the country that Presidio regularly speaks with are focused on simple fixes to allow for social distancing, fewer touch points, and sanitization, which includes minor modifications to HVAC systems and upgrading cleaning protocols.
Changes to the interior do not require a wholesale makeover, more of a rearrangement, Joy Mitchell, CEO of Office Creations tells us. Her firm has become “active researchers” into how a dealership’s interior can be designed to be both welcoming and give customers and employees a feeling of safety, says Mitchell.
Office Creations, a workplace design firm based in Norcross, GA, follows the Japanese principle of poka-yoke, or “mistake proofing.” in its approach to making dealerships feel like safe zones for customers. In the front office, where customers interact with staff, that means forming “neighborhoods” using screens, greenery, specific furniture layouts and signage. Creating boundaries so customers won’t mistakenly wander into the wrong area is important, says Mitchell.
“Touchless” is also a popular design trend. Atlanta-based Praxis3, a leading dealership architectural and design firms, is getting requests for automatic doors at all customer entry points and even some internal high-traffic areas such as the parts area, principal Ryan Stancill tells us. And of course hands-free water fountains, faucets and other fixtures are becoming a mainstay.
In the wake of COVID-19 more consumers will want to make their entire transaction online. But a sizable number still want to visit the dealership. A recent Cox Automotive study found that while 2/3 of those surveyed preferred to do the deal virtually, 1/3 still wanted to come to a dealership. The same survey found that consumers do want to start buying vehicles again once dealerships are open and “they feel safety measures are in place.”
Employees must feel safe as well, which calls for front and back office changes. That can be as simple as changing the direction workstations are facing, says Mitchell. Much can be done using standardized products with add-ons. For instance, higher dividers between desks are another easy adjustment. The changes add about 20% to product costs, she says, adding “the cost is minimal for the safety and psychological security.” Office Creations aligns with manufacturers’ image programs, says Mitchell.
One already-hot trend in office design plays right in to the new need for social distancing – micro offices. These 7X7 spaces make an employee feel she or he has their own office and enhance safety as well. And, whether in the front or back office, easily-cleanable materials are crucial to a safer work environment. No more fabric-covered panels. Metal or laminate are easier to clean. Also, less cluttered work spaces and work station and monitor arms to keep everything off the desk make it easy for the entire desk top to be wiped down.
How permanent the need for social distancing will be is the “million dollar question,” says Mitchell. But making customers feel safe is not going to go away. The level of the dividers may not be vital in six to nine months, she says, “but the environment will be forever changed.”
Overall changes in facility design in the future may not be that substantial. While the shift to digital sales will lead to the need for fewer front-line sales people, the size of the back office won’t change significantly. Showrooms may get smaller, but they will still be necessary to display the array of models each brand has to offer. We agree with Stancill that customers will ultimately still want to come to a showroom to see a vehicle due to the size of the transaction. And we think the service department will continue to occupy a big piece of dealership real estate.
Praxis3 works with dealerships around the country on facility design, with clients including large public and private dealership groups. Many of its clients have long wanted smaller showrooms, says Stancill. “They recognize that larger showrooms don’t necessarily help them sell more cars,” he says. But that change hasn’t happened yet. Indeed, Praxis3 is working on half a dozen facilities that cover over a quarter of a million square feet including showroom and service departments, says Ryan.
The biggest disruption Stancill sees coming is electrification. That will call for a redesign of service departments. Still, big changes in dealership design aren’t around the corner, says Stancill. Dealers understand the automotive industry really well, he says, and it takes a lot to disrupt them. We agree. Though the auto retail industry will evolve, the anticipated disruption from electric and autonomous vehicles has itself been disrupted. The evolution has been slowed, and with it, the change in dealership design.
Director of Communications
The Presidio Group provides M&A advisory services through its wholly-owned investment bank, Presidio Merchant Partners LLC, Member FINRA and SIPC.