Category Archives: Retailing

Tesla shall inherit the mall

Criswell predicts TeslaMondoThe good ol’ shopping mall is dying, sapped dry by Amazon et al, as countless headlines attest. But if you’ve been to a Tesla store lately, you’ve seen the foot traffic. Auto sales in general, and especially Tesla, may prove to be the cockroach that survives retail armageddon. Cars don’t fit into UPS trucks very well, and they’re hard to return for a refund, even if they make your butt look big.*

As Tesla’s model line expands and its overall company scope widens to include a host of clean energy solutions beyond cars, this may require at least some expansion of retail footprint.

Put these two trends together — withering malls but flourishing Tesla — and you’ve got a scenario where malls are no longer anchored by the likes of Saks or Nordstrom — but by Tesla. In fact, if Tesla moves to inventory selling instead of strictly build-to-order, the company might occupy much of the mall parking lot. Remember how Tesla scooped up the Toyota/GM plant at clearance-shelf pricing after GM’s bankruptcy? The same thing could play out at your local mall. It’s already starting to happen.

This will put a lot of pressure on states that ban Tesla sales. Do you want abandoned malls? Lost tax revenue? Lost jobs? Empty mall lots?

Criswell is given to rash thinking, so this might be 100% poppycock. But after a whole five minutes of analysis, it doesn’t appear so. Next up: movie theaters. They’re under pressure from Netflix et al, and they tend to have voluminous parking lots. This could be another opportunity for the auto industry in general. It might be the last brick and mortar (and asphalt) retail player.

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Tesla, if you do inherit the mall, please buy out these mall kiosks and re-assign these cretins to toilet-scrubbing duty. And after six months of stellar performance in that function, only then should you consider issuing brushes.

* Sure, someday cars will ship themselves. And if you don’t like your new car, you’ll just crack a whip and send it galloping back to its origin. But let’s stick closer to the here and now.

Fixed-price, no-haggle experiment fails

A Toyota dealership in Arizona has just learned the same lesson Ford learned in 1999. No-haggle pricing simply DOES NOT WORK. Customers don’t trust the fixed prices, and rival dealers validate that suspicion by effortlessly undercutting those fixed prices.

So how does Tesla get away with it? Well, every Tesla store is fixed-price, so there’s no interbrand competition. And there’s no intrabrand competition either, because everyone is selling apples to Tesla’s oranges. Who sells anything remotely similar to a Model X?

Ford might be the first, if it ever brings its Big Opening Never-Ending Riser project to fruition.

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Why dealers stink at selling EVs

The Sierra Club did a “secret shopper” survey to gauge the EV scene at dealerships and, of course, found that car dealers make lousy EV evangelists. They don’t have any EVs, or can’t find the keys, or have their sole EV stashed somewhere behind the dumpster, or they’ve forgotten to charge it. Consumer Reports has done similar studies and reached similar conclusions. EVs get lousy retail support — excepting Tesla, of course.

But so far, no study has discovered one of the primary sources of the malaise. Dealer insiders will understand this post better than the average reader, but here goes anyway. Ready?

Every manufacturer surveys its customers and compiles a customer satisfaction index (CSI) for each dealership and each salesperson. Underperforming dealers face fines. They often pass those fines onto the underperforming salespeople. Sometimes CSI is the sole topic of morning meetings. It’s a big issue. Many dollars are at stake. Jobs are at stake.

So far, this sounds like a reason for dealerships to stay on the ball, right? Yes, but it also becomes imperative to dodge hot potato situations that could result in bad surveys. EVs are hot potatoes. Despite their alleged simplicity, they’re complicated. They raise questions that salespeople might not be able to answer because they’ve forgotten the stuff they learned in that training course six months ago. EVs even draw sticky tax questions. Yeek! All of this spells CSI disaster.

Also, EV customers might have a bit of a ‘tude, or may come across that way because they feel like they’re imposing on the staff by even breaching the subject. They can read body language.

The bottom line: If an EV customer leaves the dealership without buying anything, it’s a bullet dodged, plain and simple. Let someone else take the CSI hit and face the fines. And so, folks, many dealers will continue to boot EVs behind the dumpster because they represent big risk with little reward.

Sales manager: “Are you still with that cruncher?”
Salesperson: “No, she finally left.”
Sales manager: “Good. Stay alert and get another up.”

You think this kind of dialogue would freak out the dealer principal if he/she were to hear it? Absolutely not. A job well done. This isn’t the week to be dabbling with dorks. The dealer is a half-point below the regional CSI average and can’t afford a bad survey right now.

So what would it take to get this situation turned around? TeslaMondo sees three possible paths to better EV retailing:

  1. Wait it out. Eventually, the technology will become commonplace, so dialogue between salesperson and customer will rise to the current ICE level. In other words, it will go from exasperating to merely annoying.
  2. Automakers must take control of the retail experience. This means inciting war by trampling dealer franchise agreements, but the outcome might justify the brutal bloodshed. Think Normandy.
  3. Build better EVs. The sales staff would love talking about truly exciting products. But who wants to talk about a friggin’ i-MiEV? Compliance cars get short shrift at dealerships because they deserve no better, period.
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There’s nothing wrong with “selling” Teslas

It’s only natural that Tesla would score poorly in a survey of showroom sales acumen. Who needs sales acumen when the product is supply-constrained and ordered largely online? If the sales staff acts a bit like museum curators, everyone can understand why — everyone except the people behind the survey.

However . . .

Let’s say Tesla has enough supply that boosting sales becomes, you know, not a terrible idea. It wouldn’t require a big change. TeslaMondo thinks there’s plenty of room between “museum curator” and “car salesman.”  The middle ground can be loosely called “benign manipulator,” or maybe “momentum facilitator.”

Do Tesla product specialists offer test-drives to people? They should. There’s no substitute for seat time, especially in such a transformative vehicle. And if the customer is too shy, the staff should offer test rides. Many people are reluctant to try out an expensive vehicle, especially something totally novel. But they’re more than happy to ride shotgun. Will they become buyers on the spot? Maybe not. Eventually? Very likely. And along the way, they will become Tesla evangelists to everyone they know: “Guess what I rode in today?”

Test-drive a Tesla, get a free Tesla thermos. Low-brow sales tactic? Harmful to the brand? Not at all.

A good suit salesman puts a suit on you and ushers you right to the tailor regardless of whether you’ve actually declared your readiness to buy. “It just kinda happened,” you tell yourself later, looking at your $500 suit hanging in the closet. Cars are sold the same way, and with no ill will.

Screen Shot 2016-07-16 at 5.55.19 PMIn 2013, Tesla neared the abyss due to Model S early-production bugs and generally bad word of mouth. Customers who had ordered cars were getting cold feet. Tesla staff from all corners of the company suddenly became car salesmen, and it worked. The company made a dramatic turnaround, igniting a virtuous cycle that restored faith and lifted TLSA above $200. So, you see, Tesla can indeed “sell” cars if need be.

Tesla product specialists shouldn’t act like museum curators any more than museum curators should hock the exhibits.

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A textile context? Bold, yet odd.

Tesla Nordstrom TeslaMondo

Tesla traits that have taken some getting used to:

  1. Silent grunt.
  2. Grille-less faces.
  3. Base models look almost exactly like range-toppers.
  4. No model years. Free-flowing kaizen instead.
  5. Company blog and Twitter account as PR central.
  6. Mall-based car stores.
  7. And now cars unabashedly displayed as fashion.

We’re used to seeing cars in a hard, gritty context: dealer lots, garages, fix-it shops, junkyards etc. They ooze fluids and emit noises and gases. They run over animals and stuff. So it’s a little odd to see a car store inside a mall, where no other store has anything remotely similar — except maybe some rider mowers in Sears.

But it’s even odder to see a car inside a clothing store. We sequester cars from the “delicates” in our lives, such as clothing. In fact, brush against a car and your next stop is the dry cleaners. Tesla is unfazed. Soon we’ll see Teslas rubbing shoulders with soft n’ fuzzy non-mechanical stuff that just hangs on us for social purposes. The proximity to such superficiality threatens to render the cars a fashion “front” instead of a real car. You might have to check the YouTube videos of Teslas slaying Ferraris to remind yourself that Tesla isn’t selling frou frou. The cars are brutally powerful, even if they look nice with wool mittens on their side mirrors and a Burberry scarf on the cowl.

Tesla does sell tote bags made from car interior scraps. Add some custom luggage designed for the Tesla frunks, trunks and any other nooks, and some Tesla outerwear for yourself, and you’re talking ensemble. Isn’t that right, Ganesh Srivats? Here are some cars that come with custom-fit luggage.

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Crucial FTC talks coming

The FTC will hold a conference Jan. 19 to hear arguments about factory-dirct auto sales. It’s soliciting public comments starting now. Here’s a link.

TeslaMondo submitted a comment: “Any car company that wants to dirty its hands by selling directly to consumers should be allowed to suffer the consequences.”

To see various strongly-worded letters from the FTC and others on this subject, click here and scroll down.

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Fresh air coming to car retailing?

If we believe what we read, we should conclude that car salespeople are more keen on smoking and texting than assisting mankind’s shift to electric vehicles. Consumer Reports told us so, albeit not exactly in those words, and now the NYT concurs. Even some auto manufacturers don’t like to sell EVs. FCA chief Sergio Marchionne, in a move he will regret,* outright flouted EVs by begging the public to avoid its electric Fiat because it represents a loss to the company. Yet Tesla sells EVs pretty effortlessly, without even advertising them, and at premium prices. Why?

  1. Compelling product. Already discussed at length, and the topic will continue ad infinitum. Other automakers are plotting their Tesla-killers, as the press constantly reminds us, blah blah blah.
  2. Compelling customer experience. Tesla controls its stores. Other automakers struggle to control theirs, so saddled are they with the grandfathered franchise system.

While number 1 gets the headlines, number 2 is quietly getting some much-needed attention. Lexus says it’s watching Tesla’s retail model very closely. TeslaMondo’s sources inside Toyota speak of a new “transparent” process in the works. BMW has opened a mall store already. And now Audi plots a retail re-boot. So Tesla is simultaneously eroding century-old complacency in both auto development and auto retailing. At last, some fresh thinking. It will be interesting to see how Tesla’s service model withstands the exponential sales growth. Will we witness broad change in automotive servicing too? Probably, and just in time for autonomous pay-per-use cars to force a thorough re-write of this post.

*Can you name a single instance when flouting technological change has worked out swimmingly for any company?

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