Oct. 13, 2008 – Changing consumer trends
October 13, 2008
Filed under Features
by Steve Bauer
DALLAS — As poor economic conditions continue to alter consumer spending habits, recent research suggests that placing a greater focus on both the exterior and counter areas of a dealership might lead to a healthy jump in revenue.
That was the message expressed to dealers in a seminar held during Kawasaki’s national dealer meeting in Dallas. Company officials explained that drastic changes in consumers’ shopping habits — including traveling to fewer stores, spending more time in the ones they do visit and a sharp increase in impulse purchases — have made it essential that dealers place a greater focus on the exterior and counter zones to ensure maximum brand exposure and sales opportunities.
Introduced last year, Kawasaki created the Zone Communications program that focuses on six specific areas in and around a dealership that consumers experience during their retail shopping experience, from the parking lot to the cash register. Current consumer spending habits suggest that dealers must pay particular attention to a few key areas of their stores to draw in more customers and encourage them to spend more once they’re inside.
Richard Thomas, CEO of marketing company Trisect, says although it’s common knowledge that consumers are spending less because of higher fuel prices, there are several residual effects that aren’t as obvious but have just as big of an impact.
“First, consumers are taking fewer trips to stores. There just aren’t as many people going places just to window shop, so to speak, because it’s a needless expense in their minds to travel to a retail outlet without going there to specifically buy something,” he said.
Following that trend, Thomas continues, is that consumers are now traveling to fewer stores to do their shopping. He says research shows they are more focused on getting only what they need, using one store to do all their shopping, and in particular avoiding specialty shops that typically charge more for their products.
The good news, Thomas says, is that consumers are also spending more time in the stores they do decide to visit.
“This is an opportunity for dealers because research has shown that the more time a consumer spends in a store, the more money they end up spending,” he said. “So more crucial than ever when we’re discussing zone communications in the current economy is the street zone, where you are able to provide the best visibility and awareness of your brand, and in turn convince customers that it’s worth their time to shop in your dealership.”
A surprising trend
One trend that Thomas says has emerged as a result of less discretionary income is that consumers are much more excited about their purchases than in the past.
“With the limited funds they have, when they go into a store they are focused on what they want. They’ve thought it out before leaving the house and are ready to buy once they are in your dealership,” he said. “In the current environment we’re in, consumers are more invested emotionally in their purchases.”
One surprising trend Thomas says dealers should work to capitalize on is that consumers are more likely to impulse buy once they’re in the store because of the increased excitement factor.
“This is where areas like the counter zone can really bring in extra revenue if your staff is keyed in,” he said. “This is where things like service, financing, warranties and other promotions can be added on to the vehicle purchase. Any accessories should also be made more visible and suggested by sales staff, as these also can bring in additional profits.”
Thomas says it’s important for dealership staff members to be proactive in suggesting the add-ons, and take advantage of the excitement factor while the consumer is still focused on that particular purchase.
“This is a particularly interesting trend that has emerged, and any opportunity that your staff has to add an item or more to an existing sale could make the difference between a profitable year or a negative one,” he said. “People might have less money to spend, but they’re much more willing to invest it in something that they can really connect to.”
The second critical zone Thomas says dealers need to focus on is the street/exterior portions of their properties. With consumers becoming harder to attract, not displaying your product lineup correctly or not providing adequate
signage to give consumers a good reason to visit a dealership could be a huge mistake.
“Your outdoor signage and vehicle displays are very similar to running a commercial on TV or the radio,” he said. “If you advertise to an audience who won’t be receptive to your message or if you don’t get your message across properly, you’ve wasted the money that was invested into the project.”
Thomas suggests dealers make every effort to ensure their outdoor sign displays all brands the dealership carries, is well lit and also provides information on service, such as a repair shop and parts department. Also, any outdoor vehicle displays should showcase everything the dealership has to offer, not just ATVs or dirt bikes, for example.
“If you have a variety of brands and models, get them out near the street so people can see them,” he said. “If you are only displaying motorcycles but you carry other segments of vehicles, potential customers might pass you by because they’ll get the impression that’s all you carry.”
After much feedback from dealers, Kawasaki will be focusing more effort on driving traffic to specific dealerships through some advertising and other marketing initiatives. Chris Brull, senior marketing manager at Kawasaki, says it’s an issue that the company knows many dealers struggle with.
“We’ve had several dealers approach us and say that yes, zone communication works great when it’s executed properly,” he said. “But getting people aware of a dealership and actually driving customer traffic to a particular store is where the challenge lies, especially with the current economic conditions. We will be working hard on helping our dealers in that aspect in the coming year.”