The Ford SmartLab in Quebec.
Ford
Ford is leveraging a simple strategy with its retailing experiment called SmartLabs: Meet car shoppers where they already are, rather than expect them to come to a dealership. By opening three pop-up “dealerships” in open space in retail malls in three different countries, the automaker has seen remarkable spikes in shopper traffic, test drives and even some outright purchases.
The first SmartLab in North America, just opened in a retail mall in Quebec City, Canada, is adding to the encouraging results that Ford already obtained in similar experiments in malls in Turin, Italy, and Brussels, Belgium, as well as test-drive pop-up kiosks in China, test-drive outreaches in Germany and the Ford Hub “interactive brand-experience center” in New York City. Rather than being a purely transient pop-up, however, SmartLabs entail one-year commitments to Ford’s mall landlords.
“Quebec City has been surprising in that we had 50 active [sales] leads each day in the first weekend it was open,” Robert De Filippo, Ford’s global director of retail experience, told me. “It really does show that customers are willing to engage — even transact — in a retail-mall setting, in a hassle-free environment where they feel comfortable.” And in Brussels, he said, the SmartLab has generated peak traffic that is seven times greater than that observed at a Skoda dealer nearby.
It’s not news to Ford that consumers globally generally don’t enjoy the car-buying experience for a number of reasons, including the large financial stakes involved and the traditional negotiation process with dealers — despite decades of efforts by the industry to make it more appealing. Add to that now the fact that younger consumers, especially, have come to rely so much on the internet for new-car research that many all but avoid browsing at dealerships; and they conduct as much of the actual purchase transaction as possible online. Dealership visits are down to an average of just 1.2 in the car-purchase process, Ford said, from a previous average of four visits. And meanwhile, the ancient retail-distribution model for the industry also is being tested by the huge real-estate cost penalty for many dealerships operating in core urban areas.
“People are no longer shopping, but they’re still transacting,” DeFilippo said. “So how do we tackle that change in consumer preference and get back into the upper part of the sales funnel to get people to consider our brands?
“We’re looking to modify our retail experience. There will always be a role for dealers, but it needs to be transformed,” he said. “We’re looking not to end retail but to end bad retail.”
Ford has been experimenting with SmartLabs for two years. The Quebec City mall outlet is typical in that there is a display of three current Ford vehicles, a seating area for discussions with passers-by and digital screens that showcase technology. Unlike in the European SmartLabs, the Ford dealer in Quebec can’t actually sell a vehicle in the mall.
Intersecting with a SmartLab means simply entering an area of the commons. “We’ve found that to be very effective,” De Filippo said. “There’s no psychological barrier for people. They can literally stop and look at our offer, engage in discussion, even go on a test drive and [in some places] purchase a vehicle — even though they didn’t come there to buy a vehicle.” To some degree, he said, these consumers “are coming to a physical location and doing browsing, learning and shopping that they normally would do online, but in a store setting and environment that they’re comfortable with.”
A second unique aspect of SmartLab is “very clear, enticing, no-haggle pricing elements,” De Filippo said. “The vehicles on display are being offered at significantly reduced prices to try to entice customer interaction. And the design is meant to generate traffic and leads. It does end up in sales.”
A third aspect of the SmartLab experiment is how these pop-ups are staffed — by personnel from a local participating dealership, and “young people, mainly skewed toward females,” De Filippo said. “They’re not hassling the customer; they don’t proactively engage. It’s about answering customers’ questions. If they want more information or to go on a test drive, great. We interact with the customer on their terms.”
SmartLab also brings a fourth element heavily into play that isn’t always present in consumers’ interactions with dealers: social media. The fact that SmartLabs are located in highly public and well-trafficked spaces brings them a certain high level of visibility, including social-media content generated by mall marketers and passers-by as well as by individuals who actually interact with the SmartLab.
For that reason, too, De Filippo said, mall owners “see SmartLabs as a strong pull for them. In Turin, we’ve become an attraction for the mall and worked hand in hand with them.” Given the rise of e-commerce and other increasing pressures on enclosed shopping malls around the world, many malls are eager to see what Ford might bring them.
Early results are promising: 63 percent of people who experienced a SmartLab and were surveyed by Ford rated the overall experience as “good.” In that survey, 68 percent of participants spoke to a Ford dealer representative on the premises. And 85 percent would recommend visiting the site to others.
Ford plans to open its next SmartLab in a mall in Saarbrucken, Germany, in July. By the end of the year, look for SmartLabs as well in Australia, Norway, and — after a few “false starts” in Ford’s home country — somewhere in the United States.
The company also continues its experimentation with other alternative retail formats and new technologies, all under an initiative known as Ford Signature. In Thailand, for instance, Ford is testing a “cost-efficient, two-car showroom and a four- to six-car service bay that can expand a dealer’s geographic presence there,” De Filippo said. “We’re looking at how we can leverage that kind of format around the worlf ro more rural areas.”
