Digitisation and customer insights
It is well-documented that both the automotive and retail industries are undergoing major disruptive transformation. Not only are new players entering the market and creating competitive tension as they tempt buyers away from traditional providers, but new business models are being created due to the speed at which products and services can now be ordered, despatched and consumed.
For example, car-based apps such as Uber and Lyft are arguably reducing the necessity and even desire for people to own a car. This same is true of the retail industry, as bricks-and-mortar stores face increasing competition from digital-only retailers and the expanding capabilities of social networks. This all translates into change ahead for a number of industries as conventional businesses are adapting to the digital age to remain competitive.
Fostering partnerships to ease the road to innovation
Traditional automotive businesses are under pressure on multiple fronts to reduce costs, improve fuel efficiency, lower emissions and become more software-competent. Consequently, many manufacturers are partnering with technology providers to stay ahead of the fast pace of evolution, racing to be the first to launch the first fully connected car, or the first driverless car.
These collaborations are set to increase; it is predicted that there will be more than 20bn sensors used in the overall automotive ecosystem by 2020. McKinsey predicts that a movement towards on-demand mobility services and connectivity could lead to up to $1.5 trillion in extra revenue by 2030, showing that the industry is ripe for change.
Integrating with a new-age infrastructure
Factors such as the recent emissions scandal and the rise of smart cities – notably the integration of smarter transport systems – have increased manufacturers’ awareness of their relationship with society. This has led to a shift in focus: from sparkling new cars and their functionalities, back to the basics of driving and associated regulatory requirements.
New car sharing platforms, such as BMW's DriveNow, are likely to become more commonplace. In fact, Ford launched its own car-sharing scheme last year, demonstrating an additional way that manufacturers are attempting to respond to changing consumer habits and ensure their business is not falling behind the new age disruptors.
Using online platforms to master customer engagement
The automotive sector has always depended on dealerships to deliver a great customer experience and understanding of its customers. However, social platforms are becoming a first stop information seeking channel, in much the same way as retail eCommerce. The analytical insights on consumer behaviour and presence gained from these platforms helps organisations make more informed decisions.
The industry has been quick to respond to consumer research habits, by increasing spend on online platforms to ensure that their brand is viewed favourably online, with engaging content and detailed information to inform buying decisions. Customer engagement across all platforms is now a given in the automotive sector, reflected by the strategies being adopted by Audi, BMW and Tesla which demonstrate their understanding of changing customer preferences and buying habits.
Data analytics - the key to a seamless retail customer experience
Retailers are also experiencing similar shifts as they seek increased direct access to their customers to better understand them. There has already been significant progress in this field, particularly due to insights accrued from loyalty cards and online shopping, influencing brand strategy and merchandising decisions, for example. Understanding buying patterns, the impact of convenience versus price, along with brand preferences are also important.
Our recent UK Shopper Experience Study revealed that consumers are willing to compromise on price for a seamless, more convenient shopping experience, highlighting just how important it is for retailers to optimise and create consistency across physical and digital viewing and purchasing. Equally as important is the ability of retailers to analyse data and translate this data into valuable customer insight.
Retailers are now using technologies such as IPA (Intelligent Process Automation) to enhance service provisions through instant customer assistance and personalisation. Regardless, analysis of customer data will play a central role in defining the strategies of retailers in future.
Adapting to the sharing economy
Both industry sectors are facing challenges around how to engage the consumer as they seek to make a purchase, specifically the notion that having does not necessarily mean owning, as we have seen from increases in streaming services such as Netflix and Spotify. Automotive organisations are starting to get a grasp of this by renting vehicles through new services such as the aforementioned BMW scheme and the AutoLib scheme in Paris, but firms across both sectors must respond to these changing demands to ensure that they meet consumer needs.
Staying one step ahead of the customer
Crucially, although the retail and automotive sectors have made significant progress in adapting to changing customer preferences, the strategic adjustments made can be applied to almost any industry. The reality is that the increasing amount of data available and ability of businesses to analyse said data, is giving rise to new entrants into the market, creating additional competition for consumer attention.
Businesses need to ensure they have the customer insights and business agility in place to ensure that they can respond to changing industry dynamics. Otherwise, traditional companies may find themselves missing out on chances to tap into new business opportunities that are becoming more diverse by the day.