The Hours of Operations Are Changing

With everything that has happened since the beginning of 2020, like inventory excesses the business model of being open day and night to secure every possible prospect is also disappearing. Has this pandemic cause a much need reset of the mentality of both the customer and retailer?

Pre-2020, when a prospective client determined it was time for a newer vehicle, be it new or previously enjoyed they started shopping online or in person and regardless of where they went the choices were abundant. They had the luxury of choose from multiple sources, from brands and locations to even multiple similar vehicles. With this choice Dealers were forced to increase opportunities to capture this elusive customer with increased inventory, omnichannel selling and dawn to dusk opening hours. All this did was increase havoc within the industry. Dealers started fighting for deals, customer service and experience started to erode causing Manufacturers to step in with more vigor. A bottom-up mentality became frightfully the norm. Managers started looking at volume as average grosses were dropping. More inventory was needed... Increase the Operating Hours... Floors got flooded with Salespeople hoping to capitalize on every potential opportunity to match the inventory. Carrying costs shot upwards and the process kept perpetually growing.

Then... Something nobody would every predict nor ever wish happened, Covid-19. It caused everything and everyone to grind to an immediate halt. Governments closed dealership operations to the bare minimum hours and only to look after the emergency issues an existing client may have. Most Sales Departments closed completely, some depending again on where you lived for months. It was the beginning of the end but that end was the old school dealership was put on life support.

The closures forced change to all those who wanted to survive. No longer could you wait on the people to come in for your sales. Pivot or disappear. The creation of digital omnichannel selling allowed clients to move at their own pace but what did that do for the dealer as foot traffic was near zero? Sales were maintained. Now this also had an effect on the hours of operation as clients could now shop these overstocked lots from home, so Dealers pivoted again when they were allowed to reopen, they decreased the operating hours. Did this have an effect on Sales, most cases no however what it did was increase conversions. No longer did the client have the benefit of shopping multiple locations in one or two days as a time and potential health issue restriction had them reducing the locations they visited. This created a greater focus on appointments and time-blocking. Sales didn't lower with the restrictions, in fact most dealers reported increases in both volume and profits.

Now, government lift restrictions and what do the dealers do.... Most went right back to expanding their hours. In doing so they saw the changes and wanted to capitalize on the new found growth in volumes and gross profits. What they didn't see was the second wave of consequence that Covid-19 was about to bring supply chain issues. Everyone thought going back to work meant normality. This was far from the truth. Inventory became the new problem. Chip shortages, plant closures, logistics all were coming straight at the dealers and that problem was growing by the day. Lots were beginning to look like a mall at midnight, empty. With no inventory reductions were necessary, layoffs and again reduction in hours. Why stay open if you have nothing to sell or represent?

Potential clients started to notice. At first, they still tried the tools they learned in the past, negotiate with the threat of going somewhere else to get the car. As time went on this became a tool unavailable as did all in their arsenal. Dealers controlled the process for the first time in a very long time, all they needed to do is get the vehicle. The process uniquely changed to an order taking event. Grosses went up even further as there was nothing to negotiate as Dealers weren't budging on price as the demand outstripped the supply. Clients once acclimatized were happy and satisfied, they shopped the local dealers as there was no reason other than availability to go elsewhere. With this Dealers started to hold firm on their hours.

What an incredible phenomenon happened. Dealers reduced staff, hours and inventory with that sales increased, gross profits grew and satisfaction climbed. People started to look to the industry more professionally. Appointments were made, time was valued and business was transacted upon. Relationships were once again forged and the opportunity of loyalty was offered back to dealership.

One thing that was recognized overall was dealerships didn't need to be open all hours to secure the sale. The creation of a bottleneck drove the conversion rate upwards. This placed the importance on both parties to use their time both wisely and efficiently. Dealers were understanding time dilution was detrimental to operation. Those who pivoted capitalized on the reprogramming of the industry. Those who didn't spun their wheel while decreasing urgency to their clients.

Think of this for a second... Does your staff enjoy being busy or do they prefer reducing their potential opportunity of earning with less people through the day? If you are open from 9 - 7 (10 hours), 9 - 9 (12 hours) or 7 - 9 (14 hours) and have only 30 people through the door, the average is 3.0, 2.5 or 2.1 people per hour respectively. We all know there are only so many potential clients out there regardless of what we do so why not increase the activity level by reducing the operation hours. This will influence a tremendous amount of KPI's as well as culture both within and outside the dealership. In Quebec, Canada; dealerships are closed on both Saturday & Sunday, what does that do for the Dealer? It forces the customer to engage through a dealer chosen timeframe. Does that affect sales? No. Some of the largest dealers in Canada operate out of Quebec with similar AOR and population demographics as the other provinces, moreso this was not a result of Covid-19 it has always been that way.

Time is now (pardon the pun) to create a new culture, a new norm of how and when vehicles are purchased. With the shortage of inventory and no end in sight let the last eighteen months be a learning experience that people will adapt to situational changes. That pivoting with opportunity can allow dealership culture to develop positively. That fear of loss will and can be overcome on dealer's side of the fence by throwing it back to the consumer. Reducing the hours will increase the throughput and it is my belief that this combined with all the other influences will benefit everyone including the consumer in the long term, all we have to do is stay strong and not waiver moving forward. The initial reset has happened.