January 2020 Redesigning dealer networks - a 'clean slate' approach workshop

One of the major research streams for 2019 was our “clean slate” view on what a distribution network could look like if it was not constrained by legacy considerations such as the existing network structure and manufacturer approach to retail.  This provides an alternative view to our Dealer of Tomorrow report which represented a pragmatic view which took these constraints into account.  In the face of the changes in customer behaviour, product technology and the market environment, we anticipate that some manufacturers may consider breaking with some of these constraints, and it is possible that a few will decide to make such a transformation.

In this workshop we shared our vision of a “clean slate” network structure that will address the omni-channel needs of future car retailing, the relationship between the manufacturer and their retail partners and how aftersales needs are satisfied.  We also described how that vision could be achieved by an existing player through a staged implementation and some compromise on elements of the vision. 

Our workshop looked at redesigning networks and addressed the following main questions:

• What is the need for change and why, and how does the traditional dealer network model present barriers to the implementation of omni-channel retailing

• How have manufacturers approached “clean sheet” opportunities in the past in Europe, are there lessons to be learned concerning  all aspects around customer proposition, creating awareness, establishing the route(s) to market, and offering supporting products and services?

• What impact will the regulatory environment in Europe have on the consideration and implementation of such a concept?

• What might the structure of a network look like if no constraints were applied, other than the need to meet customer needs for sales and aftersales with a business model that works for all parties?

• What would the roles and responsibilities be for each party involved in an omni-channel environment?

• What would the financial performance be of such a model, how does that differ from today, and what are the sensitivities to different assumptions?

• Is it feasible for an existing player to make the transition from a legacy network to the “clean slate” approach, and if so, what would that implementation path look like?

• What would the next steps be to start down this route? 

• How can all parties affected prepare for this possibility?

This workshop held at KIA’s HQ in Frankfurt was based on a range of desk research, expert interviews, and modelling outputs, and was structured to allow challenge and debate throughout the day. 

The Agenda

•  Profile of the traditional network structures, and network and dealer performance

• Theoretical framework of fundamental needs of a distribution network and lessons learned from the past   

• Introduction and discussion of our developed “clean slate” concept

• Presentation of the  results of our financial modelling of this approach, including the opportunity to propose your own scenarios for debate and discussion

• Backcasting approach for existing networks to reach the “clean slate” model

• Conclusions and next stepsthis is where you describe the agenda