What Does the Future Hold for Parts and Service Retailing?
Outlook and Scenarios for 2025
Kumar Saha, Industry Principal
Automotive & Transportation
Alex Rose, Marketing DirectorWhoCanFixMyCar.com
October 30, 2014
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Today’s Presenter
• Senior automotive analyst with key focus on both passenger and commercial vehicle
aftersales, emerging digital and channel strategies in the automotive industry
• Strong experience working closely with OEMs, Tier-1 suppliers and aftermarket
distributors on strategic consulting projects
• Often cited by and published in key trade journals and mainstream media, such as
Toronto Star, Aftermarket Business World, and Truck Parts & Service
Kumar Saha, Industry Principal
Automotive & Transportation,
Frost & Sullivan
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Today’s Presenter
• Prior to his current role as Marketing Director of WhoCanFixMyCar.com, Alex spent
four years as Google UK's Automotive Industry Manager, advising OEMs, dealer
groups, automotive classified sites and aftersales providers on their digital strategies.
• A lifelong car enthusiast, Alex trained as a graduate with BMW (UK) Ltd and
continues to maintain a classic BMW, providing plenty of opportunities to
mystery-shop WhoCanFixMyCar.com for himself.
Alex Rose,
Marketing Director,
WhoCanFixMyCar.com
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Presentation Focus Points
� Mega Trends, Retailing Shifts and Impact on Aftermarket
� Impact Area: Geography
� Impact Area: Customers
� Impact Area: Technology
� Impact Area: Channels
� Future Retailing Concepts for Aftermarket
� Service Aggregation: Why, How and What It Means for the Aftermarket
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Poll Question 1
• Which of these mega trends, according to you, will have the most important impact on the aftermarket by 2025?
• Urbanization
• Connectivity
• Demographic Changes (Women, Gen Y)
• Bricks and Clicks
• Others
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Mega Trends Driving The Future of Aftermarket RetailFrom Linear to Dynamic; Multiple Touchpoints with Customers
Creation of New Retail Formats. Location
Expansion & Smart Distribution Networks
Connectivity will create new touchpoints for both DIY and DIFM; make the service experience more predictive, customized
OEMs, retailers will experiment with new business strategies
amalgamating online and offline to create an
omnichannel experience
Women, Gen Y increasingly important customer groups with
different needs, requirements
Connectivity and Convergence
Urbanization Bricks & Clicks Social Trends1 2 3 4
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Top Transformational Shifts Shape the Future of RetailingKey Focus Will be on Customer Convenience and Experience
Future StoresSmaller, Ephemeral,
and Urban
Omnichannel Retailing‘Bricks and Clicks’ Models
New Business ModelsSocial Commerce, and new
retail models
Last Mile RetailingFuture of retail supply
chain
Engaging RetailingEra of customized targeting
Big Data RetailingFrom selling products to
selling information
Connected Retailing‘on-the-go’ seamless
shopping
Women EmpowermentEmerging Retail Models for
Women
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Geography
• Urban Store Presence
• Warehousing Locations
• BRIC markets
1
Products
• Electronics/sensors
• Repair solutions
• Private Labels
• Product Adjacencies
5 Service
• Subscription
• Customized
• Remote
• Mobile/express
• Participatory
Technology
• Telematics (prognostics)
• 3D Printing
• Augmented Reality
• Big Data
• In-store display
• Apps
Customers
• Women Drivers
• Gen Y
2 Channels
• e-commerce
• Marketplaces
• Aggregators
• Direct Selling
• In-Vehicle Sales
3
6 7
Competition
• Dynamic Pricing
• Non-traditional players
Formats
• Express/PopUp Stores
• Mega Service Centers
• Delivery/Fulfilment
4
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Aftermarket Retail Evolution 2025: Key Impact Areas
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Geography: Urban Store Locations Future ScenarioMega Trends Provide Opportunity to Attract New Customers; Product Footprint
Presence of National Parts & Service Brand in NYC (Current) Presence of National Parts & Service Brand in NYC (Future)
No locations
in Manhattan
Existing Locations Possible Future Locations
• Mostly suburban locations
• Limited access to core urban population
• Not very convenient for customers
• Strictly automotive parts focus
• New core urban locations – express; click ‘n’ collect; vehicle drop-off/pick-up service for repair
• Full access to core urban population (Gen Y; affluent customers)
• Adjacent products – bike/cycle accessories/parts; rideshare-carshare points
Mega Trends & Influencers
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Consumers: Influence of Female ShoppersNorth American Drivers are 50% Female; High Growth in Other Developed Countries
Lic
en
se
Ho
lde
rs (
% o
f th
e t
ota
l)
Driving License Holders by Gender, Selected Countries, 2012
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Consumers Case Study: Lady Parts Automotive ServicesA More Inclusive Experience than Traditional Service Outlets
� Free Wi-Fi
� Choice of Beverages Available
� TV, Entertainment zone
� Decorated Customer Lounge
� Large Comfy Couch
� Clean Restrooms
� Kids Reading and Play Area
Key Service Center Highlights� The company prides itself to be created with
‘women in mind’.
� A ‘Virtual Vehicle MD’ video tutorial is provided on the website which educates the customer on how different parts work
� The dealership has been actively engaged incommunity outreach programs.
� Even though the target customer are female, men constitute about 40% of the customer base
� Demographic profile of the automotive aftermarket customers has changed significantly over the last decade with resulting increase in female drivers.
� In the future, concentration of female customers will further increase which will require retail services customized for them.
Need Analysis
Location: Redwood City, CA, United States
Lady Parts Automotive Services
Operating Features
Source: Company website, Frost & Sullivan Analysis
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Digital Demand
Warranty Costs Reduction, Predictive Maintenance
Store & Service Shop Satisfaction
Internet Aggregators& Pricing Transparency
Adjacent Services, Products
Product Performance Analysis, Production and Supply Chain
Images and logos are only for representation Source: Frost & Sullivan analysis.
Technology: Big DataPredictive Analytics, Targeted Marketing Key Benefits for Aftermarket Retail
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Market Challenge:
To target deals based on the geographical locations of stores, the aftermarket giant wanted to understand
customer purchase decisions and preferences.
Solution
AutoZone used NuoDB’s cloud-based data
management system and was able to adjust its
inventory across stores based on information from
various databases, e.g., the type of cars driven by
people living around these stores.
Partnerships to work on in-store digital signs to
display promotions and to package dynamically.
Impact
AutoZone achieved high-volume retail
transactions based on geographical location and
user preferences.
AutoZone’s major achievement is that it has created
a store capacity with related inventory such that
the probability of a customer walking out of the store
empty-handed is very low.
Recommendation: Frost & Sullivan believes that by incorporating customer analytics, retailers/dealers will be able to study and understand customer purchasing habits; this will enable the building of newer retail chains/dealer points and ensure higher rates of returning customers.
Big Data Case Study: AutoZone Store OptimizationCloud-based System Essential to Parts Retail Giant’s No Customer Left Behind Approach
Source: Frost & Sullivan
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Technology: In-Store Digitization in AftermarketDigital Information Aids Can Assist Store Staff, Make Selling More Consultative than Directive
� Autozone in partnership with Osram Sylvania have installed iPads in select stores in the US and ‘Headlight for iPad app’ is installed.
� App includes how to videos, product features and even comparisons with other automotive light bulbs for vehicles as old as 1958 make.
� Such dedicated in-store interactive equipment could make way for more companies to follow suit in marketing their products even more effectively
� This is an innovative self service equipment aimed at revolutionizing the way drivers buy vehicle coverage.
� The company has installed the kiosks in 15 different convenient locations in United States and the information of their location is made on their website.
� Total transaction time estimated at about 5 minutes, this technology could well find way in more of the futuristic stores.
� 3M Virtual Presenter is a futuristic technology and holds potential to replace the in-store salesperson of the physical world
� Customers who walk in to the store can be assisted by the installed virtual assistant.
� It can be programed to provide information on part pricing, installation, offers and stock availability along with range of other options.
‘Insurance Store in a Box’ Direct General Auto Insurance
iPads on the ShelfAutozone
Virtual Sales Staff 3M
Source: Frost & Sullivan Analysis
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Technology/Channels: Telematics and In-vehicle SalesTelematics Can Turn Vehicle into Direct Sales Channel/Platform
DIY OBD II module installed in post MY96 cars
Data is shared over a wireless network for interpretation
In-vehicle Information relay to the potential customers
Retailers, Repair Shops, Backend
services
Range of integrated service offerings could include Oil Change, Batteries. General Repair, Service Appointments
Note: Frost & Sullivan Analysis
Installers/Independent Garage
Parts Aggregators
Dealers
Parts Retailers/Wholesalers
Service Aggregators
Telematics Provider
Insurance Providers
Effective targeting, increased visibility for service providers
Price discounts, best deals on replacement parts, ads
Customer retention, in-vehicle specials, feedback
Fleet management, DIY customer retention
Deals on service shops based on customer need, location
Vehicle data analysis, platform solutions
Track driving behavior, premium calculations
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Channels: Part and Service AggregatorsComparative Shopping Trend Trickling Down to Aftermarket
Serv
ice A
gg
reg
ato
rs
Customers select type of repair and diagnosis needed
Customers select type of repair and diagnosis needed
Customers receive real-time quotes for auto shops
Customers receive real-time quotes for auto shops
Website acts as an interface between selected repair shop and customer to negotiate and
discuss
Website acts as an interface between selected repair shop and customer to negotiate and
discuss
Once job order is received, garage pays a 3% to 4% commission fee to the company
Once job order is received, garage pays a 3% to 4% commission fee to the company
Customer feedback on the service experience closes the loop and provides easy rating scale
for other customers searching for a garage
Customer feedback on the service experience closes the loop and provides easy rating scale
for other customers searching for a garage
Customers search for parts neededCustomers search for parts needed
Customers receive quote from different sellersCustomers receive quote from different sellers
Comparison of different quotes is provided to customer for further perusal
Comparison of different quotes is provided to customer for further perusal
While the aggregator does not charge any more from neither the seller or the buyer, its gets access to the
data pertaining to customer preferences
While the aggregator does not charge any more from neither the seller or the buyer, its gets access to the
data pertaining to customer preferences
Aggregator generates revenue from selling this data. With data analytics of customer clicks, preferences are analyzed and products are targeted effectively
Aggregator generates revenue from selling this data. With data analytics of customer clicks, preferences are analyzed and products are targeted effectively
Part
s A
gg
reg
ato
rs
Source: Company Website, Frost & Sullivan AnalysisNote: junglee.com is owned by Amazon and operates in India
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Channels: Parts e-Retailing Across the Globee-Retailing Could Account for Over 10 Percent ($40B) of Sales in North America, Europe by 2020
Note: All figures are rounded. The base year is 2013. Source: Frost & Sullivan
10-20%
20-40%
>40%
2014-2015 Growth Outlook
Growth drivers: e-commerce strategies of traditional players, platform/delivery improvements
Players to Watch: Advance Auto, AutoZone, Amazon, Google
Growth drivers: Tire websites, fragmented aftermarket, geographic proximity
Players to Watch: Blackcircles, Oscaro, MicksGarage, Euro Car Parts, Delticom, Amazon, Allopneus
Growth drivers: High connectivity, fragmented market, slowing economy
Players to Watch: ConnectParts, MercadoLibre
Growth drivers: Domestic VIO growth, demand from Eastern Europe
Players to Watch: Exist.ru,eBay
Growth drivers: Global demand, slowing economy, growing domestic VIO
Players to Watch: Alibaba, TMall
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Channels: BRIC Parts e-Retail Case StudyIndian Parts/Accessories e-Retailer Has Seen 250% YoY Growth Between 2011 and 2013
Opportunity In India
� A growing automotive base, with vehicles on road expected to double by end of 2020, aftermarket trade
holds significant potential.
� A highly un-organized sector, along with growing e-commerce space and increasing smartphone penetration, together offer a favorable environment for aftermarket e-Retailing
Started in 2011, selling car and bike accessories
online
Current employee strength: 49
SKUs: 13,000
Inventory-led model with Just In time (JIT) ordering
for most parts
Sourcing partners include both local and
international brands
Future plans include investments in brick and
mortar stores
Company reported revenue growth of 250% YOY for last two years
(Targeting DIFM customers)
(Helps the company to
monitor quality of parts sold)
� Company also has private label, ‘Speedwav’, an umbrella brand with close to 1,000 SKUs offerings alreadySource: Frost & Sullivan Analysis
Successful Market Participant Profile, India
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Digital Purchasing Pathways in Omnichannel EnvironmentBlended Offline/Online Shopping Experience with High Levels of Digitization in Future
Customer
Attract
Entertain
Engage
Transact
Reward
Plan Arrive & Navigate Browse & Select Purchase Aftersales
Electronic LabelsLocation Based Advertising (In-store sensors) and Digital SignageWebsite/mobile site
GamificationVideo Display on walls, Touch ScreensAugmented Reality (eg. eBay)Online/in-app videosRepair tutorials
Virtual Solution ProvidersShelf Tablets, Digital direction boardsMobile Apps
Self Ordering KioskMobile POSSmartphone Ordering, Online Ordering
Loyalty PointsMobile App Promotional discounts
Easier Returns and RefundsDIY Support, Shopper Insights and Feedback
Re
taile
r
Source: Frost & Sullivan Analysis
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The Connected Parts and Service Store: Vision 2025
Source: Frost & Sullivan Analysis
Customized order fulfillment options with details available both online and in-store
Conveniently dedicated pick up space for Click and Collect customers
Relaxed space for women customers, single mothers, particularly at service centers
Secure payment options, Self check out, pay-by-phone
Electronic Display of Parts/Virtual Screens with real time information on pricing, offers,
availability
Self-Service Options with clear directional guidelines
In-Store technology inclusion like Virtual Assistants
Self-Serving kiosks, especially for merchandising, DIY customers
Attractive signage, social media feeds with customer feedback
Trained women staff targeting women customers
On-call support, designated relationship managers for premium customers
especially at service centers
FUTURE PARTS RETAIL & SERVICE CENTER
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Service Aggregation
The What, The Why and The How
Alex Rose - Marketing Director
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How do we Research and Buy ‘Services’?
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Who Are WhoCanFixMyCar.com?
�Aggregator / ‘compare the market’ for servicing/repairs�4,800 dealerships and garages�50,000 drivers since launch�Garages pay a 3.5% commission when they win new
business
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How does Who Can Fix My Car work?
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Other Service Aggregators
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What’s the Benefit to Dealerships? #1
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What’s the Benefit to Dealerships? #1
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What’s the Benefit to Dealerships? #2
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�32m cars on the road�24m are 3+ years old
�1m are Peugeots�20,000 are in-market for servicing this week
� 10,000 will be open-minded about where the car is repaired
£149 ‘Service+MOT
’
What’s the Benefit to Dealerships? #3
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What Can Dealers / OEMs / Service Outlets do? #1
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What Can Dealers / OEMs / Service Chains do? #2
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… And, Of Course …
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Poll Question 2
• Which of these aftermarket trends, according to you, will have the most important impact on your business by 2025?
• e-Retailing
• Big Data
• Telematics
• Retail technologies
• Others
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For Additional Information
Jennifer Carson
Corporate Communications
Automotive & Transportation
(210) 247-2450
Kumar Saha
Industry Principal
Automotive & Transportation
416 495 2688
Anuj Monga
Senior Research Analyst
Automotive & Transportation
+91 96 54 37 30 69
Stephen Spivey
Global Program Manager, Aftermarket
Automotive & Transportation
210 247 3845