In the mid-90’s, the established travel operator business was in turmoil, faced with increasingly challenging market conditions.
While there was still much to be said for the comfort in leaving all the arrangements to the operator – and paying accordingly, either at a premium or at discount, depending on your taste for the familiar or strange – something called the internet was beginning to exert a powerful influence over customers.
And while technologies were still nascent, other factors were beginning to re-shape how customers thought about the what the sector was providing – and whether it might not be time to think more directly and arrange things for themselves.
The hegemony of operators, for that was what it represented
“due to their functions as wholesalers in the industry as well as due to their vertical integration both backwards into the charter airline and accommodation sectors and forwards into the travel agent sector”
were driven into a series of systematic strategy changes.
The reinvention led to the (now rather obvious, but not so at the time) model shown here:
The point is that it wasn’t necessary for a wholesale revolution, baby-and-bathwater shake-up to help the industry remain not only competitive but relevant. What was – and is – telling is that here’s a historic model of how, by looking carefully at what customers might ‘want’ to buy, as well as ‘how’, an entire industry was able to adapt to emerging challenges.
The net results were that the operators that made it through the transition – and are several of those with us today – only did so by
“re-engineering their business activities by implementing flexible systems”
and approaches that broadened their offer and so their role.
So, what’s all this got to do with car dealerships?
My argument is that there are uncanny parallels between the two sector’s operators, even separated as they are by decades.
While there will likely always be a customer who takes great comfort and confidence in purchasing ‘package mobility’ from a dealership, the business model that fulfills that is only one possible – and commercially self-limited – revenue model. With the increasing intervention and mediation of direct sales channels and third-party intermediaries, the need to look carefully at your retail format is pressing.
The current retail model’s grip on the market is loosening and the business model’s being squeezed all the time.
The current format is intrinsically driven by that model and increasingly it’s being called into question, and rightly so – imagine going shopping (for anything other than a car), where you had to park in the delivery area, walk through the warehouse and then into the shop. Now’s not the time to keep rearranging the deckchairs on a cruise liner that’s charting a course away from the passenger’s it wants onboard.
Of course there are costs involved but the investment in making format changes isn’t all money-out-no-return, as was evidenced by a 2013 report by McKinsey:
Now’s the time to look carefully at what and where your customers are heading: to explore the paths you’ll need to make, so as they keep coming to your door.
Before they decide to take a permanent staycation from you.