Will Digital Replace Physical Showrooms?
In 2019, Mercedes-Benz USA launched a fan experience at Mercedes-Benz Stadium in Atlanta, Georgia, that used Augmented Reality (AR) to showcase its vehicles. The experience ushered in what some have predicted could set a trend for automotive sales.
At this virtual “showroom,” sports fans could go on a joyride with Atlanta Falcon players by saying “Hey Mercedes…” and let Mercedes-Benz User Experience (MBUX) technology handle the rest. The virtual sports heroes showed consumers how to activate the vehicle’s back massage feature, alter the temperature, play favorite tunes and more.
Another AR display acquainted stadium visitors with the company’s line of electric vehicles. Fans could virtually hang out with an Atlanta Falcon while interacting with cutting-edge technology available in the Mercedes-Benz electric vehicle lineup.
Monique Harrison, head of brand experience marketing, reported when the AR experience launched, that “This dazzling reimagining of the fan experience parallels the ever-evolving technological advances of Mercedes-Benz automobiles and offers fans an opportunity to interact with the brand in a fun new way.”
Industry veteran Brian Benstock, general manager and vice president of Paragon Honda and Paragon Acura, reports seeing two simulators like the ones described above in an Atlanta mall. “They had two simulators in a boutique with Mercedes-Benz clothing,” he says.
He adds that using VR this way could change dealer showrooms in the future. “If we can combine VR experiences with retail, we will be in a good spot,” he says.
He quickly notes leveraging technology will not change the purpose of the dealer showroom but might change how many cars they keep there. “It would no longer be like stacking cords of wood, where you put in as many cars as you can,” he says. “Instead, you’d have fewer cars and a display that encourages interaction with the content.”
Technology like this, he says, might even showcase engineering features. For instance, visitors might interact with the engineer who designed the crumple zone for the vehicle. The VR figure might say, “Hi, my name is Brian. I engineered the crumple zone on this vehicle. This feature could save your life, let me show you how.”
Benstock recalls attending a show where an engineer explained how they designed the seats. He noted how they explained how they selected the leather, stretched it, and other details. “I wanted to buy one after the presentation,” he says. “The automotive world needs more of this. Instead of saying, ‘Let me get you the best price,’ we’d work with customers to be more experiential and showcase the brand.”
Digital and Technology Trends
The industry recognizes Rockar for building the first e-commerce car buying platform in the world.
They did so by combining online and offline shopping into a single, seamless journey. The company brought the showroom to customers with digitally enabled shopping center spaces. In 2016, the company opened a store with Jaguar Land Rover in Westfield’s Stratford shopping center in Europe.
The store gives customers purchasing options. They can complete the entire journey online from finding a new vehicle, configuring it to their needs, financing and delivery. Shoppers also can start online and finish in the store or shop in the store and finish online. And they can arrange test drives from shopping center stores, which are staffed by Rocker employees.
Audi Hong Kong opened a similar concept store known as the “Audi Innovative Space” before the pandemic. The concept store in the Festival Walk shopping mall showcases future digital and technological innovations within an innovative retail experience.
Onsite Audi product specialists guide visitors as they preview future car concepts and create customized cars from over 40 Audi models. Customers pick their body color, interiors and exterior modifications, then use an immersive AR experience to view every detail of their creation and even take their virtual vehicle for a spin.
BYTON Place in Shanghai, China, also uses AR to help customers learn more about its vehicles and what it is like to drive one. Visitors can even teleconference with the engineers who developed the vehicles to learn more about their inner workings.
The Case for Physical Showrooms
The AR and digital tools described above may attract people’s attention, but an impressive physical showroom with high-end amenities can work just as well.
Holman Automotive, for example, one of the largest privately owned dealership groups in the United States, recently opened an all-new, state-of-the-art facility that will be home to Jaguar San Diego and Land Rover San Diego. The dealership offers world-class showrooms and an extensive service center that will deliver an extraordinary experience to customers throughout the region.
“The new Jaguar Land Rover dealership in San Diego is stunning and is an impressive showcase for these two iconic luxury brands,” said Brian Bates, CEO, Holman Automotive in a press release. “Customers can expect the same personalized attention and expertise that Holman is known for, in a spectacular retail environment that embodies the DNA of these distinguished vehicles.”
The new 214,000-square-foot facility includes five floors of new and pre-owned vehicles from Jaguar and Land Rover as well as an innovative service center with an indoor service drive, two first-class customer lounges, and ample parking. The dealership features Jaguar Land Rover’s sophisticated ARCH design styling, highlighted by simple elegance, contemporary colors, and rich wood tones.
High-end, beautiful showrooms like the new one at Holman Automotive play into the emotional buying experience consumers’ desire, reports Brady Schmidt, president of National Business Brokers. Though people have predicted AR and digital retail will replace the need for a showroom, Schmidt says they underestimate “how emotional the car buying experience can be. It’s far more emotional than it is logical, right? Our senses drive our emotions. We want to see, touch, hear or smell that vehicle.”
He says car sales may become more difficult if dealerships remove those qualities and replace them with a digital experience. “I'm in the market to buy a Mastercraft boat right now,” he says. “I went on their online portal and it’s a sophisticated portal where you can change almost every detail of that boat to build exactly what you want. I spent hours doing that, but I didn’t decide to buy until I went and saw the boat; sat on the cushions, in the driver's seat and in the bow area; touched and felt it; and flipped up the engine cover to look at the engine.”
The car buying process is similar. He adds, “I think people enjoy the car buying experience emotionally because they fall in love with a car in the process. They like the new car smell. They like to sit in that car and envision themselves driving it. I get suspicious when people talk about these fabulous digital experiences and a future with a showroom that has one vehicle sitting in it. You can kind of experience the vehicle this way, but it just doesn’t translate for me.”
In short, technology can enhance the vehicle buying experience, but it is unlikely to replace it. Showrooms will remain—at least for the foreseeable future.