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As Automotive Tech Evolves, the Rules of the Road Are Changing for Retailers

Main visual : As Automotive Tech Evolves, the Rules of the Road Are Changing for Retailers

By Paul Kennedy

 

A remarkable thing is beginning to happen in our world that will have broad-based implications to our society, the way we interact with one another and the way we move around our communities. It will fundamentally transform everything about our daily lives, how we spend our hard-earned money and with whom. You may guess “the internet”, but no—that was over two decades ago—what I am referring to is something yet to come. What is it?

I am referring to personal car ownership—its rapid decline, that is. We are already beginning to see the impacts to this in the auto industry around the globe as urban areas are seeing the impact of ride share services. This article will tell you all you need to know. My colleague, Paul Warburton, head of automotive at Fujitsu, has written an interesting article worth a read.

As Paul’s article discusses, the EV vehicle markets are upon us, and the connected autonomous vehicle market is coming right behind it. In fact, many experts believe the adoption curve for fully autonomous vehicles will begin within five years. Known as Connected Mobility as a Service (MaaS), it is believed that a new industry will emerge in which a consumer would pay, for example, $500 / month to a mobility provider for access to any available car in its autonomous vehicle fleet. The consumer could hail a ride from her phone same as she does Uber, but as opposed to ride-sharing as we know it today, the car would be part of an autonomous vehicle fleet.  With the recent news about personal security as one uses ride-sharing services, an autonomous vehicle could be an excellent solution to that particular issue. More interesting, though, imagine the impact MaaS would have to the entire value-chain of the auto industry and automobile ownership, from auto insurance to aftermarket parts to fueling and maintenance.

As Retail Industry head of Fujitsu, I think about these trends, and how they might impact my industry. The possibilities for retail are significant if a MaaS provider can connect to a variety of consumer shopping capabilities for transaction and fulfillment. Consider the following scenario:

Peggy, a mother of two, is at the office at 3 p.m. She has a busy rest of day and neither her, nor her husband, will have time to make dinner before her son’s soccer game. Peggy also has a few items from her pantry that she is out of—coffee, bread, and cereal—that the family will need for breakfast the next morning. Peggy pulls out her MaaS app, and hails an autonomous vehicle to pick her up at 5:30 after her last meeting. She also requests that the vehicle arrive to pick her up with a healthy dinner for four from her local café—along with her coffee, bread, and cereal for breakfast.

When the vehicle shows up at 5:30, Peggy finds the food and groceries in the trunk as expected, but also notices milk had been added to the order by her husband just 15 minutes before arrival. With the press of a button, Peggy has her vehicle stop by a convenience store on the way home to grab the milk. During the ride through traffic, Peggy is presented with a curated shopping experience and is reminded that she needs a new pair of Nike’s. She adds a pair of shoes to her order and asks for it to be delivered in the next autonomous vehicle she hails to take her home, likely the next evening. Peggy arrives home by 6:15, where she’s able to carry on with her evening knowing she has taken care of dinner, breakfast, and her next pair of Nike’s without needing to spend her precious time in a supermarket or shopping mall.

The above scenario highlights a further dispersion from traditional brick & mortar retail, and how shopper loyalty will be challenged. Peggy did not select a specific retailer at any time of this journey for price, value, customer experience, or product / service quality. Peggy trusted her MaaS provider to curate the “suppliers” of those products and those experiences. She did so because of the convenience of the interaction, and the reduction of friction in the shopping experience that is provided.

How prepared are retailers for this? Well, it depends on segment. The retailers that have experienced the “Amazon effect” and survived are now battle tested and may well be in excellent position to compete. On the other hand, I believe the convenience retail and food segment to be woefully behind. Those that I talk to in this space still capture much of their sales from cigarettes, beverages, fuel and food, a segment once thought to be impervious to Amazon. Well, think again. What about Amazon Go? What about same day delivery?

The answer, many believe, is to invest in the creation of their own Amazon Go. I don’t agree. Amazon Go solves a different business problem—that being automation of store and fulfillment processes. That is a good problem to solve, but it doesn’t alone prepare you for MaaS. The business problem that needs solving for all of retail, and especially convenience retail, is to adopt an adaptable and flexible selling and fulfillment platform that is ready to engage in transactions driven through new channels, and fulfillment into ever-evolving methods and endpoints.

At Fujitsu, we call this Selling Transformation—we believe that this is the essential next shift in effective c-store retailing required to position for MaaS. Why? Time is in high demand for consumers, and she will select a MaaS provider that offers the most robust set of time-saving capabilities and services. Moreover, most consumers would agree that shopping is one of the most time-consuming activities they participate in each week. Meanwhile, convenience stores are the stores in our world that are closest to where the consumer lives and works, and therefore has the proximity—convenience—advantage. These factors lead to one clear conclusion—MaaS providers and convenience stores are a match made in heaven! A MaaS provider is likely to seek a c-store partner that will augment and enhance its differentiation through:

  • Robust transaction and fulfillment capabilities of traditional c-store product categories,
  • End-point collection and fulfillment of third-party products (from the earlier example, Nike shoes),
  • Store geolocation that will optimize travel time and energy usage of the vehicle while it is procuring the orders requested by its future passenger.

Of course, a MaaS provider may choose to operate its own convenience stores one day… perhaps a future blog post.

Bottom-line, most c-stores operate today primarily as fuel distribution points, few offer transactional and fulfillment capabilities beyond fuel, grab n go, and some prepared foods. In my view, convenience retail is perhaps one of the most important segments in addressing this important trend in our society. Without personal car ownership, and with MaaS providers operating fleets of autonomous vehicles beginning only five years from now, convenience retailers that are ready and eager to engage in this market will be in position to win in this future state retailing environment.