Photo: CarSaver
Will shoppers go to Walmart to buy a car?
From pairing books with coffee to pairing computers with smartphones, store-within-a-store concepts have proven successful in allowing retailers to get fans of complementary brands in the door and keep them looking around. But Walmart is expanding a store-within-a-store concept that meets a customer need not generally associated with a visit to a mass merchandiser — car buying.
Walmart is expanding a one-store pilot partnership with car buyer support service CarSaver to 250 locations, according to USA Today. The rollout will begin at stores in Georgia, Illinois, Indiana and Virginia. CarSaver offers in-store advice on the complicated task of leasing and financing a new or used automobile and puts customers into contact with the appropriate car dealers and insurance companies. The service will also be available on Walmart.com.
Having a service like CarSaver on-hand could theoretically bring customers considering car purchases into the store and increase dwell-time for those already there mulling the idea.
There is no news indicating Walmart is entertaining an eventual acquisition of CarSaver, though the extended partnership comes as the retailer continues to expand its offerings — mainly its digital ones — through acquisition. In the last year-and-a-half, the chain has acquired at least seven companies, including Millennial-targeted clothing brands like Bonobos, Modcloth and Moosejaw.
But unlike the ongoing digital acquisitions, the store-within-a-store aspect of the CarSaver deal allows the chain to leverage one of its most important assets — its physical footprint — over its main competitor, Amazon.com.
Amazon has made attempts to move into the automotive market. In 2016, it piloted a partnership with Hyundai to allow Prime members in select markets to test drive a 2017 Hyundai Elantra. Around that time the e-tailer also launched Amazon Vehicles, a site that lets customers research vehicles before buying.
Earlier this year there was speculation that Walmart intended to purchase health insurance giant Humana, a relationship that is still up in the air.
Discussion Questions
DISCUSSION QUESTIONS: Do you see CarSaver as enhancing or detracting from the Walmart brand? How likely is the service to meaningfully increase customer visits and dwell time for Walmart?
Poll
BrainTrust
Lyle Bunn (Ph.D. Hon)
Strategy Architect – Digital Place-based Media
Tony Orlando
Owner, Tony O's Supermarket and Catering
Unless they are offering prices not found elsewhere, it seems like selling cars in Walmart will be tough. I suppose “dwell time” is guaranteed to go up for those who actually purchase a car, but I am not sure that any more time will be spent in the aisles. This feels similar to Walgreens adding cell phone services to their stores. Sure, adding reasons to come to the store is, in theory, a good idea, but I am not sure cars is the best use of that square footage.
Walmart continues to explore new ways to leverage its physical stores, and CarSaver is yet another good one. The auto industry is a prime target for disruption. The buying experience in car dealerships has a long history of being negatively stigmatized as fast-talking and aggressive. While I’m not sure CarSaver will necessarily attract more traffic into their stores, I do believe that this service will be of interest to the hordes of people who already visit Walmart stores on a daily basis.
I don’t have much faith in this one, Mark. It almost feels like these mega-retailers are becoming the new malls with fragmented experiences across the store that are vastly different from one another. Two reasons why I don’t see this big bold bet working out for them:
I’m all for meeting people where they are, but this seems like a stretch.
Good points Gabriela, and you could very well be right. However, the fact that Walmart went from a one-store pilot to a 250-store expansion is telling. What I appreciate most about this effort is Walmart’s willingness to test and learn — something all retailers need to get much better at.
I’m all for testing, believe me. I just hope that Walmart puts enough investment behind the pilot to improve this notoriously negative customer experience.
This one actually interests me. As a former sales guy, I loathe going to dealerships, and I don’t look forward to trying to make a deal on a car. It’s my perception that buying a car is a world is full of hidden expenses, hidden rebates and nothing seems straightforward.
If Walmart were to bring its EDLP strategy to car buying, I’d do my research online and I’d even pay for a demo drive for the cars that I was really serious about buying. Then I’d head to Walmart to buy the car knowing that I was getting a straightforward, hassle-free deal.
This is one place that I think Walmart has a better brand than anybody else. Amazon can’t do this because they’re not known for the lowest price, and I don’t need my car delivered to me in three hours. But the lowest price for a car? that’s a proposition I think most would buy into.
Having worked with car dealers on the design side, I can tell you, this is going to be much harder to do than to say. I’m sure it tested well with Walmart customers because just about no one enjoys the current experience anywhere else. But the inventory management, the low margins, repairs, acquisition, trade in, etc., of the auto sales industry is not something you can do half way. It is amazingly complex. So like so many things now thanks to Amazon; great PR, good luck with execution.
Exactly! Has PR become fake news in the battle between Amazon and Walmart?
It’s not likely to increase visits or dwell time – I think people who are going to visit CarSaver will be focused on that. Might they do some shopping at the same time? Sure. Will it be an incremental trip with incremental purchases? Probably not. When I think car shopping, I don’t know that I’d think Walmart.
The shopper journey in car buying is naturally one of the most convoluted of any major, periodic purchase. Should home repair stores sell appliances? Yes. Should cars be on display in malls and at sports venues? Yes. Should Walmart sell cars? Yes. Serving consumer interests is the name of the game.
This idea of bringing the endless aisle into the store is going to render brick and mortar more impotent. Don’t kid yourself, just because you can throw a car into your store, doesn’t mean you can sell it or shoppers want it.
As long as the discounted price of the car beats the dealer’s price they will succeed in this venture too! Costco has been doing it for its members for years and it has been done in Europe as well. The service can only enhance the Walmart brand for those customers looking to buy a car at a discounted price with none of the drama of the dealership. It may not increase the amount of time customers spend at Walmart but will put Walmart back on the list of places to shop for sure!
There’s nothing wrong with this initiative. Indeed, I can see it appealing to those who may feel intimidated by the traditional routes to buy a car, including visiting dealerships.
It will do not harm the brand nor to customer visits. However, the infrequent nature of car buying means that it is not likely to be a major driver of traffic or custom.
That’s a tough connection to make, between looking for a car and shopping for the basic essentials that Walmart provides. I’m not sure this approach will provide them with more store productivity if that is the objective of expanding this partnership. Focusing on accelerating their digital capability is where Walmart should continue to prioritize.
I don’t see it as a material driver of foot traffic (or the online equivalent thereof) for Walmart.
CarSaver’s model isn’t about the “car buying” act itself — at its core, it’s a research and pricefinding tool. I can’t think of any practical rationale this type of business would pull new customers to a physical location. From an online standpoint, I suspect it’d be an exercise in SEO that determines whether or not this offering draw new customers.
It’s not that it’s necessarily a bad move (and will likely have some impact on sales per square foot), but I don’t see it as more strategic than any other kiosk within a big box location.
If Walmart wants to sell cars, good for them. If you want to buy a car, there are many good websites to research your vehicle and get an idea on the prices. Once you have done that, take your information to a local dealer and work out a deal. They will see the information you have in your hand, so they will know you are a well-informed consumer, and the bait and switch stuff won’t be a problem.
I bought all of my cars from dealers from my county, and they make some profit on the transaction, which is fine. But gouge me and it’s not gonna happen. I am prepared to pay a fair price and the local car dealers know me quite well. If I have any problems with the vehicle I will get good service, as they back up what they sell, and that goes a long way with me. Walmart is in it for a quick buck, and I’ll take local all day long.
CarSaver will add to the Walmart brand. Car purchasing can be a challenging experience especially since it is typically not done very often. Walmart can offer a more pleasant experience through its own staff which can provide access to all brands using CarSaver instead of focusing on a specific product line at a dealer. The car purchasing service will likely not increase traffic that much but represents a total service offering to Walmart customers increasing the value of the Walmart brand.
Somewhere in the deep recesses of my mind, I seem to recall Walmart attempting something similar to this many years ago. Obviously it did not succeed then. Now may be a different story. But Walmart is not where I am going to decide what car I am going to buy and where I am going to buy it. I prefer buying local. I do agree with another comment about the value of doing your homework before going to the dealer. It reduces if not eliminates the bait and switch option the dealers use. Plus it might reduce other tricks they may use.
It’s an enhancement.
Currently, Sam’s Club and Costco offer car buying services for their members and if you ask anyone who has used the services they will recommend it. The caveat is that those are membership consumers who are early adopters and more likely to modify purchasing behavior for their benefit. That’s a good sign for CarSaver and Walmart because the rest of consumers will follow and adopt the behavior.
It’s not going to enhance dwell time or increase visits to the retailer. However, it will enhance the brand relationship with loyal consumers and it can be combined with additional services (current and future) to capture the dollars associated with car ownership.
“Customer service to Aisle Six to help a customer move a Chevy Silverado to the Parking lot”… I’m having a hard time visualizing it. Car-buying is still and perhaps always has been a specialized transaction, and I don’t see a lot of advantages in bundling it with groceries or cleaning supplies.
Assuming there is a price incentive here that causes customers to buy from this service at Walmart, I don’t see it having an impact on foot traffic and dwell time (at least not in a meaningful “buy more merchandise” kind of way. Costco and Sams Club both sell cars to their members so maybe this is yet another way Walmart is trying to bring more value and services to its customers without requiring membership fees. Not all that different to their offering 2-day shipping without an annual fee like AmazonPrime. Consumers who buy cars at Costco seem to recommend the experience as a positive one, so maybe this will help Walmart build some brand loyalty. Let’s see how many stores they expand this to.
I compare this to the very successful vision centers in Costco. There is little connection in my mind between shopping for bulk items and getting eyeglasses. And yet, because the service is fast, professional and accurate, thousands of Costco customers use the service and I dare say make special trips for the purpose, adding to the likelihood of further Costco shopping.
Therefore, since most Walmart stores are too large, adding this service is not detracting from store productivity and will likely add trips to Walmart — assuming the service is excellent. I applaud the move.