New BMW stores to be big, open, beige

DETROIT -- BMW of North America is rolling out new dealership standards, patterning changes on what has happened to retail outside the automotive world.

BMW aims to give showrooms the friendliness of an Apple computer store and the technology and experts to explain an increasingly complicated and growing product line. It will cost BMW's 339 dealerships about $2.8 billion to meet the standards over the next four years, BMW executives said.

The upgrades are mandatory.

One key component: increased use of video to showcase BMW's expanding lineup. About three years ago BMW had 50 to 60 different products or variants; today the number tops 100, said Ludwig Willisch, CEO of BMW of North America.

"You cannot have all the cars and all the variants at the dealership, but you can impressively show them on a screen," he said.

Dealers also will have to employ so-called BMW geniuses who explain features and technology without any pressure to buy. When it's time to make a purchase, the customer is turned over to a salesperson.

"If we look at the retail environment in the automotive world, it did not change much since we started selling cars," said Ian Robertson, BMW AG board member for sales and marketing.

"Outside, the retail world has been changing dramatically," but the automotive dealership "has not been moving at the pace people are expecting," said Robertson.

"We are reformatting and adjusting to customer needs."

BMW has extensively discussed the standards with dealers, and the perception is the company is "trying to be more reasonable," said Damon Shelly, head of the BMW National Dealer Forum and owner of Irvine BMW and Irvine Mini in Irvine, Calif., and Shelly BMW in Buena Park, Calif.

"Their leadership is sensitive that BMW dealers have invested money over the years," Shelly said. "They realize their worldwide standards and design story has changed and they have to bring the U.S. in alignment with the worldwide design."

The new mandatory facilities standards will be rolled out in three phases over four years. Dealers whose facilities haven't been renovated in more than six years will be required to begin updating stores this year.

Peter Miles, newly appointed vice president of sales channel development and customer relations, said the second phase will affect dealerships that haven't been updated in the past six years. The third will set renovation targets for BMW's newest facilities. Highlights include:

• An open showroom without cubicles to give the store an air of transparency.

• Warmer beige and brown interiors will replace today's white and silver.

• Large video screens throughout the showroom will illustrate features and options.

• Regional pools of test cars with a wider range of models will give dealers access to more demo models than any store could stock.

BMW looked at retail innovations outside the industry and launched pilot programs 18 months ago at several European stores, Robertson said. That led to the new facilities program, called Future Retail. Last year several new European and Chinese dealerships began rolling out the concepts. Members of the U.S. dealer council have visited some of these stores, Robertson said.

Miles, who is overseeing the program, previously was executive vice president in charge of sales operations.

"Tesla had already proved you can sell cars and make customers happy without a dealer network, and dealers are getting that pretty quickly. If you want to future-proof the network, then you have to make it relevant, he said.

"People have to want to come, look and try."

Miles said 130 dealers have already committed to the changes and will increase their showroom space by an average of about 40 percent. Those dealers account for 60 to 70 percent of BMW's U.S. vehicle sales, he said.

Miles said he expects 500 geniuses at BMW dealerships by year end. He expects the ratio of geniuses to salespeople to be 1 to 3 or 1 to 4, depending on store size.

Robertson said some United Kingdom dealers have found they need more geniuses and fewer salespeople in showrooms. "We are finding a lot of the younger product geniuses using tablets are more receptive to a broad technology understanding, and it comes across when the customer is talking to him."