The key is to build flexible spaces that could allow a dealership to pivot as business needs change, said Greg Gates, vice president of business transformation for Swickard Auto Group, which has 15 stores on the West Coast and in Atlanta.
"We're not like an office-type environment, where every sales associate has an office," said Gates, who previously worked on image programs for Mercedes-Benz USA as its general manager of strategic retail development.
"We're really about taking the transaction to the customer — on the showroom floor, on the lot if they want to do that," he added. "So I think, for us, it's about designing with that flexibility in mind."
Dealers have demonstrated during the pandemic that they are good at responding to market changes, said Bernie Moreno.
He mostly exited the business in 2019 after selling all but two stores but this year bought back a 49 percent stake in Cleveland Motorsports, which sells Aston Martin, Bentley and Rolls-Royce vehicles in North Olmsted, Ohio. Moreno said he was motivated to return to auto retail in part because he senses some automakers have taken a softer view on showrooms than they did a year ago — namely, that they can be brand- compliant without being overbuilt.
Dealers want to keep their cost structures as variable as possible, Moreno said, and showrooms increase fixed costs.
"If there's anything I hope the manufacturers learned, it's that if they allow dealers to be entrepreneurs and solve these problems themselves, they'll come up with creative solutions," he said.
"When they try to be too prescriptive and say this is a cookie-cutter approach and we want you to do A, B, C and D and only A, B, C and D, it just doesn't work," Moreno added. "The box needs to be big enough that dealers can create some really interesting, creative things."
In a report this year for NADA titled "The Dealership of Tomorrow 2.0," consultant Glenn Mercer wrote that automakers should establish balance between online and offline strategies.
He said there isn't much quantitative evidence showing that updated showrooms lead to more sales.
"We can hope they will be more flexible. But OEMs face two conflicting forces. On the one hand, as they tell their dealers that 'the future is online,' it is harder to insist that dealers pour millions into the physical facility," Mercer said in an email.
"On the other hand, OEMs have egos (both at the company and the individual executive level), and we have seen them time and again over the years insist on lavish new facilities that they deem commensurate with the image of the brand," he wrote.