TORONTO, ONT. – Genesis Canada opened its first retail boutique – no, it’s not called a dealership – on Queen Street in Toronto’s East End on May 30. It’s dubbed Genesis Downtown.
No carrara marble floors. No customer waiting area with a coffee bar offering a wide choice of lattes. No service department viewing area. There’s no service department at all. And no multi-million-dollar construction price tag.
But there’s space for three, maybe, four cars on the showroom floor. And if a customer wants a coffee, they can go next door. There’s a connecting door so the customer doesn’t have to brave the elements.
Genesis brand director Michael Ricciuto is pleased with, by luxury dealership standards, the no frills surroundings.
“We call it smart luxury. We are taking advantage of what we have. No granite floors. No huge sales centres,” says Ricciuto. “Someone has to pay for that. We make our showrooms nice but modest.”
He says Genesis Motors, the brand’s Korean parent, is crafting design guidelines for small stores, with a pilot to be unveiled in Montreal. But the design guidelines will not be extravagant.
Ricciuto says Genesis Canada has appointed “distributor principals” – they are not called dealers – who will be running pop-up boutique sales centres in malls and other locations across Canada to give the public a taste of Genesis.
Look for three more, one in the Greater Toronto Area and two in the Montreal area, this year with six more stand-alone facilities expected by 2021.
He sees slow but steady growth.
Genesis At Home
“We are keeping our showrooms to a relatively small – 5,000 to 6,000 square feet – so the financial business model can revolve around an ambassador or concierge picking up the car for service and delivering it rather than having opulent dealerships costing millions of dollars,” Ricciuto says.
The OEM calls it Genesis At Home Service.
The automaker wants to spend its money on this and items such as a five year/100,000 km warranty with no-charge, regular maintenance.
But what will Genesis do if the competition copies the service?
Ricciuto is confident they won’t be able to.
“I think it will be very difficult to imitate. Most of our competitors are already established. Look at the dealerships they are putting in place! They are huge dealership palaces with huge service operations.”
He explains that when it comes to servicing product, agents – Hyundai dealers – will use their Hyundai service departments and Genesis-trained technicians.
“Our model will be hard to imitate.”
Customers Still Favour a Showroom
When the brand made its debut in 2015, management was open to a variety of sales models, including having no dealerships at all just an online presence with ambassadors driving demo cars to potential customers.
But Genesis Canada found customers still liked certain elements of the the old-fashioned way: they wanted to visit a dealership.
“Customers want to see the product in a store rather than having them brought to them at their home or a coffee shop,” says Chad Heard, Genesis’ senior manager, public relations.
Heard says that the OEM’s three current models – G80, G80 Sport and G90 – will be sold at a fixed, no-haggle price with no trim levels. There is no entry-level model. One price pays for everything, including destination and delivery charges and admin fees.
“The Genesis model is one of simplicity. We believe that in the luxury market, the customer wants all items like the safety systems as standard equipment.”
He says that means there’s no need for a large showroom to display a variety of trim levels.
He explains the logic behind the set price model.
“We saw an opportunity to differentiate ourselves in the luxury segment so that the customer has a stress-free purchase and ownership experience.”
The customer will also be dealing with a “Genesis experience manager,” who is not a commissioned salesperson.
No Sales Goals Set
Once the deal is done, the customer drives away with cost-free regular maintenance, a five-year warranty and five years of map updates and satellite radio.
“Everything is included. The customer doesn’t have to pay for anything more for their vehicle for five years except insurance and gas. That is a stress-free ownership position.”
And with the concierge service, they aren’t likely to see the inside of a dealership until they return to buy another Genesis.
The Genesis sales model features no dealers; they are Genesis’ agents. They don’t own the inventory; the OEM does.
“Genesis Motors Canada owns the vehicle inventory so the company can set no-haggle, all-in prices and be able to sell online.”
When asked about sales goals, Heard says they have some “modest” estimates but no hard and fast ones. Just please the customer first and sales growth will follow.
Ricciuto concedes it will be difficult for Genesis to woo Mercedes-Benz, BMW and Audi customers. But Genesis’ product will be able to go head-to-head with the Germans when it comes to design quality. He cites Genesis’ luxury SUV project.
He reasons that Genesis could have come up with a luxury SUV based on one of Hyundai’s current platforms and added a few luxury touches to have a luxury SUV on the showroom floor.
He argues that’s what Acura and Lexus do.
“That’s not effective. We are designing luxury cars from the ground up – a rear drive luxury SUV platform for all of our SUVs. Yes, that will take longer because it takes longer to design a platform from the ground up.
“But that is the appropriate way to come up with authentic luxury products. And those products will be benchmarked against the Germans.”
The target is “move ups,” customers who are moving up to luxury and considering Lexus, Acura and Infiniti.
“Price-wise, we are competing with the Japanese; product-wise, we are competing with the Germans.”
Ricciuto is confident that Genesis’ fixed, no-haggle, all-inclusive pricing strategy will win over customers.
“We’re taking the whole negotiation out of the equation and allowing the dealer to focus on selling the brand and the car.”
Some Things Change, Some Remain
Agent Shahin Alizadeh bustles around the floor of the boutique checking that everything is ready for the first customer. Alizadeh is the president of Downtown Automotive Group, which includes nearby Downtown Hyundai store, where Genesis sold at the Genesis Downtown boutique will go for service.
In two years, the boutique will move to a new, standalone home owned by Alizadeh in the neighbourhood.
He is optimistic that business will be brisk since the neighbourhood is home to six luxury dealerships.
Alizadeh insists that Genesis Downtown will have a personality. He won’t sit back and let the OEM do all the marketing.
“I’m a big believer in community marketing so we will partner with Genesis Canada. This dealership will not be an Apple store. We will be involved in the community.”
Alizadeh concedes the relationship with Genesis Canada as a distributor, not a dealer, is new to him. But one thing endures: the customer is still coming to the dealership and a sales opportunity presents itself.
“What I like is that people come in here knowing what the experience needs to be. We follow through up with that hassle-free experience and every time we retail one of these cars, there will be an opportunity to earn additional revenue.” .