A BMW waiting room built for show

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Customers receive access to the lounge plus valet home or office pickup for service appointments, basic detailing, courtesy vehicles equivalent to their own and invitations to dealership-hosted events such as track days or wine tastings. 

An optional upgrade to an Experience Plus membership, costing $795 per year, adds catered meal service at the lounge, premium detailing, a 72-hour priority valet service guarantee and winter tire storage. 

Brynn Winegard, a Toronto-based retail and marketing expert, said premium spaces such as the Bavaria Lounge are key to attracting high-end customers to brick-andmortar stores. 

“What we talk about [as] best practice is creating what is called ‘being spaces,’” Winegard said. “Holt Renfrew has done this, Nordstrom does this, Microsoft does this, Apple does this to some extent. What it is, is a circumstance in their retail environment where their consumers can just go and be. The idea is effectively that that would drive foot traffic.” 

LUXURY LETHARGIC 

Luxury sales in Canada are under pressure. According to the Automobile News | tomobile.org Data Center, BMW brand sales were down 6.1 per cent in 2019 compared with 2018, while the overall luxury segment fell 4.5 per cent. Across the board, new-vehicle sales declined 3.6 per cent in 2019.

“Sales are down more so than the total industry because there aren’t as many truck and SUVs models for luxury buyers to choose from,” said Robert Karwel, J.D. Power’s senior manager of Automotive Practice in Canada

“All of those trucks and SUVs provided some additional buoyancy to the mainstream market, which the luxury industry did not have as much of, or in the case of pickup trucks none at all. … Luxury would have fared a bit better if it had a few more utility-body-style nameplates out there in ’19.” 

Inviting customers into a space without the pressure of making a sale is crucial to remaining competitive in today’s evolving retail business model, Winegard said. 

“In the automotive category, we’ve seen it’s plagued with that used-car salesman bad [reputation],” she said. “The amount of time spent in a retail space directly increases … purchase intent. 

“It’s not enough anymore in retail, and especially in bricks-and-mortar retail, to sell things. You have to have a reason for people to show up. 

“What brands are hoping for, especially in the automotive category, is something we call consumer tribalization….You go to see and be seen and to interact with your friends so that you create a BMW tribe. … You’re borrowing from the brand’s identity in order to build your own identity.” 

PLACE TO WAIT, OR CELEBRATE 

Although Policaro declined to disclose the upfront cost of building the lounge, he said its maintenance costs involve the salary of one full-time staff member — “she is responsible to make sure that [customers] get the most optimal and premium experience,” he said — plus an estimated monthly cost of $500 for consumables. 

While some customers use the lounge as a waiting area if they choose to bring their vehicle in for service, others have asked to hold meetings or social events in the space, Policaro said. The dealership also uses it as a space for executing high-value purchase agreements and for hosting dinners. 

Policaro cited one customer who purchased an i8 after going through a life-changing experience. 

“He decided after he almost passed away that he wanted to buy this i8. It was a special moment for him. 

“We invited him to the lounge, and he invited 30 of his closest friends and family. We did a breakfast for him wit Champagne and orange juice and a cake. So, it was a different kind of experience, and then we did the unveiling during the delivery.” 

The lounge, Policaro said, is generalizing loyalty as well as repeat and referral business. 

“When you provide an optimal experience, they come back, and they refer lot of people, too. We’ve got a lot of great responses from customers and referral from it. It seems to be working quite well.” 

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