Tesla changes retail strategy: To move from high end malls to parking lots and cheaper locations

 

Tesla is putting in place a major change in its retail strategy. Sources familiar with the matter told electrek that the electric vehicle maker is planning to move away from showrooms in high end malls. Instead, it will hire space in mall parking lots and cheaper locations.

 

Tesla has no franchise, so it always had the option to change its retail strategy through the years and it has experimented with a few seismic shifts. In 2018, the company focused on retail locations in stores inside high-end malls with high footfalls. Now, it will rent spaces outside malls and display its vehicles in mall parking lots instead of showrooms inside malls. Tesla cars will be also displayed in warehouses and other locations.

 

In 2019, Elon Musk surprised everyone when he said that the automaker would be closing most of its retail stores. He said that the company will focus on online sales, as most of its customers ordered their cars online. A few weeks later the order was reversed, and the company confirmed that many stores will remain open.

 

There was a reason for the flip flop in retail strategy in 2019, which was disclosed later. Tesla was under financial pressure at that period of time. It had launched Tesla Model 3 in Europe and was trying to conserve funds.

 

Sources familiar with the matter told electrek that the new strategy is a more well-rounded version of the 2019 one. It will exit most of its high rent locations and move to cheaper locations and delivery centers. However, it will retain a large sales force to work remotely with the customers who place online orders, as the company feels that it is unnecessary to have such employees at a specific store.

 

American mall owners have struggled during the pandemic with minimal footfalls. The number of storefronts leaving malls has been increasing and they are about to lose another high-end customer. Tesla is not the only large company to leave malls as others including Gap, Macy’s and Victoria’s Secret have either shut down stores or moved to cheaper locations.

 

CNBC contacted Tesla and mall owners including Simon Property Group and Macerich for comment but has not as yet received a response.

Image Author Vauxford

 

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