Tesla is Moving its Retail Showrooms Out of Upscale Shopping Centers, According to Sources
As the retail landscape in the U.S. changes, prime retail locations at upscale shopping malls are not as attractive as they once were with dwindling foot traffic. In addition, many malls across the U.S. have closed, or remain almost entirely abandoned, which may keep some high-profile retailers away.
This trend, which was caused by the rise in e-commerce, has now led electric automaker Tesla's decision to shutter many its vehicle showrooms in upscale shopping centers around the U.S., according to a report from Electrek.
Instead, Tesla plans to focus more on remote vehicle deliveries and online sales, which would make it a bit easier for customers to take possession of their new electric vehicles. For struggling mall owners, it's a devastating blow, as the electric automaker is one of the world's most widely recognized companies. But Tesla will save money by not having to pay expensive leases or staff its retail showrooms, Electrek reported, citing sources familiar with the company's plans.
Tesla's decision may come as a surprise, but the plans have been in the works for the past several years. In 2019 Tesla Chief Executive Elon Musk said the company would be shuttering most of its brick and motors locations. However, the company reversed course and has kept most of them open for the time being.
Tesla currently operates roughly 170 retail showrooms around the country, many of them in affluent areas such as Beverly Hills, CA, New York City, West Palm Beach, FL and Palo Alto, CA.
According to sources that spoke with Electrek, although Tesla plans to close some retail locations, it will retain its retail workforce but focus more on online sales. Tesla will convert a significant portion of its retail workforce, including sales advisors, to remote work, a growing trend for companies which was caused by the global pandemic of last year.
Tesla's sales advisors will be able to perform the same duties while not being assigned to a specific location, Elecktrek reports.
Instead of throwing away cash on expensive leases in upscale malls, Tesla will be able to save money by renting spaces in mall parking lots and warehouses to help expedite deliveries and store vehicles. According to Electrek, Tesla employees working remotely will schedule test drives using vehicles from these local locations. The remote employees will be able to assist customers by unlocking cars remotely and setting up test drives.
While many of the retail locations inside the shopping malls will close, Tesla plans to keep many of its charging stations in parking lots open for customers. Tesla plans to work with mall property owners on solutions to keep them open.
In the long term, its probably a good thing for Tesla to pivot to a digital sales model that's a bit more convenient for tech-savvy customers, as the company is facing growing competition in the electric vehicle space from legacy automakers. Tesla will also save money that could be put to better use in other areas of its business as the company expands.
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