Beryl Disrupts Dealers, Personalized Pricing Woes, Target Ditches Paper Checks

Paul J Daly: 0:14

Good morning. It is Tuesday, July 9, it's a special day because it's July 9. I don't know why that is. But today we're talking about the hurricane reading its personalized pricing and target ditching. I'm not even gonna tell you what the last story is. I don't want to reveal it yet. Unless it's in the title when you're watching the live stream when they weren't.

‍Kyle Mountsier: 0:36

They already saw it, like say good

Paul J Daly: 0:38

morning to the retail auto industry today.

Kyle Mountsier: 0:41

Good. I like it does feel just like a good morning. I don't know the energy yesterday, I had three chats with three different dealers, and the detail at which they're looking at their operations is kind of staggering. Like,

Unknown: 1:01

it is.

Kyle Mountsier: 1:03

It is this like meticulous look at every element is what I'm not noticing. And that's really cool. Because you don't typically get that in, in a July. And I know it's anecdotal. But that's like for me for that to be a July. And like typically, summer is just wide open anything goes and then you kind of refactor in the fall.

Paul J Daly: 1:30

Yeah, that you're right. That is not the temperature out there right now. No, no, it

Kyle Mountsier: 1:35

is meticulous defining of I also think there's

Paul J Daly: 1:38

like another word. Another word that goes with meticulous is sophisticated. I think over the last three years, are looking at the industry and the business has gotten so much more sophisticated. Some of that is technology. A lot of that is what happened during COVID, where we really started to get meticulous and sophisticated about all the little things. And if we're going to keep profits going right, I think that switch, right, the COVID mindset shift happened. And everyone's like, we can make how much and then no one likes to go back. So it's like, it breeds invention, which is super fun to watch and be a part of. It really, really is. And it's this is the gonna be the ones who are doing that are separating from the PacMan. They seem to say Pac Man, they say those two words together Pac Man. We released that new Auto Collabs episode yesterday. It's another podcast that we have longer form Kyle and I get together with Michael Cirillo we interview some some really cool people in the industry. And we talk a little bit of personal history, we talk a little bit of like real time data analytics, this one was with Keyshawn bats of upstart route talking about AI financing, and how like these companies speaking of sophisticated or leveraging AI in the finance world, gives us a little peek into what we think AI finance is going to look like in three to five years from now. So super relevant to everyone who, you know, sell something that's finance. So a couple of people in the next couple to treat people with Fortran traveling next week, or traveling a little

Kyle Mountsier: 3:03

bit or we're they got that we got the annual charity event we love obviously, we've done the more than cars with the store with Mr. Beaver and Patrick, a bad there and the whole team. So we're excited about that. We're also excited about if you got our daily email today, we're gonna be judging the automotive amplifiers contests with Reynolds in August and submission, the submission deadline is I think the end of this month for what you're doing in your store, that we get to judge whether or not it has that like more than cars mentality around it. So if

Paul J Daly: 3:38

you don't use points for more than cars mentality in

Kyle Mountsier: 3:40

there and yeah, oh, absolutely. It

Paul J Daly: 3:44

people may say like, Well, why do I want to do this? Number one, obviously open handed wins in this industry. So there's an opportunity for you to be open handed about some of the things you're doing share with you other people also, you get an all expense paid trip, flight, hotel, golf, Reynolds is going to donate $5,000 to the charity of your choice if you win. So I think they've I think they did it right. As far as like this is another little incentive. It's like you're not winning a cash prize. But as an industry $5,000 goes to something you're passionate about maybe in your local community or your home. So I mean, it's a pretty good ROI, and we'll hang out. We'll hang out. We'll come out all right, let's talk about some news. Definitely some struggle going on right now. Hurricane barrels arrival as a category one storm brought a lot of severe weather throughout Southeast Texas yesterday, but specifically, the Houston area affecting a number of local dealerships. They cause temporary closures. Forget the seven Carmax stores and one of Carmax is vehicle auctions. Carmex spokesperson says you know we temporarily closed everything to ensure everyone's safety. Ben Keating, owner of Keating Auto Group says problems are the mother of invention, as he expressed some optimism despite the disruptions his stores experience including One of his buildings got damaged. A number of his cars were damaged. But you know what? We love that that more than cars mindset. He's like, hey, yeah, problems coming in opportunity. Penske also has pretty large presence in Southeast Texas. However, they're they don't have stores in Houston, but some of their other stores a little bit further south remained open. So, you know, still still selling services out there. High winds, torrential rains, you know, the whole deal. As of last night, there are still 2 million people without too late. No. 2 million homes and businesses. That's more than 2 million people.

Kyle Mountsier: 5:33

That's wild. Yep. Yeah. I mean, I one, I feel it for the Southeast Texas, it's like ever since 2014, or whatever. They've just continually kind of been pegged. across the Gulf. They're also I mean, barrel like 78 year old grandma is definitely category one storm. Yeah, thankfully, it was a category one, obviously never fun to be in a storm, but nothing like some of the historical, you know, windfall and flooding that they've had in that area. So but the Power Man, it's high. It's it's tough being without power, you know? Yeah. And, you know, you got some CDK dealers that just coming back online, just to go offline again, think about Yeah, and think about that. Hey, but aliens is not passive yesterday, by the way. Hey,

Paul J Daly: 6:27

I Dude, it is amazing how quickly that story just drives off the face of the planet. It's back up. All right, cars, but any dealer, any dealer who's in the middle of that, like we texting back and forth, they're like, Man, I gotta I gotta go get text, I gotta catch up. And so you know, our thoughts and prayers out to those in Houston, especially everybody being significantly affected, affected. If you are a store and you are open and you do have air conditioning, you have an opportunity to serve the community. So I think this is where this is where dealers can can shine pretty bright. And if you need any help, do you have anything you want? Everyone else to know? News? Something like that? Just let us know. We'll get it out there crew CR ew at a sotu.com All right. This next story is not technical. Usually the last story is usually the non automotive story. It's a retail story, but we have two of those today. I saw this story this morning. I was like we have to talk about this. Here it is is personalized pricing a doorway to a place nobody wants to go. So personalized pricing driven by AI is becoming more prevalent, allowing retailers to set prices based on individual characteristics and behaviors aka how much money can I get out of you for this? Personalized pricing sounds so friendly, not so much. Retailers are using AI to exploit personal data adjusting prices basis based on factors like age, mood, even battery life of your phone, Nicholas Cogan, Berger assistant professor at the University of Houston Law Center, back to Houston argues that personalized pricing can lead to significant biases and inflation, often targeting the most vulnerable. And said he said algorithmic price discrimination can basically automate usury. It's a practice that is legal in the US as long as it doesn't discriminate based on protected characteristics. Companies like Amazon and Uber have been accusing accused of using tactics like this, for example, Uber allegedly adjusts ride prices based on a user's phone battery level, basically, if your phone battery's low, they know you're more likely to pay whatever it takes to get that car, they're fast, so you don't risk being stranded. Since the proof is kind of siloed in our pockets, like on our screens, it's very hard to track. Because it's like the price it shows me could be a different price and what it's showing to you two people down the line, they're waiting for the Uber ride at the airport,

Kyle Mountsier: 8:52

man the the the the the like insight of I'm willing to pay anything to get where I want to go fast. And it's

Paul J Daly: 9:02

I don't know yes, it's but they were talking about like airline upgrade seats. They were talking about, like, you know, saying even like Amazon adjust prices two and a half million times a day. Right. So how much of that is like surge pricing? How much of that is like based on what they know I've paid they were saying like because the all the data you know what it's like, people know what I've paid for items elsewhere. Exactly.

Kyle Mountsier: 9:25

crosstab tracking? Yeah, man. I mean, auto industry

Paul J Daly: 9:29

could never get away with this. Let me just say that right now. If someone found out dealers were doing this, there would be a congress congressional hearing. But okay.

Kyle Mountsier: 9:41

But that happens already.

Paul J Daly: 9:43

Right as a negotiation as a negotiation, right? But there's the ability to negotiate. There's like, right like there's there's like this thing and I really wrestled with this one like as I read the article, I'm like, I was like, well, the free market capitalism, right like nothing's worth what someone's willing to pay. Exactly. So and so it's like, I don't think it just doesn't feel good. Doesn't feel good. Like, if I know that feel

Kyle Mountsier: 10:10

good before you knew about it, you were fine with it, too. That's all of

Paul J Daly: 10:13

life. That's all of life. I was happy with my muscles. So I saw that guys.

Kyle Mountsier: 10:20

I don't know. I think it's I think it's pretty neat. And I think it's an opportunity for profitability. And I think it's, you know, as long as the I think the scary part for me is how deeply it goes into personal data shopping behaviors, things like mood, battery life, all that type of stuff. But, but adjusting pricing basing on shopping behavior. Right. Yeah, I think that that is completely reasonable. And, you know, it allows for market demand. And it's a benefit of E commerce. I mean, like, one thing I know, is that a ton of marketing automation out there, when it comes to Ecom? Like drip emails and things like that. There are people studying retention as an opportunity to either hire, raise or lower prices based on a person's retention timeline. Right. So it's all you know, it's all up for grabs, in my opinion, it's so

Paul J Daly: 11:16

it's so gray. So it's it's so great. Because like sometimes I'm like, yeah, if it seems fair, sometimes I'm like, that feels terrible. I think one of the biggest challenges, like what they would do to, you know, an example, they cited in the article, right, typically how they would keep groups of people from being exploited, for instance, your low income areas, grocery stores, you could go see what things cost here, and what things cost four miles away, and be like, Oh, are you exploiting the fact that there's lack of transportation to get to that water? Sure. So but that was easy to track. This is a little bit different. And I was thinking, like, my mind kept like processing through like, what if I go to the grocery store, and I'm ordering on the app, and all of a sudden my milk is 525 a gallon. And the other guy says 380 a gallon. That's such a small dollar amount. But it's like, Sure, my grocery bill will be 20%. Higher, because like, I'm willing to pay it. And I'm not going to like, it's like the

Kyle Mountsier: 12:14

like, I was at Lowe's two weekends ago, buying a power tool. And that thing was$50 more in store than online, I pull up my app. I'm like, why is this $50 More or less on the app, they're like, we don't really know. But we actually can't discount it here in store. And I said, so what you're telling me is if I go right here, click Buy and pick up in store. I can take this one right here because you can scan it and they were like, Absolutely, I hit, I hit the buy. And they said great. You picked it up. And I walked out with the one that I could have scanned and been out three minutes earlier. So yeah, and retail as opportunities everywhere. It's there are definitely opportunities everywhere. Oh, I need a segue for this week in a retail opportunities, I guess opportunities to grow and your patients. Target is now eliminating what we're calling a character, character building moment. And many of us as we've had to endure something that nobody ever wants to endure. Target, has now said that they will no longer accept personal checks starting July 15 2024. So you're not going to get stuck behind the check writer. They cited low usage, and primary reason for discontinuing it with only 3% of purchases made this way and 2023. Obviously, they they have said like look, there's a bunch of other ways you can pay if you're used to paying with checks, you just got to get used to the cash or the credit card or the digital wallet. And the decision aligns with a broader trend of declining check usage noted by the Federal Reserve. Interestingly enough, personal checks are more prone to fraud and errors. So that three makes sense to potentially has fraud. You know, you get written errors. Maybe someone catches a

Paul J Daly: 14:03

few cannon. Yeah. Yeah. No checks and checks are really kind of this, this strange enigma to Gen Z. Right? Oh, let me ask you this question. How many how many paper checks? Have you written in the last year? One? Case in point, it's important I get so annoyed and

Kyle Mountsier: 14:23

check fight to find those. Right.

Paul J Daly: 14:25

Right. It's and so like, if for those of you in Gen Z, like you used to go to the shop, and you would like size up the person at the front of the grocery line or back to the grocery store today. And we're like, who looks like they're about to pull a check. And if you know, old and barrel right is up there and she pulls out that checkbook puts it out. You're like, no, no, don't do it. My kids act the same way. If someone pulls out cash, like ah, yeah, it's like we got a cash payer.

Kyle Mountsier: 14:54

I almost can't you know, you get someone that needs a chip card, you know, yeah.

Paul J Daly: 14:59

I can't I gotta get my wallet out go old school? No, I mean, this I can't believe it took so long to do this is obviously going to start a little, a little train, I think of people saying it's okay, the grocery store would probably be the last place to go. Right? There'll be the last paper check thing to go. I'm like, What do you even do with that just think of the processing involved. And like you had the cashier take a piece of paper check. And they have to do something with a pass it to somebody, someone has to process that and then they have to deposit it, and they have to make sure the money gets in the account. Like what a mess.

Kyle Mountsier: 15:27

Yep. What about this is interesting, actually, you know, as it comes to dealers, obviously, right lot

Paul J Daly: 15:34

of paper checks and dealers are probably benchmarks, one of the highest industries,

Kyle Mountsier: 15:38

what is your favorite? Yes, you're staying is like, you know, if a dealer as a Stripe account, and has bank, you know, because the biggest thing with checks is like, you don't have to worry about the cost of the, you know, the X percent or 3%. But if you use a Stripe account require only ACH or bank, someone can actually connect their bank account through their Stripe account or initiate a direct wire. And so you basically pay like, less than 1% 1% on that charge. So that's an opportunity to just reduce fraud and increase the speed of cash and account, say, Yo,

Paul J Daly: 16:15

did you know that banks banks used to charge for Depositing cash? Yeah, you know, like, that's, I don't know. So I mean, we have credit card fees now. What you just said is probably the cheapest way to take money a cashier's check. That's true. cheapest way to take it. Probably three to take not free to get I don't know. Hey, y'all, we got we got you thinking about being meticulous and precise about your business. It's a good season to be in. Look, we're making all the little changes serving the people. Get out there. Serve some people. We'll see you here tomorrow.

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