Business Case Studies & Business Publications

CarMax: Driving What's Possible

Nelson, Ryan, Wrig...

Case

CarMax: Driving What's Possible

Nelson, Ryan; Wright, Ryan

S-0317 | | 14 pages Case

Collection: Darden School of Business

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CarMax, based in Richmond, Virginia, is the largest retailer of used cars in the United States. Over the past several years leading up to 2019, CarMax has undergone a major digital transformation, integrating agile, lean, and user experience (UX) design best practices to become a customer-centric, product-driven organization. In this case, CarMax is facing new competitors (e.g., digital native players Carvana and CarsDirect), changing consumer shopping behavior, and technological advancements in electric cars, autonomous vehicles, and ride-sharing platforms. In order to maintain its dominant position in the used-car marketplace, CarMax must continue to evolve from a traditional brick-and-mortar model marked by legacy corporate practices (such as annual roadmaps and budget cycles) to a product-focused, omnichannel experience that delivers significant value to its customers.

After discussing this case, students should be able to do the following: - Describe the technological and business-model disruptions facing the used-car industry in 2019. - Evaluate the steps taken by CarMax to transition to a customer-centric, product-driven organization. - Describe the role of product teams and design-thinking methods in the dual-track innovation process. - Debate CarMax's strategy to compete through an omnichannel experience. - Understand the differences in structure and approach between a typical project-focused organization and a product-focused organization.