Hunter Engineering Co. has released an educational video for vehicle owners that explains why cars need wheel alignments.
The maxim “business as usual” has become “business unusual” for the dealers on this year’s MTD 100. They emerged from a global recession to find an increasing threat to their margins: tire pricing on the Web. Their willingness to adapt to change has given them the competitive edge to grow their businesses.
Much of the action on the 2014 MTD 100 took place in California, where two dealerships added 57 outlets. Overall, 34 dealers added stores, and 31 plan to expand. Most are adding one to three stores. Cincinnati, Ohio-based Tire Discounters Inc. plans to open 12 to 15 stores in the next 12 months.
Among the top 10 ranked dealers, Reinalt-Thomas Corp., which operates Discount Tire/America’s Tire stores, added seven outlets to keep its No. 1 spot with 877 stores. TBC Corp. holds onto second place with 823 stores, down from last year’s due to the conversion of 22 company-owned stores to Midas franchises.
In third place is Monro Muffler Brake Inc. with 427 stores, up 24 over the previous year. The company’s acquisitions over the last year include 10 Curry’s Auto Service stores. Monro also purchased nine Lentz USA Automotive Service Centers and eight Ken Rock Tire stores to enter the Michigan market. In fourth place is Les Schwab Tire Centers with 382 stores. The company also has 64 member dealers.
Somerset Tire Service Inc. is No. 5 with 150 stores, five more than 2013. Belle Tire Distributors, Tire Discounters Inc. and Town Fair Tire Centers Inc. opened four, three and two stores, respectively, in the last 12 months. Belle Tire is eighth with 92 stores and Tire Discounters is ninth with 89 stores. Town Fair Tire Centers has 87 stores to round out the top 10.
Activity in California
In California, AKH Co. Inc., which does business as Discount Tire Centers, sold 17 stores in the Los Angeles metro area to Pep Boys-Manny, Moe & Jack. Discount Tire Centers is tied for No. 38 on the MTD 100 with 29 outlets.
Another dealer, Los Angeles-based Rent-A-Wheel/Rent-A-Tire, acquired the Rimco tire and leasing business from Aaron’s Inc. The purchase added 25 company-owned stores and five franchise-owned stores. The company also purchased a Rent-N-Roll store in Las Vegas. Rent-A-Wheel/Rent-A-Tire now has 115 company-owned stores in 15 states and is ranked No. 7 on the MTD 100, the same as last year.
The Rimco acquisition launched Rent-A-Wheel/Rent-A-Tire into franchising. President Matt Seaburn says the five franchise stores as a group grew sales 25% in April 2014 over April 2013. The company plans to begin selling franchises nationally this month. Todd Evans, the former vice president of franchising at Aaron’s, is leading franchising operations. The company also is expanding company-owned stores and plans to open five outlets by the end of 2014 and up to 20 in 2015.
Seaburn says the company has had to work harder for sales over the last couple years. To capture more walk-in customers, the company added more cost-effective imports to the wheel and tire mix, more flexible payment options, and leveraged growth to lower vendor pricing. To attract customers who do not normally walk through its doors, the company has moved to grass roots marketing efforts that reward customers and employees for bringing in new customers. Social media is used to communicate with potential customers who may not understand the company’s business model.
“These changes have not resulted in big sales gains at more mature stores, but they have helped us to continue steady growth in tough economic conditions,” says Seaburn.
ATV Inc., which does business as American Tire Depot, also grew significantly. The company added 19 retail outlets to grab the No. 13 spot on the MTD 100 with 68 stores, all of them in California. The company is growing by purchasing existing locations and opening greenfield stores, according to Avo Kamberian, director of marketing. “Recently, comparable store sales have been growing at a double digit rate. Growth of the store base is also expanding at a double digit pace.
“Due to this combination of strong existing store sales and the opening of new units, American Tire Depot has achieved significant growth in overall sales,” he says.
The La Mirada, Calif.-based company added a comprehensive line of wheel products in the last 12 months. Kamberian says the company is “laser-focused” on customer service. “When you’re 100% concentrating on customer satisfaction, the rest falls into place. For us, customer service is paramount. Our growth is a direct result of accommodating our customers.”
Kamberian says the effect of the Internet on pricing played out years ago. “Now all the players know their competitors’ price positioning. Customer support, service and satisfaction differentiate a successful company today — and not pricing.”
The Internet has forced dealers to stay at the top of their game, according to Kamberian. “The entire industry has benefitted tremendously. The customer has a significant voice in the marketplace in terms of acknowledging and praising the companies that provide the best customer service. We view it as a scorecard. It’s our service scorecard in the marketplace, and our goal is to be better at it every single day.”
Impact of Internet pricing
Despite thinner margins, Delta World Tire Co. added one outlet in the last year. “We plan steady growth in our current markets and remodeling locations for more interaction with consumers,” says Paul Bernstein, president. “Tire pricing on the Internet continues to drive margins lower; however, it makes us more aware of our market’s conditions.” The New Orleans, La.-based dealership is tied for No. 67 on the MTD 100 with 16 stores.
“Margins on Tier One are the only tires affected by the Internet,” says Chris Mitsos. He is vice president of Mountain View Tire & Service Inc., which also opened a new outlet. “These margins have seemed to stabilize, but they are much lower than five years ago.” The company is headquartered in Rancho Cucamonga, Calif., and is tied for No. 34 with 31 stores.
Overall business finished strong in 2013 and is doing well in 2014 for Warren Tire Service Center Inc. The Queensbury, N.Y.-based dealership added a store this year. “We have been doing more electronic marketing and social media, and it has helped,” says Robert Kellogg, president. “Internet pricing has settled down and our margins are starting to increase slightly.” The company has 17 stores to tie for No. 63 on the MTD 100.
“Internet pricing has leveled the playing field,” says Randy Jones, president of Tireman Auto Service Centers, which opened a new store in the last year. The Toledo, Ohio-based dealership is tied for No. 60 with 18 stores. “This factor lowered margins a few years ago. We and our competitors have made adjustments in our operating expenses in light of new margins.
“The Internet factor is kind of old news now,” he says. “I believe it is having a very negative impact for smaller dealers, especially dealers who haven’t embraced retail websites.”
In Oklahoma, Robertson Tire Co. Inc. is experiencing record retail sales despite the fact Discount Tire recently entered the Tulsa market, according to Shane Robertson, who manages corporate development. Increased retail sales helped offset the impact on his wholesale business from a new American Tire Distributors Inc. warehouse in Tulsa. Says Robertson, “We are constantly working to improve our presence online as well as remodel our stores and update our equipment. Internet pricing has lowered our tire margins substantially but has brought us more business than usual.” Robertson Tire is based in Tulsa and is tied for No. 98 with 11 stores.
Internet pricing has lowered margins at Graham Tire Co., according to Jen McCann, marketing coordinator for the Minnesota and Iowa locations. The company has 28 outlets in Iowa, Minnesota, Nebraska and South Dakota.
“We have tested listing pricing on our website, but overall we get a better response having interested consumers contact us for quote requests through our website,” she says. “It gives us a chance to start a conversation and let them know the service and products we can offer them above our competitors.
“We often hear back from consumers who request a quote that we are the only company to get back to them with different options and pricing.” Graham Tire is No. 40 on the MTD 100.
Peerless Tyre Co., which does business as Peerless Tires 4 Less, has changed some of its pricing policies and gone to zone pricing in various states, according to Sam Forbes, president. “We follow everyone else online and make sure we’re in the marketplace. It’s part of doing business today.”
The Denver, Colo.-based company is tied for No. 16 on the MTD 100 with 57 locations and plans to add two outlets.
30,944 ‘likes’ and counting
When it comes to Internet pricing, dealers have to keep their website pages updated to show they are “right there with everyone else,” including retailers like Walmart, according to Rusty Coats, operations director for Bore MPC LLC, which does business as Big O Tires in Missouri and Arkansas. The company’s fiscal year ends in August. Year 2013-14 is shaping up to be a record year in terms of sales.
The company is selling fewer tires, but auto service sales are up. Coats credits the increase to technician training and an improved product line from Big O. The company is on pace to generate 57% of revenue from tire sales and 43% from auto repair in its current fiscal year. That’s a shift from the prior fiscal year, when the mix was 63% tire sales to 37% auto service.
Big O Tires in Missouri and Arkansas also dedicated an employee to manage all advertising as well as its Facebook presence. Although questions about tire pricing are answered daily, Coats says the social media site is making people feel the stores are part of the community versus “trying to sell them something.” He says the Facebook page is lighthearted and fun, with contests that award tickets to popular concerts. As of June 30, the company’s page had 30,944 “likes.”
Tied for No. 88 on the MTD 100 with 12 outlets, the company plans to open stores in Springfield, Mo., and Bentonville, Ark.
“Sales have skyrocketed,” says Coats. “I have to say Facebook is helping that. Is it the end all? No. But when you’ve got 30,000 friends on Facebook, it becomes a constant reminder you’re out there.” ■
Click here to see the Modern Tire Dealer 100 chart for 2014.
Related Topics: AKH Co., American Tire Depot, Big O Tires LLC, Discount Tire Co., Flynn's Tire, Internet marketing, Jack Williams Tire, Les Schwab Tire Centers, Modern Tire Dealer 100, Monro Muffler Brake, MTD 100, Rent-A-Wheel/Rent-A-Tire, Somerset Tire Service Inc.
Hunter Engineering Co. has released an educational video for vehicle owners that explains why cars need wheel alignments.
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