The same day Tire Factory Inc. took possession of a warehouse in Memphis, Tenn. — its first in the eastern half of the U.S. — CEO Walter Lybeck says the tire cooperative already had “20 store leads” it was actively pursuing. “And that number is growing quickly.
“In the short term, I’d be very happy if we had 12 or 14 (new stores) by the end of next year that are being serviced from that warehouse.” Three years from now, Lybeck says it could be 40 stores.
The key to the growth of the Point S retail brand in the east will be the partnership between Tire Factory and Nussbaum Distributing Inc., a tire distribution company created in 1986 in Memphis that’s owned by Mike Nussbaum. He’s admittedly a big fan of the Point S cooperative structure, and was a founder of the National Tire Corp. cooperative which evolved into Del-Nat Tire Inc. He was also a member of the Del-Nat board.
Nussbaum Distributing sells tires to retail tire dealers in four states — Tennessee, Mississippi, Arkansas Kentucky — plus parts of southern Missouri on smaller scale.
As Tire Factory recruits new dealers to join its Point S network, those dealers will order tires from Lybeck, but they’ll be delivered by Nussbaum — in trucks he owns, driven by employees he pays, and perhaps most importantly, along distribution routes he already has in place.
“It’s an opportunity to really help the independent tire dealer survive the consolidation that’s going on in the industry,” Nussbaum says. “It should be a benefit to our business. It should help our business grow. I think Point S has an unbelievably aggressive growth agenda, and by partnering with us they can accomplish what they want to do with one-third the normal overhead if they just came in and tried to open up and duplicate all the things my company is already doing.
“By partnering with us, I think it will allow Point S to expand their footprint more rapidly.”
Lybeck says the Point S warehouse, which is located at 1549 2 Place in Memphis, is blocks away from Nussbaum Distributing. (The cooperative has leased the space for now, and is under contract to purchase it.) He’s already placing orders to fill it with tires, and says the company is in the process of recruiting sales employees, as well as warehouse workers. In the short term Tire Factory will hire three or four people. Once the company has around 50 stores in the region it expects to employ about a dozen workers in Memphis.
The Point S warehouse should be fully operational by the end of March, Lybeck says. “Perhaps sooner.”
Nussbaum says he sees opportunity in the two companies joining forces.
“I think it’s a very complementary offering in that they tend to focus on major brands, and we tend to focus on entry level, so we have complementary inventories. The customer base is different. The offerings are different. There’s a lot of synergies out there.
“We overlap to some degree, but I think we pretty much go after two different kinds of tire dealers. I have several hundred tire dealers that buy from us. They’re not looking for as many customers as I’ve got. They’re looking for the big customers.”
Nussbaum’s territory spans 150 miles from Memphis, and offers twice-a-day deliveries in the metro area, and almost-daily deliveries within that 150-mile radius.
“We’d love to deliver everything within that 150 miles every day, but we have some territories where we don’t have the volume to run every day,” he says. “One of the big reasons I’m doing this is, if Point S can go out and find a fairly large dealer in one of my routes where I’m delivering three times a week, that would probably increase the volume to where I could run it five times a week.”
And he’s made that commitment to Point S, too. If they help him increase the volume in “the few areas” with less-than-daily deliveries, he promises his trucks will be on the road five days a week.
Lybeck says, “It’s our collective vision that’s allowed this to work.”
Lybeck says the expansion continues to establish the cooperative for the long term.
“If we stay in our 15-state region and continue to operate in our current capacity, we will lose leverage and buying power over time.”
Plus, dealers on the fringe of the group’s territory won’t have as many opportunities to connect with their fellow dealers.
“We have people on the edges that are not fully serviced by our warranty and the connection to the people. In Portland dealers are surrounded, so they get the nice benefit of the neighboring states and the people. The farther you get from that central hub the more difficult it becomes to stay connected.
“We need to continue to expand because we really want this nationwide network of independents where we’re all supportive of one another. You add that to the Canadian connection, and hopefully soon a Mexican connection, and then we’ve got an entire network in North America of dealers trying to fight the same battle.”