February 25, 2014
Tire Factory becomes a cooperative
Tire Factory dealers saw a model of the new branding initiative at the annual meeting. “We have consistency in our merchandising and signing but still give the individual dealer the latitude to do what’s right for their shop,” says Keith Morris, director of merchandising (pictured).
Tire Factory LLC capped its final year as a partnership with 28 more stores, about 8% more in revenues, and approximately a 5% increase in units of tires shipped. The dealer program group is beginning 2014 as a cooperative. The change in structure, which was passed by 97% of members, became effective Jan. 1.
“One of the biggest advantages to becoming a cooperative is that over time it changes the way members support their own company,” says John Kreidel, chief executive officer.
“By law we have to pay out our profits pro-rata to members’ purchases. So instead of being based on stock ownership, it’s now based on purchases. We’re not taxed at our corporate level, we pay out all that profit to members and they get that earning. So the more a member buys the bigger chunk of the profit they’re going to get. In most co-ops, over time that leads to lower prices for all members.”
At its annual dealer meeting in Portland, Ore., Tire Factory executives announced plans for 2014 which include a new branding initiative, testing of tire pricing on the web, options for delivering data to help dealers make slotting and pricing decisions, and a goal to add 25 more stores.
Tire Factory is emphasizing growth in Denver and surrounding states in 2014. The company just opened a 40,000-square-foot distribution center Denver to replace a much smaller facility. The expanded Denver warehouse will be fully operational in April.
No other group in this country that is providing the members a complete solution, according to Kreidel. “It’s a beautiful model in that the owner is at the sharp end of the stick but the tough things to do – the aggregation of buying and the advertising – all those things come together like a large company.
"There is no other group in the U.S. that does business the way we do. What that means is that the dealer can buy multiple lines with very frequent deliveries at near direct cost.”
For information on becoming a Tire Factory member, visit www.jointirefactory.com.