Who will be your next great competitor? As independent tire dealers, you already compete against stores owned by tire manufacturers, mass merchandisers, warehouse clubs, car dealerships and muffler shops.
Shortly after the turn of the 21st century, Ford Motor Co. upped the ante with its Quick Lane Tire & Auto Centers outlets, which are run like independent tire dealerships. Now there are more than 800 of them in the U.S.
Costco Wholesale Corp. is not the biggest of the three warehouse clubs, but it is arguably the most successful, especially following a big 2016. Not coincidentally, it runs its 500-plus domestic tire centers like stand-alone tire dealerships, at least more so than the other clubs.
So it’s time to look ahead for the next big player in our industry. I am handicapping the top three, all of which already sell tires, but are potentially set up to grow exponentially if they play their cards right.
It would have been four, but I just couldn’t imagine Target Brands Inc. ever selling tires, at least at its 1,800 Target stores. Tires are not a good fit with its self-proclaimed signature businesses: “Style, Baby, Kids and Wellness.”
And in case you had a little extra cash burning a hole in your pocket, sorry. You will not see these odds in Las Vegas.
In its 2015 fiscal year ended Dec. 31, 2015, Amazon.com Inc. sold $63.7 billion worth of goods online in North America. That included tires and automotive parts.
According to a report by “Internet Retailer,” Amazon.com accounted for nearly 82% of the web revenue growth among publicly traded online retailers in the third quarter of last year. ChannelAdvisor Corp. estimated Amazon accounted for more than half of the quarter’s online sales reported by the U.S. Department of Commerce!
Although Amazon sells every major tire brand, plus plenty of imported tire brands, it has only scratched the surface of what is possible. From what I hear, the reluctance of many tire manufacturers to sell direct to the company is holding it back. So is its lack of distribution partners.
Online tire sales account for 6% of the total consumer tire market, according to Modern Tire Dealer research. That represented 14 million passenger and light truck tires last year.
Even if some of its growth cannibalizes the sales from other companies selling tires online, Amazon’s growth potential is substantial.
Sears Automotive: 10-1
At one time, Sears, Roebuck and Co. sold more than 20 million tires a year. Now that total is down to around 3 million. A revolving door of executives has tried to jump-start tire sales to no avail.
As recently as nine years ago, there were more than 800 Sears Auto Centers in the U.S. Now there are less than 650. The vast majority of them are attached to Sears stores, which makes them unattractive to potential buyers.
The company recently unveiled a new stand-alone store concept: the DieHard Auto Center Driven by Sears. The first store opened in San Antonio Feb. 17.
The new auto center “is another example of how we’re unleashing the power of the DieHard brand,” said Brian Kaner, president of Sears Automotive. “It offers state-of-the-art technology and services in a contemporary, comfortable setting; that, combined with our experienced associates, can help today’s drivers make the right choices for their vehicle’s needs.” Sound familiar?
It might be too little, too late for Sears to stop the bleeding.
NAPA Auto Parts: 100-1
Here’s a sleeper. The National Automotive Parts Association, better known as NAPA (NAPA Auto Parts is technically redundant), has not really shown an inclination to push tire sales, but it is logistically set up to do so, with more than 6,000 stores in North America.
NAPA, which is a division of Genuine Parts Co., could add bays, but has chosen to leave tire sales and service up to its 14,000-strong independently owned NAPA AutoCare Centers network. It doesn’t even sell tires online.
What about those service centers? They are truly independent. They are members rather than franchisees. As such they are not a cohesive group, per se. They also emphasize automotive service and collision repair over tire sales.
If Amazon, Sears and NAPA all beat the odds, look out. ■
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