Hurricanes, recessions and now the COVID-19 crisis – Black’s Tire Service Inc. is accustomed to working through temporary setbacks and sticking to its long-term plans.
Before the COVID-19 outbreak hit the United States, MTD sat down with Ryan Benton, who runs Black’s retail arm, and Rick Benton, who directs the company’s wholesale distribution business, to discuss the future of independent tire distribution and two other hot topics that they – and other dealers – face: how to find auto service technicians and the impact of e-commerce.
MTD: Is there still a place for the independent wholesale tire distributors in today’s marketplace?
Ryan: I feel there is not only a place, but a need. My kids like eating pizza on the weekend. One of my kids like Domino’s. One of my kids likes Papa Johns. You need different flavors. You need variety. To some people, relationships are important. To some people, convenience is important. For others, price is important. There are so many factors. The tire business is a lot more complicated than it should be. We try to simplify. We try to be more than just a tire distributor to our customers. We truly try to partner up with them and be a resource for them.
Business in the retail marketplace is tough. Competition is tough. Our dealer customers are competing with the Internet, mass merchandisers, car dealers, big box stores and other organizations that have deep pockets and endless resources. We challenge ourselves to come up with new ways to help out those (smaller) guys, so they can continue to thrive. We want to do our part so our customers can continue to compete.
We’re independent. We understand what they face on a daily basis. We go through the same struggles. And we feel that we understand each other. We’re also making decisions in the markets where they are. A tire is a tire. A car is a car. But each market is different There are different economic factors. There are different logistical factors. There are different workforce factors. What works in one market may not work in another market. I think there is absolutely a place for independent, regional distributors.
Rick: I strongly agree. With all the consolidations, people are being taken out of the equation. And that creates an even greater need for the independent distributor. We try to help our independent customers. We see so many tire dealers who have spent their whole lives building something. It’s not just about the dollar. It’s what you’ve done in life. We take that philosophy to our customers. We 100% feel that there is a place for the independent wholesale distributor. And it’s more important than ever because business is getting more complicated. Dealers need solutions. We have an open policy at our company. We want to help our dealer partners. We don’t want to just jump and run. We’re in a lot of rural areas. We’re not in big cities. There’s a high cost to serve our dealer members. But we want to keep our independent dealer customers strong because the industry needs it.
Ryan: People still deal with people. It’s more enjoyable to do business with people whom you know, trust and value. And they help us, too. We learn from them.
Rick: We do what we call “dealer connects” each quarter. We do some training for our members. They come into our training center. We try to find ways to partner with them. It’s not just about selling tires.
Ryan: We do little things. For example, if you’re a tire dealer in Small Town, N.C., and you want to get your techs Tire Industry Association (TIA)-certified, you have to send them to Baltimore or Texas or someplace else. It’s very costly. We do that for our dealer members. We have TIA trainers who work with us. And when we train our people, we (take that training) to our partner dealers. We don’t charge them.
Rick: We try to be a knowledge source for them. We’re growing and investing. We just opened another distribution center in Columbia. S.C. We’ve set up satellite distribution locations. I think there’s also value in independent distributors because we promote the tire brands. We invest in growing the brands (we carry) and I think we’re a positive reinforcer. We’re also committed to the business long-term. I think that’s a value to tire manufacturers. They know that we’re a company they can have a strong future with.
MTD: A lot of dealers have told us their biggest challenge is finding good people – particularly young auto service technicians. How are you tackling this issue?
Ryan: I think there is a common misconception that millennials are lazy or don’t want to work hard and aren’t interested in our type of industry. We have to teach them and we to make ourselves known as a good option – because we are. There are a lot of great benefits. You can make a good living. You can have a future. But you have to show them this. You have to think outside the box. If you’re waiting for good applications to come across your desk, it’s going to be a long wait.
We’re trying to grow our own techs. We’re taking some of our older, more experienced guys and are having them mentor younger guys. We go to high schools. We go to community colleges. We network and try to connect with faculty, administration and students. We also have a lot of families in our organization. Everyone who works with us is a recruiter. And they know people. Now, that’s not the only way. You can’t rely on just that. You have to exhaust all options.
It’s a real issue. There’s a shortage now and it’s only going to become a bigger and bigger problem. Young people look (at work) differently. You have to be flexible. You have to find ways to connect with millennials in the workforce. You have to find out what motivates them early. It’s not always compensation, although a good tech can be very highly compensated, if they develop their skill set. Are you giving them something to feel good about, outside of their daily work? Part of our DNA is giving back to the community Are you giving these young people the opportunity be part of something so they can contribute to the greater good?
These people are philosophical and smart. They have good ideas. We have to listen to them. We have to be open-minded. We have to be willing to change, as an industry. That’s tough. But it’s the only way if we want to attract younger talent.
Rick: I don’t think it’s been as bad on the wholesale side but there has been a challenge. It’s an opportunity, too. Right now, a lot of our younger guys are making things happen.
Ryan: They don’t want to feel like a number. They want to feel like they’re making a difference. But it has to be genuine. It has to be real.
MTD: Right now, it is estimated that about 7% of all tires in the U.S. are sold online. That will most likely increase over time as other entities – like Amazon – enter the picture and build installer networks. Has e-commerce had an impact on your business in a positive or negative way?
Rick: It has definitely affected profitability. It makes it tough on us because we have brick-and-mortar and other overhead costs. The good thing about it is that people still put tires on cars. The service – mounting, balancing and other things – still has to be done.
We think we have to do more e-commerce. We don’t want to miss out on that business. We’re a service point. We like to say we’re tire service experts. But it’s a double-edged sword for us. I can go on my cell phone right now and buy a set of tires.
Ryan: We estimate over half of tire consumers do research online prior to calling or visiting a store. People come to us and say, ‘I found this tire on my phone at this price.’ We say, ‘OK, let’s see what we can do. We might be able to match that price.’ Now that price may be due to the fact the seller doesn’t have overhead costs, like what it takes to operate a full-service tire store. But the consumer’s expectation is that we will match the online price. That’s one very common way e-commerce erodes margins.
We tell them, ‘I know you’re shopping online. But when you take the total cost of ownership price into consideration, it’s not as big of a difference as you might think. If you buy a tire from us, we mount that tire for free. That’s one way you’re saving. And we’ll rotate your tires at no cost. That really adds up to significant dollars if you average maintenance needs over the life of a tire.’
That said, selling tires on the Internet isn’t going away. We have to do one of two things: we have to reject it or embrace it. We choose to embrace it. We’ll be an installer for any brand we do business with.
“There will always be a place for the local, independent dealer who gives good service and builds relationships,” says Ryan. “A large percentage of consumers still want to talk with an experienced professional who’s an expert. Speed ratings, load index, tread design, sizes, application specific performance – the list goes on and on. There are a lot of factors to consider, which makes the tire buying process more complex than first-time shoppers realize.
“Consumers can research and gather a lot of information, but we find that with something that is as important as tires, they also want to hear real, live, expert advice from real people. There will always be a need for local, hometown service.
“We encourage our stores and wholesale-dealer partners to sell peace of mind, which is hard to put a price tag on. If our customer has a problem, we welcome them to come on down and let us take care of it for them.”