Retail

Tire Factory Dealers Get to the Point: Conversion to Point S Dominates Annual Meeting

Joy Kopcha
Posted on March 17, 2016

Interim CEO Walter Lybeck, center, told dealers, “I need to earn your business. I cannot expect your loyalty.” Tire Factory had 205 stores and $92 million in sales in 2015. The goal for 2016 is 255 stores and $100 million in sales.
Interim CEO Walter Lybeck, center, told dealers, “I need to earn your business. I cannot expect your loyalty.” Tire Factory had 205 stores and $92 million in sales in 2015. The goal for 2016 is 255 stores and $100 million in sales.
Nine months after Tire Factory Inc.’s former CEO announced its members would join Point S and rebrand their stores, Tire Factory dealers gathered for their annual meeting in Portland, Ore. It was the first comprehensive gathering of members since the May 2015 announcement.

And while the rebranding of blue and red Tire Factory stores into blue and green Point S stores was a key component of the meeting – there was even an afternoon bus tour to visit three rebranded stores – Tire Factory board members and staff also worked to show dealers the advantages of joining Point S, an international group of independent tire dealers with a presence in 30 countries.

Eric Gill, chairman of the board and the owner of 14 stores in Oregon, said Point S initially approached Tire Factory four or five years ago, but the idea of joining forces was quickly dismissed. Then, two years ago Point S resurfaced and Tire Factory board members learned “not only was their vision a good one, but it was extremely similar to ours.” That vision remains focused on the independence of dealers.

“We are seeking a way forward,” Gill said. “We want to be the very best support agent for the independent tire dealer in North America.”

Point S Canada has shown the way

Point S has cast a wide net, not only with its Tire Factory partnership in the U.S., but also with a similar agreement in 2012 with UniMax Tire Ltd. in Canada. UniMax began rebranding its retail stores using the Point S name in 2015. Bruno Leclair, CEO of UniMax Point S Canada, told Tire Factory members he thinks the rebranding and uniform image among dealers, supported by a sweeping marketing campaign, has been a key to the group’s success in Canada. Leclair’s goal was to have 50 rebranded stores by the end of 2015. They ended up with 154. The uniformity created momentum, he said.

“My biggest concern was brand recognition,” Leclair said.

Tire Factory dealers will have access to Point S branded tires beginning in 2016, including this Winter Star ST with an optimized spike sequence that offers good ice grip, reduced noise, and a comfortable drive.
Tire Factory dealers will have access to Point S branded tires beginning in 2016, including this Winter Star ST with an optimized spike sequence that offers good ice grip, reduced noise, and a comfortable drive.

Two months after the launch of the Point S name and a “No Stress with Point S” advertising campaign, the group commissioned a professional survey to ask customers about brand recognition of tire dealers and auto repair shops. Point S registered at 16%, second behind mass merchandiser Canadian Tire. After 35 years in the market, UniPneu, the retail banner of UniMax, was at 12%. The survey also showed customers were more familiar with the new advertising campaign, and 41% understood the advertising, whereas only 4% said they understood UniPneu.

Walter Lybeck, Tire Factory’s interim CEO, told dealers he expects that same kind of momentum to flow in the U.S. with the rebranding of stores, as well as the launch of a new marketing campaign “Get to the Point.”

“I believe we can be the third largest in North America,” Lybeck said. The expectation is there will be more than 700 Point S locations by 2020.

Not all Tire Factory dealers have been on board with the change, and some came to the meeting ready to air those frustrations. Some admitted time had softened their anger, and others said talking to their peers and seeing how three dealers had adapted their stores helped them open their eyes to the possibilities.

So far 28 stores have rebranded, and another 41 are expected to complete the transition this spring. They’re getting some financial help along the way, as each store is eligible for up to a $25,000 advance to pay for qualified and approved changes. Tire Factory has sought $4 million in rebranding support from its suppliers, and its largest tire vendors, Goodyear Tire & Rubber Co., Hankook Tire America Corp., and Cooper Tire & Rubber Co., are offering assistance. Balkrishna Industries Ltd. is supporting the rebranding of commercial tire dealers.

To take advantage of the $25,000 advance a dealer must make a commitment by Sept. 30, 2016, and complete the rebranding by the end of the year.

Tire Factory staff and the cooperative’s partner, MBT Marketing of Portland, are helping dealers with the details and transition, including visual mock-ups with paint and signage updates.

Gary LeLoff, owner of American Tire Point S in Gallup, N.M., said his store conversion cost $16,500, but he spent only $500 out of his own pocket – for new checks, business cards and stationery.

How to handle online tire sales

But the new look is only one part of the Point S conversion.

This year Point S is unveiling an online training center, Point S University. Sessions are designed for employees when they need it, and where they need it.

Clint Young, director of sales and business development, said the program allows dealers and their employees to “capture short bits of time” with “short bursts of knowledge and information.”

Sessions are designed in three- to five-minute packs.

Another advantage to the Point S partnership will be private label products. Joe Moore, director of merchandising, said dealers will have access to the first Point S tire, the Winter Star ST, for the 2016-17 season. The tire is based on an existing design and will be manufactured by Continental AG in Europe. It will be available in 30 SKUs for wheel sizes 13 to 17 inches. Next up will be a Point S light truck tire, with a targeted launch in mid-2017.

“There’s no way Tire Factory by itself could have come with enough volume to bring private branded products to market,” Moore said.

A series of seminars offered dealers tips on how to expand their business, whether it was through ramping up commercial business or servicing some of the newest and most technical cars on the road, such as the Tesla Model S. Attendance at one session was more packed and lively than any of the others: combatting online retail tire sales and winning back your customers long term.

Tony O’Billovich has developed an idea to help tire dealers recoup some of the lost revenue from consumers who purchase tires online. O’Billovich, who works for Gill’s stores in Oregon, asked dealers how they react to consumers who arrive at their store with four tires purchased online. “Are you just going to get mad?”

O’Billovich suggested another path. Yes, the dealer missed out on that one sale. But the consumer needs the tires installed, and there might be an opportunity to charge more than a flat installation fee. He said dealers could develop package pricing that includes installation plus free flat repairs, a certain number of tire rotations and spin balances, and even a road hazard warranty.

They could create bronze, silver and gold levels for the packages, and have higher price points for light truck and ultra-high performance tires over standard passenger tires. The same sort of pricing could be offered to customers who want used tires installed on their vehicles.

In the meantime, dealers can use those service opportunities to show consumers why they should buy future tires from the local dealer.

“I’ve got three years to make you my buddy, and it didn’t cost me $375 to get you in the door,” O’Billovich said, referring to the potential cost of recruiting a new customer into a dealership. “When people come to us they’re floored by our service.”

A look at Point S stores in Portland

 Modern tire and wheel displays include posters that showcase the store’s history, which dates back to 1978.
 Modern tire and wheel displays include posters that showcase the store’s history, which dates back to 1978.

Nolan’s Point S in Gresham, Ore.
Nolan’s Point S in Gresham, Ore.

The front counter at Eric Gill’s Brown’s Parkrose store features a bold design.
The front counter at Eric Gill’s Brown’s Parkrose store features a bold design.

Related Topics: Eric Gill, Nolan Calvin, online tire sales, Point S, Tire Factory, Walter Lybeck

Joy Kopcha Senior Editor & Digital Projects Editor
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