Max Finkelstein Inc. has opened its second distribution center in Virginia. The new DC is located outside of Richmond, Va., in Colonial Heights.
Investment in brick-and-mortar locations seems an unlikely strategy for combatting online tire sales, shrinking tire margins and a tight labor market. Yet for many dealerships on the 2018 Modern Tire Dealer 100, a larger geographic footprint is essential to compete in today’s retail environment.
Reinalt-Thomas Corp. built every one of the 42 stores it has added since July 2017. The Scottsdale, Ariz.-based company is at the very top of the Modern Tire Dealer 100 with 982 Discount Tire/America’s Tire outlets.
Fifteen stores were opened in the first six months of 2018. The new outlets are in Goleta, Calif.; Tucson, Bullhead City and Tolleson, Ariz.; Suwanee and Alpharetta, Ga.; Aiken, S.C.; Wichita, Kan.; Memphis, Tenn.; Eagle Pass and Bulverde, Texas; and Henrico, Newport News and Chesterfield, Va.
More stores are on the way as the company says it plans to enter the North Dakota, South Dakota and Pennsylvania markets “soon.”
TBC Corp. holds on to the No. 2 spot with 732 stores versus 772 a year ago. The company attributes the drop in stores to the sale of 44 NTB Tire & Service Centers locations to Big O Tires franchisee Mark Rhee in November 2017. Rhee, who is president of Western Automotive Ventures, also has 12 Big O Tires stores in Nevada. The deal with TBC gave Rhee a total of 56 Big O Tires outlets in Iowa, Kansas, Missouri and Minnesota as well as a tie for No. 18 in the Top 100 rankings.
Monro Inc. purchased 36 independent tire shops and now operates 612 retail and nine combination retail-commercial locations. Recent acquisitions include 12 retail and commercial stores from Free Service Tire Co. Inc. and seven retail stores from Appalachian Tire Products Inc. The Rochester, N.Y.-based company is in the No. 3 spot, unchanged from last year.
The Millwood, N.Y.-based dealership moved into the No. 4 spot with 530 company-owned stores, up from 335 outlets in the year-ago period. The company expanded its presence in the southeastern U.S. through a merger that added Express Oil Change & Tire Engineers stores and other outlets operated by former Modern Tire Dealer 100 list maker Express Oil Change LLC. Acquisitions since the start of 2018 include Kauffman Tire, Sun Tire and Automotive Services, Hill Tire Centers and Dekalb Tire & Automotive Service locations.
Mavis expects to continue the pace of its geographic expansion. “We hope to maintain or accelerate our rate of growth,” says Pat Schulte, vice president of marketing.
Cincinnati, Ohio-based Tire Discounters Inc. added nine stores in the last 12 months. The company says it is continuing to open stores in its existing markets as well as in its newest market, Knoxville, Tenn., later this year.
“Creating a better in-store experience for our customers is a top priority,” says Steven Wood, director of operations. “Our new locations, as well as our remodeled stores, offer modern amenities that promote a positive experience for both the customers and the employees. From increasing our number of service bays that feature state-of-the-art equipment to providing more comfortable waiting areas with convenient Wi-Fi access, our stores allow us to deliver higher standards to our customers.”
The dealership was voted a “Best of Cincinnati” winner by CityBeat magazine readers for the 10th straight year in 2018. Tire Discounters is tied for the No. 7 spot with 112 locations in Ohio, Kentucky, Indiana, Tennessee, Georgia and Alabama.
Also operating 112 stores is ATV Inc., which goes to market as American Tire Depot. The La Mirada, Calif.-based dealership added a total of 13 stores since July 2017. The company, which surpassed the 100-store threshold in December 2017, opened its first American Tire Depot location in Santa Fe Springs, Calif., in 1991. “Our customer veneration-centric approach with commitment to provide the lowest price exceptional tire and auto care services has led to this milestone achievement that businesses rarely accomplish,” says Avo Kamberian, director of marketing.
The company also plans to enter Indianapolis, the state’s largest market. By the end of 2018, Belle Tire will have between 15 and 18 stores in Indiana, according to President Don Barnes III. The dealership built its first store in the Indiana market in 2015. Belle Tire, which was founded in 1922, also has stores throughout Michigan and northern Ohio.
Nebraskaland Tire Co. Inc. expanded by acquisition. The company purchased three stores in the last 12 months, according to Carson Wright, executive vice president. The new stores are in Amarillo, Texas; Clay Center, Kan.; and McCook, Neb. All three locations are new markets for the dealership, which goes to market as Nebraskaland Tire, Kansasland Tire and Coloradoland Tire. The Lexington, Neb.-based company holds the No. 23 spot with 46 locations.
No. 34 ranked Colony Tire expanded into the Virginia market with the acquisition of ABC Tire LLC (one location), Lynchburg Tire Corp. (two locations), Carpenter Tire Inc. (one location) and Glenn Trent Inc. (one location). The five newest Colony Tire outlets are a combination retail-commercial store in Stafford in northeast Virginia, a retail store in Madison Heights in central Virginia and three combination stores in nearby Lynchburg. Colony Tire is headquartered in Edenton, N.C., and has 32 outlets.
T&W Tire LLC nearly doubled its store count with the purchase of 14 commercial locations from Tire Centers LLC (TCi), a subsidiary of Michelin North America Inc. T&W Tire holds the No. 39 spot with 29 outlets. The dealership is based in Oklahoma City, Okla.
There are four RNR Tire Express and Custom Wheels franchisees on the Modern Tire Dealer 100. David Harrison, owner of No. 49-ranked Rental Concepts LLC, added three outlets for a total of 24 stores. Chris Raffo, owner of Rims USA LLC, added two stores for a tie at the No. 70 spot with 16 RNR stores. The company which offers RNR franchises, SPF Management Co. LLC, is owned by Larry Sutton, who added two outlets for 15 RNR stores and a tie for No. 76. Tied for No. 84 with 14 RNR stores, two more than last year, is Shannon Strunk, who owns Gulf Coast L&P Inc.
Vince Ficarrotta, RNR’s vice president, says the company is seeing a lot of growth in its existing franchise territories and is looking for new franchisee candidates. “We’ve covered the southeast quadrant of the U.S., so we need to be in those other three quadrants with some presence. We’re just starting to bleed over to the north, we’re bleeding over to the west a little bit with some stores in Texas and Arkansas being in the middle. We opened a store in New Mexico this year.”
Like all successful dealerships, Mountain View Tire & Service Inc. has a game plan for identifying emerging risks and evolving with an ever-changing landscape. Changing demographics are behind a push for new stores in new markets, according to Chris Mitsos, vice president.
A new Mountain View Tire & Service outlet opened in Southern California in April. Three more stores are under construction and ground is slated to be broken for a fourth location in 2018’s fourth quarter.
The just-opened store is located in a newly built shopping center complex in Wildomar. The staff of seven will eventually ramp up to 10. Another store is scheduled to open in the southwestern quadrant of Murrietta in September. Its customers will come mostly from the nearby community of Temecula. Mountain View Tire & Service also has a store in the northeastern part of Murrietta.
The next store is set to open in the Los Angeles suburb of Chatsworth, which is a new market for Mountain View Tire & Service. Although the dealership has stores within 10 miles of Chatsworth, the area does not have a lot of intense competition, according to Mitsos.
The Chatsworth community was home to Southern California’s aerospace industry in the seventies and eighties. “Most of that aerospace has gone away and slowly everything is being redeveloped. It’s kind of becoming gentrified so we saw a good opportunity to have a store there and we jumped on it,” says Mitsos. The Chatsworth store will open in September or October.
In addition, a store in Menifee, about five miles north of Murrietta, is under construction. The Menifee store’s opening is planned for November or December.
The company also is finalizing the architectural plans for its second store in Fontana. It is scheduled to open in the first quarter of 2019 to service a different set of customers from the existing Fontana outlet. The dealership’s database marketing provider mapped customer data to see who lived in the Fontana store’s neighborhood. “There were literally no customers coming from the quadrant of the city where we are building the new Fontana store, so that’s why we decided to build a second store there,” says Mitsos.
“One of the reasons why we are building new stores in newer communities is because a lot of the stores opened when our company was in its infancy were in older communities,” says Mitsos. “In some of these communities, the demographics have gone down, not up. The neighborhoods are no longer what they used to be.”
Mountain View Tire & Service has known for a couple of years that it would not be renewing leases for some of its stores in older neighborhoods. “That was the motivation to build new stores,” says Mitsos. “We don’t want to go backwards in store count.”
The company is also responding to situations in which landlords want to replace tire store tenants. “There’s a saying that all real estate eventually finds its best and highest use,” says Mitsos. “Tires stores are not best and highest use in the real estate industry. Right now food and medical are best and highest use. As some of our leases come up for renewal, especially in large malls, we are not going to get renewed. That’s why we continue to look for new locations.”
People pay a little more for a tire from Mountain View Tire & Service in return for a pleasurable retail experience, according to Mitsos. “Our stores are clean, inviting and friendly. Our staff is very, very customer centric. We just don’t talk about taking care of the customer; it’s in our culture. We’ve been living that culture every day for 30 years, and you can see and feel it when you are in any of our stores. I think for that reason, people are willing to pay a little bit more money to do business with Mountain View Tire.”
The dealership refuses to participate in the race to the bottom to see who can sell the tire at the lowest price. “We will negotiate with our customers, but there’s a certain line we won’t go below. We’d rather save the tire and sell it to somebody else that’s willing to pay our price,” says Mitsos.
Customers buy tires from Mountain View Tire & Service for three reasons, according to Mitsos. “We provide a positive experience, we stand behind our warranties, and we give people inviting environments. And that’s the secret. It’s easy to say, it’s really hard to do. It’s something we’ve been doing for 30 years and it is second nature for us. For so many of our competitors it’s not second nature. They fight the customer and view the customer as a burden and not an opportunity, and that’s where we win.”
Mountain View Tire & Service is close to completing a project to rebrand 25 outlets. Once the last two stores are rebranded, the company will have spent between $500,000 and $600,000 to create a consistent visual identity across all of its stores. The dealership is tied for No. 36 with 30 stores.
Solutions to the challenges
Whether they operate a dozen or nearly a thousand stores, every dealer on this year’s Modern Tire Dealer 100 brings a focus on solutions, not problems, to their businesses. Mitsos considers technology to be the greatest challenge facing the industry today. “Are we going to have the skill set through our workforce to handle the technology that is going to be associated with cars? How do we overcome the technology and how do we stay competitive with the dealerships?”
For Jim Ramsey, a key piece of the solution is a full-time trainer for his technicians and a clear career path for aspiring technicians. He is president of Lamb Ventures LLC, which operates 16 Lamb’s Tire and Automotive stores in central Texas. The stores provide mechanical services for both passenger and commercial vehicles. Vehicle repair and maintenance represent about 75% of Lamb’s Tire and Automotive business.
Every Lamb’s Tire and Automotive store has at least two “A-level” technicians, and some stores have three. There are usually five entry level technicians in every outlet. Two of the stores have eight bays; the rest have 10 bays. The trainer instructs all entry level technicians on basic procedures for oil changes, tire repair and tire installation. Beyond the basic training, the dealership tries to grow its own technicians, according Ramsey.
“We’ve trained techs and enabled them to make a very good living,” says Ramsey. The process starts by identifying general service entry-level techs with the potential to move into new roles, and partnering them with the shop manager.
“The tech will usually work with the shop foreman for about a year, and then he’ll go out on his own. And that works really well because the shop foreman will continue to help him, and he will always feel that if he gets into a bind when working on a vehicle he can always go to his shop foreman for assistance.”
Ramsey’s plan for training technicians is helping him prepare his business for the future. “The automotive aftermarket in the next six to seven years is going to be very robust due to the fact that so many new cars are being sold. I was looking for a downturn in new car sales this year but it seems to be doing well again, and I think that bodes very well for the aftermarket.”
In Dayton, Ohio, John Marshall is meeting with high school and trade school teachers, principals and school board members to change attitudes toward technician careers. He is the corporate secretary for Grismer Tire Co., which is tied for the No. 44 spot with 25 Grismer Tire & Auto Service stores in northern Cincinnati, Columbus and Dayton.
“I used to think Dayton, Ohio, was like Flint, Michigan,” says Marshall. “We had a slew of General Motors plants, and I thought most people who weren’t going to college believed the only job worth something was in manufacturing. We felt it would take a generation for the parents to no longer teach their children that. Instead, we found out it’s probably as much the teachers only talking to their students about going to college.”
Grismer’s solution was to begin meeting with educators and administrators to show them the advantages of an automotive technician career. Teachers are even invited to visit his stores. He has had some success, even though the program began just a year and a half ago. “The big thing is getting the teachers to understand,” says Marshall.
David Simons of Dunn Tire LLC rejects the stereotypes of young employees. “Everybody wants to get down on today’s generation of workers. Maybe it is harder to find the gems, but they’re still there,” says Simons, who is executive vice president and chief financial officer.
“Maybe they need to be treated a little differently than when we were 22 years old. But it still comes down to treating people well and giving them a reason to want to come back tomorrow and a reason to think that they could have a longer career; there are still people looking for that kind of a situation.” Buffalo, N.Y.-based Dunn Tire is tied for No. 36 with 30 stores in western and central New York and northern Pennsylvania.
Mitsos notes that the same things that attract customers to Mountain View Tire & Service stores are the very same things that attract potential employees to his company. “We create a positive growth environment for the people who work for us. We’ve learned to treat our people the right way. It’s not perfect, we’ve had disgruntled associates, everybody does. But again, it’s the way you handle it and it’s the environment you create. It’s just about doing the right thing for your customers, for your associates and everything else takes care of itself.”
The Best One Tire Group is in the midst of developing standards, measurements and benchmarks for its member stores, with the goal to “grow by getting better,” according to Lindsey Beer, chief strategic officer. Performance versus a benchmark is assessed in terms of minimum accepted standards, planned accepted standards and visionary accepted standards, which are known as MPVs for short.
The company has set key result metrics for financial and operational items, and is currently defining measurements for items related to its culture. “In 2018, we are making significant investment within our corporation to continue to grow and improve and enhance our culture,” says Beer.
“We are defining and putting a focus on our vision, mission and core values and how we operationalize and standardize those within our locations,” she says. “We feel that is very foundational and will be a difference maker against our competition.”
The cultural benchmarks will reflect a customer’s experience at a Best One location. Examples include how long it takes an employee to greet customers when they enter the store, whether employees step out from behind the counter to engage customers, and whether employees open the door for customers. Says Beer, “There are different levels of operationally driven things that you can do to create the kind of culture you want internally for your employees and externally for your customers.”
A training program also sets Best One’s culture apart, according to Beer. The Gold Best One Learning and Development Academy has two full-time trainers. The program offers technical, operational, sales and leadership training throughout the year.
The company has 100% ownership of 19 Southern Indiana Tire stores. In addition, there are Best One retail, commercial, combination commercial-retail, retreading and distribution locations in 26 states. Although all Best One locations are independently owned, the Zurcher family owns a percentage of each. Not all locations go to market under the Best One banner, although more are adding Best One to their individual legacy names to increase brand awareness.
About 30 stores have renamed themselves “Best One of” their respective communities since March 2018, according to Beer, who is a third-generation member of the Zurcher family that founded the company in 1948. Originally known as Zurcher Tire Inc., the company became Zurcher’s Best One in 2000, two years after the launch of the Best One brand. The Zurcher family changed the name of its store in Monroe, Ind., to Best One of Monroe earlier this year.
MFA Oil Co., which owns and operates Big O Tires stores in Missouri, Arkansas and Oklahoma, added locations in Mustang and Norman, Okla., to bring its store count to 19 stores and a tie for the No. 59 spot. The Colombia, Mo.-based franchise plans to open two stores a year, according to Rusty Coats, director of operations.
Although tire sales have been relatively flat, the company is maintaining market share thanks mainly to mechanical sales, which have risen drastically.
“The average age of a car is eleven-and-a-half years so that’s part of it,” says Coats. “Another part of it is a lot of small dealers are beginning to fall by the wayside because of the increased technology and the expense to take care of that increased technology. Consumers go to large shops that have the ability to handle the additional expense and the training.”
Coats says that while technology has created some roadblocks, the MFA-owned franchise “has learned to deal with it.”
Shrinking tire margins continue to challenge profitability for all dealers, but Coats sees opportunity in sales of high performance tires. He compares the current situation to manufacturers’ switch to radial tires in the late 1970s and early 1980s. He remembers a time when the industry worried radial tires would reduce sales of replacement tires. “That concern is past. But now almost all the auto manufacturers are putting a high performance tire on their vehicles. They handle well aggressively but they don’t get particularly good mileage.”
Although replacement tires with 80,000 or even 90,000 mile tread wear warranties are available, Coats notes they won’t fit on many high performance cars. “It’s an application issue.”
Coats says his stores focus on gross profit dollars on sales of high-end performance tires. “You can’t eat gross profit percent. We look at gross profit dollars instead of gross profit percentage on those high performance tires because you can’t pay bills with gross profit percentage.”
In addition to performance tires, sales of tires online can lead to in-store business. “We saw Tire Rack come into the scene. They initially made an impact, and they still do. According to figures from TBC (the parent corporation of the Big O Tires franchise), only about 6% of consumers are buying tires online, but that’s going to grow. We want to become a preferred installer to any of these people selling online and hopefully get the customer’s mechanical business,” says Coats.
He says buying tires online can be a hassle for consumers. “Usually people think they are beating the system by buying online, but then they find out it’s not such a good deal. By the time you add in the freight, and now the sales tax, our in-store pricing is usually right there. We are not going to let them steal our customers.”
Most Modern Tire Dealer 100 survey respondents indicated they expect little, if any, negative impact from the distribution joint ventures announced by Michelin North American Inc. and Sumitomo Corporation of Americas (NTW Wholesale) and Goodyear Tire & Rubber Co. and Bridgestone Americas Inc. (TireHub LLC). Some foresee many benefits. “Our new relationship with Michelin is going to benefit me greatly. I see enhanced distribution and pricing strategies,” says Scott Koldenhoven, a group partner in Koldenhoven Enterprises, a Colorado Springs, Colo.-based company with 15 Big O Tires stores.
The new players in tire wholesaling may help boost the service and support independent dealers can expect from their suppliers. Dunn Tire relocated its Henrietta, N.Y., warehouse to a larger 75,000-square foot-facility in 2017 as it expanded its Exxpress Tire Delivery wholesale division. Dunn Tire’s Simons says a small dealer who forms a partnership with a strong regional distributor can find the help they need from people who live and work in the same communities.
“The best regional distributors, like our Exxpress Tire Delivery, have the selection of products equal to or exceeding the national or manufacturer-based distributors. We offer all of the major programs, so a dealer can choose which offerings best fit their business and customer base. These programs are the way the dealer can generate after invoice dollars and marketing/identification funds.”
He says the best regional distributors also have a field sales force that is helping the dealer solve problems as a business advisor, not just as order takers.
“Because we have some retail stores of our own, we understand the day-to-day operational challenges, as well as how to promote ourselves in a world where others seem to have limitless marketing budgets. The small dealer can’t possibly stock enough tires for their daily needs, but their distributor can and has a fleet of trucks ready to bring them what they need throughout the day. So, in many ways it’s a good time to be a smaller independent dealer, if you are focused on improving your business and getting the help you need from trusted partners.” ■
See the 2018 Modern Tire Dealer 100 here.
Max Finkelstein Inc. has opened its second distribution center in Virginia. The new DC is located outside of Richmond, Va., in Colonial Heights.
TBC Corp. has sold eight of its NTB Tire & Service Center stores in Texas to a Big O Tires franchisee, allowing the Big O Tires brand to enter the Lone Star State.
Ken Voelker, president and CEO of Mighty Distributing System of America (MDSA), dba Mighty Auto Parts, a Gonher company, announced the promotion of four employees to key leadership roles.
Goodyear Tire & Rubber Co. says three factors caused its tire unit volume to fall in the final months of 2018.
Even the most straightforward service – mounting aftermarket winter tires that are the same size as the original tires – has the potential to create tire pressure monitoring system (TPMS) issues.
Technicians increasingly reach for adhesive weights when balancing flangeless alloy rims and ever-bigger wheels. What does that mean for a shop’s inventory of clip-on wheel weights?
More than 30,000 people cast their online vote to choose the grand prize winner in the first annual Techs Rock Awards sponsored by the nonprofit TechForce Foundation.
Art Blumenthal LLC, a business broker that specializes in the automotive aftermarket, has redesigned its website with more resources to help those buying and selling tire stores and auto service centers.
You have regular customers who feel like family. But are those customers loyal?
The new all-season Avid Ascend GT from Yokohama Tire Corp. is designed to deliver improved handling, long mileage and superior comfort.
Hunter Engineering Co. has unveiled a new reporting tool to help tire dealers maximize their investment in inspection equipment.
CRP Automotive has three new Pentospeed application-specific synthetic motor oils for BMW, Volvo and Volkswagen vehicles.
The WVE Vehicle Electronics brand from NGK Spark Plugs (U.S.A.) Inc. offers a broad portfolio of 215 product types for connectors, emissions, ignition, relays, solenoids and switches.
Xingda steel tire cord customers in Europe will now be supported by Xingda Europe Ltd. The new company, a subsidiary of Xingda Co., held its grand opening late last year in Luxembourg.
The Coker Group is acquiring PS Engineering and Vintage Wheel Works. Coker Tire will become a distributor of both brands, giving customers the company's first aluminum wheel offerings in its catalog and online.