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Monro CEO Lays Out 5 Ways to Improve Store Traffic

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Brett Ponton, the new CEO and president of Monro Inc., acknowledges store traffic “has been a challenge” in recent years, but he believes there is “real potential to strengthen our in-store execution, and by doing so, drive traffic back into our stores.”

Ponton laid out his five-point strategy to increase traffic counts in remarks he made to investors Oct. 24, 2017, — just 22 days after taking over as CEO. (He began his duties as president of Monro on Aug. 1.)

These are the company’s strategic areas of focus for its 7,500 employees and 1,136 company-operated stores and 107 franchise locations.

1. Store operations. Ponton says the company will “establish a standard in our appearance, store layout, merchandise strategy and in-store experience so every store across our chain can offer the same best –in-class customer service.” It will start with “simplifying our selling approach” and optimizing Monro’s product mix with a clearly defined strategy of good, better and best product and service options.

“For tires that means making sure we are relevant to all consumer price segments by leveraging our tire brand portfolio while optimizing our pricing strategy. This is supported by better in-store and online merchandising as well as educating our customers on their tire options.”

For service, Ponton says Monro needs to better leverage its customer database, and specifically what it knows about customers’ vehicles and buying habits as well as original equipment manufacturer maintenance schedules.

The analysis of the company’s products and service offerings has already begun. A strategy will be built from the findings.

2. Marketing. Ponton says he’s most enthusiastic about applying his expertise in marketing and store operations to build Monro.

“I believe we have a significant opportunity to improve the way we engage with our customers by further leveraging the immense amount of customer information we already have in our CRM database,” he says. “I believe we could be more productive with our marketing dollars by using the data-driven insights to deliver the right message with the right product and service offering to our customers at the right time, and in so doing drive higher customer retention rates.”

The efforts will be supported by other initiatives already underway, and Ponton specifically mentioned Monro’s Drive Card program, a credit card and loyalty program which launched earlier in 2017. (In July the company said nearly 10% of its total retail sales were processed on the card, surpassing the 6% of sales processed on the previous Goodyear-branded credit card in 2016.)

Monro will reallocate some of its marketing staff to higher return on investment channels, such as digital, Ponton says. And that will help the company’s acquisition efforts. (More on acquisitions later.)

3. Employees. Training and retaining employees is a priority, and Ponton says the company will use technology to create a learning management system with online tools for both management and technical training capabilities.

The continual increase in complexity of vehicles will “drive consumers to outlets they trust that are also convenient,” and Ponton says Monro technicians are on the cutting edge.

The focus on team members also applies to the staffing model at Monro stores. “I see an opportunity to optimize the staffing and scheduling process, which is currently done by hand, by investing in technology to assist store management in achieving the right balance of labor and cost to our stores.”

There’s also a need to provide store managers with tools to evaluate and manage their store’s performance.

“To be clear I believe Monro is already a very lean organization, therefore we believe these systems will not necessarily reduce our absolute payroll, but rather maximize the dollars we already spend so that our business model remains lean and scalable.”

4. Online sales. Ponton says Monro is working to offer a “true omni-channel experience to our customers, one which allows them to view and purchase available tires online and seamlessly make an appointment for installation.”

Ponton says, “Many of you have asked me how susceptible Monro is to online competition. We believe the service component of our business and the inherent immediacy that is required isolate us to a higher degree than other companies in the broader aftermarket space.”

He notes it’s a “small percentage” of consumers who buy tires online. At the same time, Monro does serve as a preferred installer for other online sellers’ programs. “These installations are very profitable with a high average ticket that is comparable to our corporate average.

“And just as important, half of the customers sent to us from online sellers are new to Monro, making this an important traffic driver. Once these customers are in our stores for their tire installation, we’re able to inspect their vehicles, offer any additional needed services, and add them to our database so we can engage with them through our new CRM system with the goal of building long-term relationships.”

5. Acquisitions. Ponton believes improving the first four areas will help Monro build “a stronger and more easily scalable business model, one that will drive more efficient acquisition integration, and ultimately higher levels of ROI.

“Having said that, we are not taking our foot off the gas when it comes to our pursuit of bolt on acquisitions.  We are continuing to build out our acquisition pipeline which remains robust with more than 10 NDAs (non-disclosure agreements) on opportunities ranging from five to 40 stores.

“We are also applying the same disciplined approach to acquisitions that has become a strong competitive advantage of Monro. As the company previously discussed, while the potential for tax reform is deferring the completion of larger transactions, the challenging dynamics in our industry are creating significant opportunities for smaller deals that we are currently pursuing.”

Ponton did not lay out a specific timeline for any of these strategies. He also didn’t say how much money the company is dedicating to completing any of them, except that he believes “many of these initiatives can be executed by better utilization of our existing assets and by reprioritizing our capital investments.”

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