Bound Brook, N.J.-based Somerset Tire Service Inc. (STS) aggressively expanded its base in the New Jersey/New York/Pennsylvania area last year. By opening five new outlets, including a "clearance" shop, and acquiring two major New England-area chains, STS has increased its total store count to 115 -- a 35% increase in the last six months.
It is now the eighth largest independent tire store chain in North America, according to Modern Tire Dealer research. MTD recently spoke with STS President Bill Caulin about the company's goals for the new year.
MTD: What are your plans for 2002?
Caulin: In 2002, we'll be working to assimilate and integrate all (Ramapo Discount Tire Centers and Wholesale Tire Co.) stores into our system. We'll open four to five stores from the ground up or make small, one- to two-store acquisitions. We're constantly talking to guys with shops. I have three or four (new stores) under development right now. But I don't think you'll see anything major.
MTD: Do you have plans to expand beyond the New York/New Jersey/Pennsylvania tri-state area?
Caulin: New Jersey is pretty well saturated, but we'll add stores there. Pennsylvania is a big state; we're just in the eastern part. I'm not sure we're done there. In lower New York, we could add some, (but) don't have imminent plans there. For the foreseeable future, (there are) no plans to expand (beyond the tri-state area) -- at least, nothing short-term.
MTD: Do you have a specific goal regarding the total number of STS outlets?
Caulin: It was 100, but we just passed it! I didn't think it was going to happen before this year, quite frankly, but things just clicked. We've had fairly rapid growth. I don't believe in long-term budgets or formal business plans, because you don't know how real they are. However, we will do anything that makes sense.
The big variable is are we going to align ourselves with other players? There will be consolidation going on and we'll participate in that process. (But) we're not for sale. The tire business is dominated by guys in their 50s and 60s; they're either dying, retiring or selling. We have a management team of relatively long service -- 15 to 20 to 25 years -- and they're all in their 40s.
MTD: What is the philosophy behind your new Clearance Center?
Caulin: We pirated the idea from other retail industries. As we acquired companies and suppliers, we had some products that had been discontinued. We thought that without disrupting our retail marketing scheme, we could come up with a distinct format and piggyback it on our name.
MTD: How have customers responded to it?
Caulin: The concept has been well-received on a small scale, but we haven't marketed it aggressively yet. I think it'll take off when we free-up our marketing budget.
MTD: How will you market the store and concept?
Caulin: (With the Clearance Center), we're competing at warehouse club levels, which is very different from our tire and auto centers. We have a half-dozen tire and auto centers in close proximity that don't carry discontinued products, so we don't embarrass ourselves on pricing. We're fairly densely populated in New Jersey; the store will pull in customers from 15 miles away, maybe more -- the same customers who will drive that far to a price club for tires. Here, you can get the same (tire) price but much, much better service.
MTD: STS is extremely aggressive when it comes to marketing and public relations. What is your long-term strategy in those areas?
Caulin: It's a combination of things. We have a good story to tell. And to be successful on all fronts, people need to know what you're doing. We're trying to raise awareness. It helps with recruitment, it helps with sales.
MTD: How important is marketing for independent tire dealerships, regardless of their size?
Caulin: It depends. In New Jersey, we have a deeply rooted franchise; there's a standard of service (customers) know they're going to get. In New Jersey, our marketing challenge is easy. As we go into New York and Pennsylvania, STS is not known. So it's critical that we get our name out any which way we can.
MTD: What is the biggest challenge facing STS in 2002?
Caulin: The most obvious is assimilating 25 existing (Ramapo and Wholesale Tire) stores into our system. That's slightly different than opening a new store. You open a new store, you do things your way from day one. The bad news is, you don't have employees or customers -- you're starting from ground zero.
With acquisitions, the plusses are they already have employees and customers. But you're asking them to change, and some people don't like change. Plus, what are your products going to be? Your targets are always changing. The industry is consolidating a bit. I like to think of us as a small company, but the reality is, we're getting big... there are going to be winners and losers.
