This interview is the latest installment in a month-long series of question-and-answer sessions with top executives from the tire industry's leading private brand manufacturers and marketers.
St. Peters, Mo.-based private brand marketer SURE Tire Co. has undergone several major changes over the last three years. The company lost its popular Remington brand when Goodyear Tire & Rubber Co. stopped making it. "There were some people who thought SURE would be out of the picture" due to the loss of Remington, says SURE Tire President Pat McLaughlin. (SURE currently sells the Summit, Heritage and Kreed private brands.)
SURE Tire, which has 23 member-distributors throughout the U.S., had to scramble to find a new supplier in the wake of Goodyear's decision. It wound up taking on Cooper Tire & Rubber Co. (Greenball Corp. and Maxxis also build tires for SURE.)
"One thing we've strategically done is not marry ourselves to any one manufacturer," says McLaughlin. In this exclusive interview, he discusses SURE Tire's business, changes that have taken place in the private brand segment, and other subjects.
MTD: What is your take on the current state of the private brand market?
McLaughlin: I’d have to say in the last three or four years it has had challenges with Goodyear walking away from the business and Bridgestone-Firestone changing some of their strategies and platforms. Cooper seems to be the one that has remained steadfast in the private brand arena. The private brand as we knew it 15 years ago has changed.
MTD: Can you discuss those changes?
McLaughlin: If you go back to the days of the Ganins and some of the other great names in the private brand business, you’ll find that the direction that the private brands had to take based on the manufacturers’ footprints has changed. When I got into this business there dozens of private brands we used to compete against, and today there are fewer private brands. Part of that has to do with consolidation on the distributor side.
MTD: What about consolidation at the manufacturers' level? Obviously, you were impacted by Goodyear's decision to exit certain segments of the private brand market back in 2006...
McLaughlin: At first light, there were some people who thought SURE would be out of the picture. But what took place was something I found to energizing for the Summit brand. The group, instead of shrinking, has grown. Since 2006, we’ve invested millions of dollars in new molds and designs. Even though our attitude for growth in 2009 is realistic, we feel we’re very well positioned for the value-conscious consumer.
MTD: Did Goodyear's decision force you to look at other sources you may not have examined previously?
McLaughlin: In the last two-and-a-half years, we have formed relationships with manufacturers that had the resources and technologies we need to be able to compete in the market today. We’re happy with the way we’ve been able to develop our relationships with these manufacturers. We feel like we have a very good footprint.
MTD: Are consumers as open to buying private brand tires today as they once were? A lot of major manufacturers claim it's more of a flag brand market right now. Do you agree?
McLaughlin: I think we need to have strong flag brands in the U.S.; it's very important. We don’t really compete against the flag brands -- the Michelins, the Goodyears and the Bridgestones. Our products are really driven more toward the consumer that’s looking for value.
In the last five years the major manufacturers have done a very good job pushing the flag brand mentality. With the collapse of the market in the latter part of 2008 going into 2009, we’re seeing a little shift in that demographic to private brands. The economic conditions are such that people are re-thinking how they spend their dollars. I think people are looking for an alternative – something that’s affordable.
We don’t look at ourselves as being the cheapest in the marketplace. There are so many pressures on the market right now with the challenges we see from Europe, as well as Asia… there’s a lot of pricing that’s been thrown across the marketplace from various offshore manufacturers. What we have is a very good price point for something that (the dealer) can market with his own personalized marketing plan, and do so with territorial exclusivity. A lot goes into it. It’s not just low pricing.
MTD: Is the influx of low-cost, entry-level tires from offshore sources impacting the private brand market and your business in particular? Are these products biting into your sales?
McLaughlin: They’re not biting into our sales. It’s something we’ve learned to live with. We feel we can hold our own against them. A lot of manufacturers have had to dump a lot of product into the marketplace in a short period of time to reduce their inventory costs. The Asian market is no different. Their products do attract the value conscious consumer. But we’re not seeing it take away from our sales. The manufacturers we use have very modern factories and a lot of the latest testing equipment. They build a very good product.
We’re continually working with our suppliers to keep us competitive, even in a downward-spiraling market. They’re looking at green technologies, for example. We know that’s around the corner. We’ve broadened our relationships and feel good with the strategies we have with our manufacturers.
MTD: In your opinion, what is the future of private brand tires in North America?
McLaughlin: I would love to say you’re going to continue to see growth in private brands. Then there’s a part of me that says private brands will have to work very hard to maintain their strength in the marketplace. The challenges we face are real.
"The consolidation of distributors... instead of being negative, has had a more positive effect” and has created opportunities for private brands “that didn’t exist five years ago," he adds.
Stay tuned to www.moderntiredealer.com throughout the month of May for more exclusive interviews with top private brand tire executives!
