Tire dealers at the 'Crossroads:' Competition, both commercial and retail, is awesome in Indianapolis
Indianapolis. The city calls itself the "The Crossroads of America." And with good reason.
Through its center run four of America's busiest interstates -- I-70 connecting Washington, D.C., to the west, I-65 from Chicago through Louisville, Ky., to the Gulf Coast, I-69 bringing traffic from the Canadian border in Michigan, and I-74 from Iowa to Cincinnati.
The city is also circled by I-465, which channels hundreds -- perhaps thousands -- of big semi rigs daily between and among these major arteries. Their round-the-clock roar is a part of Indy's urban personality. Even business locations are described as inside or outside of "the loop."
Needless to say, Indianapolis is the home base or a major terminus for dozens of major trucking companies and the auxiliary enterprises needed to service their needs.
Indy, too, is a center for car buffs and motorsports fans steeped in the tradition of the legendary Indianapolis 500. It's a city on wheels.
What a fabulous place to sell tires!
Until 1970, Indy was something of a "cow town," with a dumpy and deteriorating downtown that was unsafe after dark. That's when, after extensive study, then-mayor-now-U.S. Senator Richard Lugar and others seized control of the state Republican party and literally rammed through legislation creating "Uni-Gov." This concept made possible combining the resources of all but three municipalities in Marion County.
The resulting regional planning capability, elimination of duplicated government services and far more efficient use of tax dollars has totally transformed the area.
Since then, under a succession of far-sighted mayors, Indianapolis has blossomed. Major sports arenas have risen, bringing major league football and basketball and NCAA college basketball tournaments to town. Beautiful Circle Centre Mall brings shoppers to a downtown that has been totally cleaned up and is safe after dark.
The Indiana Convention Center and RCA Dome, connected by skywalks to seven downtown hotels, attract tens of thousands of visitors to the city annually.
No wonder in the last decade a dozen business magazines and consulting firms have variously described Indianapolis as one of the "most improved," "fastest growing," "most livable" and "best places in America" for small businesses.
What a fabulous place to sell tires!
Along with other businesses, this healthy atmosphere has brought some of the tire industry's heaviest hitters to the region.
Arizona-based Discount Tire Inc., America's largest retail tire chain, now has seven stores in the area.
Bauer Built Inc., the growing Durand, Wis.-based tire giant, has moved in with a commercial operation and the Michelin retreading system. In fact, every major retreading system, including Bandag, Goodyear and Oliver, has facilities in greater Indianapolis.
But the strongest influence in tires in the metropolitan area comes from dealerships affiliated with the Zurcher Group founded by Paul Zurcher and headquartered in Monroe, Ind.
With financial assistance and other business arrangements, Zurcher has an interest in a variety of dealerships -- a total of about 175 outlets in nine states. They are operated locally under a number of names, sometimes competing with each other. But in recent years all have added the same logo to their dealership name, "Best One Tires and Service."
Largest of the Zurcher operations in Indianapolis is Indy Tire, headquartered in a 109,000-square-foot building north of town. Besides corporate offices, the structure houses a tire store with seven retail and five commercial service bays, a huge tire warehouse and Premier Bandag, the world's fifth largest retreader and the largest one operated by an independent dealership. Indy Tire has a majority financial interest in Premier (the company now calls this operation the Best One Group).
Aided by Zurcher, Indy Tire President Dennis Dickson, a former Bridgestone district manager, started the dealership in the mid-1980s in a single Indianapolis location. Now Indy Tire has eight satellite stores besides the headquarters complex. Dickson plans to open a number of additional stores in Greater Indianapolis as opportunities arise.
Most of Indy Tire's commercial business is conducted out of the headquarters building and is supported by four sales reps. Nine service trucks provide 24-hour emergency service in an area of roughly 80 miles around the city. Indy Tire also does some wholesale business.
Tire sales account for 80% to 85% of business from company headquarters, but Dickson says the dealership's growth and reputation has been built on excellent service.
Competitors say Indy Tire salesmen, who work strictly on commission, are well trained and highly paid. One major competitor said he'd like to hire a top Indy salesman, "but even if he'd leave, which I doubt, I couldn't afford him."
Indy Tire's major tire brands, especially in the commercial segment, are Bridgestone and Firestone products. The retail stores also sell the Continental, General and Mastercraft brands and Yokohama performance tires, among others.
Another Zurcher Group commercial dealer is J&E Tire, located south of town. Co-owner Gary Johnson has been in the commercial business for 29 years, following a two-year stint with Firestone. He has been a Zurcher partner the last 10 years.
He says the advice and assistance provided by Zurcher colleagues help J&E prosper in a market greatly over-saturated with high-quality commercial dealers.
J&E's six service trucks manned by 10 service men provide around-the-clock road service within a 30-mile radius of Indianapolis. The dealership's retreads come from Premier Bandag, in which J&E has part ownership.
Johnson believes Indianapolis is a highly sophisticated commercial tire market with exceptionally knowledgeable customers. But he says that can be an advantage, separating topflight dealerships from those with more limited expertise or product offerings.
J&E does some retail business, mostly as a convenience to provide passenger tires to commercial customers.
Competition with other Zurcher-related dealerships can sometimes be a problem, but Johnson and his partner, Ed Tearman, say that for the most part each business has staked out a market niche and conflicts are few.
Another Zurcher partner is Ross Kubacki, the tough-talking, take-no-prisoners owner of Quality Wholesale Tire. He inventories about 30,000 tires in his 45,000-square-foot warehouse in a gritty area near downtown. But Kubacki can handle it.
There is no sign on the building besides the street number and a siren blares when you open the door. After hours, a watchdog patrols the premises very effectively.
Kubacki was once a district manager for Uniroyal. A free-wheeling salesman, he says "when they left me alone I made them $100,000 a year," but when the brass stepped in with what grew to 50 Uniroyal factory outlets, the system faltered, and all closed down within about nine months.
Left on his own, Kubacki decided to team up with Paul Zurcher. He started over in an 8,000-square-foot former bread warehouse under a traffic ramp. That was nearly 20 years ago. He moved to his present location 15 years ago.
All has gone well except for a couple of rough years after Michelin, then owner of Uniroyal, stopped providing him with tires because, though most of his sales were Uniroyal tires, "Michelin said I didn't sell a large enough percentage of Michelin brand tires to qualify for their Alliance program.
"But I recovered and I'm back having fun in the tire business," says Kubacki. He loves being his own boss and telling it like it is in often-colorful language. "My disposition is not retail oriented," he admits.
On the other hand, he is fiercely service oriented -- as long as his customers pay their bills!
Quality Tire's five trucks deliver all brands, types and sizes of tires to customers up to 100 miles away. "We get them there anywhere from 30 minutes to a week after the order," he says. "Everybody wants them cheap and now, but they can forget about the cheap! However, if they order a truckload, they get our immediate attention!"
For all his tough talk, Kubacki generates loyalty. About 90% of his customers have done business with him for 20 years and a handshake is usually the only contract he wants or needs.
"Joe's very competent and knowledgeable," says a major competitor. "When our salesmen discover they're calling on a customer of his they usually know they're wasting their time."
Kubacki calls Paul Zurcher "a great partner. If you have a problem and need help, he'll see you get what you need to handle the problem. It may not be exactly what you ask for, but it'll get the job done."
Of course there are other large tire dealerships in the area prospering despite the Zurcher competition.
One old-line, family-owned business is Petro's Tire Sales and Service. In 1981 Gene Hendricks bought the dealership from Harold Petro, who had started it as a tire and wrecker service.
Now Petro's has five locations in central Indiana. Three of them, in small cities, were former Goodyear dealerships. About 65% of their business is commercial, 35% retail. Off-road and farm tires are part of the mix. The dealership also does some wholesaling.
Kelly is the dealership's top tire brand, and Petro's is an Oliver retreader.
The company is proud of its around-the-clock service both in the main store and on the road. "We never close," says David Coppess, Hendricks' son-in-law, who now runs day-to-day operations. "Our tire shop doesn't even have locks on the doors."
Like all major commercial dealers contacted, Coppess says top quality service is essential in a market where even small commercial customers are knowledgeable and cost-per-mile conscious. "Service sells tires and keeps customers coming back," he says.
Besides Kelly, the dealership is also direct with Goodyear and "has access" to Cooper tires. Several other brands also are available.
Another large and largely commercial dealership a few miles away is Suburban Tire of Indiana, run by Mike Williams. The dealership is 90% commercial with four salesmen soliciting business. Suburban, a Goodyear Truckwise dealership, also sells Goodyear retreads produced at a plant in Cincinnati, Ohio.
Williams has high praise for his commercial tire competitors in the area, but says their expertise keeps his own people sharp.
"We feel we are very good at what we do," he says. "We concentrate on the things we do well. We are not just out to get bigger. The Goodyear name brings us some excellent commercial customers."
All the major commercial players have entered the Indianapolis market.
Bauer Built Tire, a Michelin Retreading System convert, came to town nearly six years ago by buying out Jim Stewart Tire.
Regional Director Marty Ruhaak says Michelin’s emphasis on quality service is his big advantage. Proper tread design and compounding for each application is a must.
The tire center also provides 24-hour road service and sells a small number of smaller tires, mostly as a service to commercial customers. It does not wholesale tires.
Brands include Michelin, Bridgestone, BFGoodrich and Kumho. Ruhaak says the poor economy has resulted in "a rough start" for business this year. Following the illness of the previous manager of the facility, the outlet had been without a manager for some time. However a new manager, Jim Mitchell, recently took over.
The Indianapolis facility is one of four Bauer Built retread plants. Others are in Wisconsin, Iowa and the Chicago area.
Davids vs. Goliaths
Within a stone's throw of the Bauer Built building is a huge Goodyear company-owned complex, again with a share of the large fleet and other commercial business and battling for customers in a tough market.
With rising fuel prices and expenses, tough price competition and demands for more and more analysis and problem-solving in a weak economy, some commercial dealers believe not everyone may be able to survive in the Indianapolis market.
But in the midst of the large "Goliaths," a tiny family-run "David" business has prospered over the years.
Just a short distance from the Petro's, J&E, Bauer Built and Goodyear facilities is Jones Tire, a 20-year-old family-run business operated until two years ago from the home of Joe and Amanda Jones.
Amanda runs the office and Joe and their two sons, Troy and Joe Jr., keep service trucks on the road. One other employee works in the two-bay service facility. Much of the business is in off-road and heavy equipment service, but the dealership also has local fleets and other customers. Their new tire brands include Firestone and General.
They also sell some passenger and light truck tires, units for smaller equipment such as backhoes and graders and some used tires.
Even competitors praise the Jones’ brand of "very personal" service. Hard work, efficiency by the family members and individual attention to customers offsets their smaller volume-buying price disadvantage. Amanda says most of their customers are loyal and have been with them for years, and most new business comes from word-of-mouth.
Retail boom town
Competition among largely retail dealers is also fierce, and the Indianapolis tire market has attracted chains from near and wide. Goodyear and Bridgestone/Firestone company-owned stores have multiple locations. Wal-Mart lists 11 outlets in the Yellow Pages. Costco Wholesale, Pep Boys and Tires Plus are well represented and Discount Tire, headquartered in the Phoenix area, keeps adding stores. Then there are the strong Indiana chains like Tire Barn and Indy Tire, each with nine stores.
In one large shopping complex alone -- Castleton -- almost all do business within walking distance of each other.
Both those selling tires based on price and those stressing good service appear to be doing well. For instance, a Tire Barn store sits next door to a Goodyear outlet and sells and mounts multiple brands of tires and custom wheels, but provides no automotive service.
Manager Dale Allgood says the two dealerships are competitors, but get along fine. "If someone wants a Goodyear tire that's OK," he quips. "I just walk next door, pick one up and sell it for less than they do."
How does the Goodyear store meet such competition? "Well, we're Goodyear," says Assistant Manager Benjamin Elsbury. But a more realistic explanation might be the nine busy Gemini service bays that stretch back from the rear of the sales room and where service overcomes price.
Across the street and within sight of these two stores are a Discount Tire and an Indy Tire outlet.
On an easel in the Discount Tire sales room was a board comparing Discount's grease-penciled-in tire prices with other retail competitors. It is obviously updated frequently.
Manager Kevin Gall, a 14-year Discount Tire employee -- five at this location -- says Discount's good, well-trained people as well as "unbeatable" prices are reasons for the store, and the chain's, success.
The store offers no automotive service, but was the busiest outlet visited in Indianapolis.
A few doors away, Matt Harper, assistant manager, also was juggling customers at an Indy Tire store.
He credited a multiple-brand mix of passenger tires, headed by Bridgestone/Firestone products, and a healthy 50/50 mix of tire and service revenues with the store's success. "All this," he said, "and very competitive prices."
Nearby, a Firestone company store was scheduled to add the Bridgestone label to its signage. Manager John Goodwin, a 32-year company veteran, said it's the top outlet among the 25 company-owned stores in Indiana and had increased its profits by $123,000 in 2002 over the previous year. Daily car count, he says proudly, "is up by 18 vehicles a day!"
The store is open seven days a week and sells multiple passenger tire brands besides Firestone and Bridgestone products. It has 14 service bays plus two alignment bays, and is capable of performing any service work up to and including major engine rebuilding and repairs.
Goodwin says repeat business is all about really listening to customers and never trying to oversell them. "There is no such thing as 'can't' in our vocabulary and we never tell a customer 'no.' We want our customers for life so we make them feel important."
He demonstrated the philosophy on the telephone by juggling service appointments and stressing the store's long hours -- 7 a.m. to 9 p.m. weekdays, 7 to 5 Saturdays and 9 to 4 on Sundays -- and suggesting appointments for times when "we can get you right in."
The Tires Plus store in the area is one of seven in metro Indianapolis that Bridgestone/Firestone took over from Larry Morgan's former Don Olson Tire chain. Manager Russ Rogers says the store stresses low prices, full services and a "30-day ride guarantee" not available in many other stores, plus free flat repair, balancing and a low-cost road hazard warranty.
About 60% of the tires he sells are the same Bridgestone and Firestone products available at the nearby Firestone company-owned store. Michelin and General tires are stocked as well.
Among other stores selling tires in the Castleton complex are Costco, Sears and some smaller auto parts and service outlets that also stock a few tires.
With this impressive array of large tire store chains in the area there are probably fewer healthy smaller independents than in many markets.
But Randy Adams, who runs Lee Adams Tire & Service, a dealership operated by his father since 1975, is a prosperous exception.
Adams says business is booming. It was up 20% in March over a year ago. And that's in a year when the dealership topped $1 million in sales. The six service bays produce about 60% of Adams Tire sales revenues, a healthy mix with 40% tires.
The store, in a busy shopping district area, features Cooper tires, a brand it has sold for more than 20 years, and also sells the Michelin, Uniroyal and BFGoodrich brands.
The dealership is a big supporter of local sports teams, including one for disabled kids, scouting and other groups, and has numerous framed citations for its generosity on its waiting area wall.
Adams says the dealership mostly depends on quality service for its sales growth that he believes will reach $1.3 million this year. "We can't afford a lot of advertising," he says, "so the store depends on repeat customers and word-of-mouth recommendations."
In a more modest neighborhood south of town, Billy Freeman, owner of Freeman Tire & Automotive, has done well at the same location for 22 years selling new and used tires. He has two service bays and does some wholesale business.
"I buy the good tire deals," he says. "The public doesn't care about the name on the tire, but they do expect good, honest service." That's why he believes many customers have stayed with him for years.
With only a handful of employees -- three currently -- Freeman works long hours six days a week, but he says he loves what he does and appreciates his customers.
However, running a business with only three employees, he does insist that customer expectations be reasonable. A sign behind the service counter tells them, "A lack of planning on your part does not constitute an emergency on our part."
There's also a market for used tires in Indianapolis and a number of new tire dealers also offer them.
Peterman's Tire Center advertises as one of the largest of 23 used tire dealerships listed in the phone book. Big Momma's Tires must be one of the smallest.
Keith Brown, who has one employee, runs the show at Big Momma's from a two-bay location, one bay of which is filled with tires, the other with space for one vehicle and tire-mounting equipment.
His used tire stock comes from Charles "Pops" Parker, who started Big Momma's to marry up with his "Pops" nickname about a year ago. Pops wholesales tires out of his truck and Big Momma's helps turn a profit from the tires he picks up making wholesale deliveries.
Big Momma's mounts and balances tires it sells for $20 and up, but "we don't patch 'em," says Brown.
He says Big Momma's benefits from a good reputation. "We check the safety of our tires carefully before we sell them and we have a 60-day warranty on every tire we sell."
What a fabulous place to sell tires!
The city's prosperity breeds high expectations from tire customers. The healthy business climate attracts sophisticated entrepreneurs. Most established dealerships there appear to have loyal repeat customers and a big-picture understanding of the market.
Some outsiders have discovered that despite the huge volume of traffic in "The Crossroads of America," it is a tougher place to make money selling tires than it appears.
In 1991, Canadian Tire, by far Canada's largest tire retailer, moved into Indianapolis with a "pilot store" called AutoSource and quickly expanded to a 10-store chain. But by 1994, it was racking up multi-million-dollar losses and decided to shut down the operation.
Over the years there have been other fatalities. A downtown store operated by Louisville-based Disney Tire stopped retail and commercial tire sales years ago and concentrates on the wholesale business.
"The prospect for profits is here," said one dealer who could be struggling, "but the competition is awesome."
Lloyd Stoyer, former editor of Modern Tire Dealer, was elected to the Tire Industry Association Hall of Fame in 2000.
Past metropolitan 'challenges:' Different cities across the country, but similar opportunities
Since our first "Tire Dealer Challenge" piece on Philadelphia tire dealers in 1986, we have run in-depth profiles on the Dallas, Seattle, New Orleans, San Diego, Los Angeles, Atlanta, Las Vegas, Orlando, Minneapolis/St. Paul, Kansas City, Boston, Portland (Ore.), Akron, Boise, Milwaukee, Vancouver, Denver and Cleveland markets. This year, we gathered information on the economic and social climates of "The Crossroads of America," Indianapolis, Ind.
By talking with tire dealers -- and the competition -- within the backdrop of a specific market, we hope to pass along information that will give you a better understanding of how and why your peers are succeeding. That, in turn, will help you run your businesses more efficiently and profitably.
One constant we have found is that profitable tire dealers often follow similar basic strategies in building their businesses.