Discount Tire Co. focuses all its energy into a very simple business doctrine: People do business with people. "It doesn't matter whether you are selling tires or widgets," says CEO Gary Van Brunt.
The largest independent tire dealer in the world has thousands of employees working at its 524 Discount Tire stores in 18 states from the East Coast to West Coast (it is known as America's Tire Co. in California). Based on $1.5 billion in sales in 2002, the number of customers is in the millions.
Chairman Bruce Halle, who founded the company in 1960 with two goals in mind -- pleasing the customer and selling five tires a day -- also supports the markets in which he competes by championing local charitable causes. It's a self-perpetuating relationship.
How did his business philosophy come about? "It came out of the Bible, how you treat people," says Halle. "Do unto others as they would do unto you."
Expansion plans
What started out in a rented storefront in Ann Arbor, Mich., has grown steadily. Halle's goal is to have 1,000 Discount Tire stores up and running by 2010. It is on track for 550 by the end of this year.
The company has not been tempted to rely on buying existing companies in order to speed up Discount Tire's growth. It has acquired some dealerships, but prefers to grow organically from within.
Growth has been spurred by experimentation. "We try different things. It's a good education," says Van Brunt. "You have to stay on top of what your customers want."
In the book, The Legend of Discount Tire Co. Inc. by Jeffrey Rodengen and Richard Hubbard (Write Stuff Enterprises Inc., www.writestuffbooks.com, $39.95), many of Discount Tire's successes and failures are chronicled.
Discount Tire's business practices have included the following over the company's 42-year history:
* get close to McDonald's. Halle would seek out a McDonald's fast-food restaurant in a city he wanted to open up shop and try to position his store as close to it as possible. The reasoning? McDonald's had already done the demographic research, and its customers were the same ones targeted by Discount Tire. The company now does its own demographic surveys and market research, but Halle still visits and approves each site personally.
* free replacement warranty. In the mid-1970s, Discount Tire began offering its "Certificate for Free Replacement." For a reasonable fee based on the price of the tire, a customer can fully warrant a tire for any damage regardless of wear. In more than 28 years, the company has replaced tens of thousands of tires free of charge.
* snow tire replacement. Before others followed suit, Discount Tire would mount and demount snow tires every fall and spring at no charge if the tires were purchased at Discount Tire.
* aggressive advertising. Halle incorporates himself into some of Discount Tire's advertising; he has appeared in print as a gangster, pilot, cowboy, Indian, even Batman. The company, based in Scottsdale, Ariz., also is a sponsor of the Arizona Diamondbacks and Phoenix Suns, among other sports teams.
It's also not surprising to see an ad at the top of the Yahoo! search engine Web page trumpeting "Discount Tire/America's Tire Co., where America shops for tires and wheels."
On its www.discounttire.com Web site, the company advertises "four new tires for $100" on seven sizes: 155R12, 155R13, 165R13, P155/80R13, P165/80R13, P175/80R13 and P185/80R13.
Remember the Tires Plus Club? Opened in Chino, Calif., in 1988, Tires Plus Club was the first auto and tire accessory club. Although sales reached almost $1 million a month within three years, stiff competition from Pep Boys and Kmart outlets stifled profitability.
The warehouse was closed in 1991. However, the club's mail order business, started in 1989, has since become Discount Tire Direct. The successful mail order catalog targets the performance tire and wheel market.
Tires: the core business
Discount Tire's core business is selling tires. Its brands include private brands like Arizonian, Phantom, Escort and Dominator, and major brands such as Goodyear, Dunlop, Kelly, Continental, General, Michelin, BFGoodrich, Uniroyal, Kumho, Nitto, Pirelli and Yokohama. Discount Tire has been a direct Goodyear dealer since 1993; at the time, the only volume retailer that handled Goodyear was Sears Auto Centers.
The company added aluminum custom wheel sales in the 1970s. The only services it offers are tire-related: balancing, tire repair and tire rotation.
Halle expects a lot from his employees. But he offers them plenty of benefits: a pension program, pretax insurance and childcare payment program, 401(k) savings plan and health care benefits.
Since 1960, the tire industry has changed dramatically. Tires last longer, in part thanks to radialization. The number of tire skus has skyrocketed as vehicles have become more sophisticated. The new breed of competitors, like Wal-Mart and TBC Corp., are larger.
Discount Tire, too, continues to evolve and co-exist with anyone who sells tires. But one thing stays the same: Halle.
Does he foresee ever retiring? "No," he says simply.
