Several months after TBC Corp.'s sale of nearly 600 retail stores to Mavis Tire Express Services Corp., Sam Kato, TBC’s president and CEO, discusses what’s next in this MTD exclusive.
MTD: TBC owned Tire Kingdom since 2000 and owned NTB since 2003. Why did TBC decide to divest itself of these properties after decades of ownership? (Editor’s note: TBC sold 595 Tire Kingdom and NTB stores to Mavis Tire Express Services Corp. on June 1, 2023.)
Kato: We learned a lot about store operations and consumer experiences throughout the last 20-plus years. We concluded it’s time to leverage those lessons and experiences to accelerate our position as a market-leading tire distributor and value-creating franchisor.
MTD: Was company-owned retail distribution no longer a viable strategy for TBC?
Kato: We continue to commit ourselves to retail but are determined to pivot our focus to franchise-owned retail and grow together with Big O and Midas.
MTD: What was the strategic thinking behind selling NTB and Tire Kingdom and selling to Mavis, in particular?
Kato: As you may know, Mavis acquired more than 100 retail stores from TBC in 2020 and it was a smooth and successful transition, creating value for both companies that gave us confidence for this transaction. This experience and Mavis’ alignment with our people-focused values, as well as proven expertise in the retail segment, made it the ideal strategic partner. We knew Mavis would become the largest retailer in the United States and we wanted to be its preferred wholesale distributor.
MTD: Now that TBC has exited company-owned retail, what are TBC's plans for its Big O and Midas franchise operations?
Kato: Our plans are quite clear. We are shifting our resources to the two franchise brands and intend to make current and future franchisees more profitable and sustainable.
MTD: Do you expect to invest more in Big O and Midas and if so, how?
Kato: Absolutely. We will do this through reinforcing and evolving our supply chain solutions, enhancing our digital capabilities, adding dedicated support staff and developing new revenue channels, such as EVs and commercial fleets.
MTD: What's the growth strategy for your wholesale business?
Kato: Our growth strategy is focused on the customer experience. We expect to differentiate ourselves on the level, quality and cost competitiveness of our distribution services.
MTD: Are you planning to buy other wholesale operations in order to grow or will you build new locations/distribution centers?
Kato: We believe upgrading the value of our distribution services is the best growth strategy, but whenever we determine to add capacity in our supply chain to create more value for our customers and partners, we have the willingness and ability to make it happen.
MTD: Are you adding brands to your wholesale business?
Kato: We are always refreshing our product portfolio by adding and removing brands. We strive for an optimum product assortment to meet and exceed our customers’ expectations.
MTD: How much of that business is comprised of TBC brands versus brands offered by other suppliers/manufacturers?
Kato: It’s about a 50/50 split.
MTD: What's your take on the wholesale-distribution landscape in the U.S. right now? Do you think we'll see more consolidation?
Kato: It seems that the rapid increase in SKUs will result in efforts to be more efficient.
MTD: In a press release issued on May 22, you stated that as TBC executes "our growth plans and strategies, we continuously analyze the assets in our portfolio and periodically fine-tune them to drive superior performance in our core focus areas." Can you elaborate on this? Is more fine-tuning of TBC's portfolio of businesses in the works?
Kato: We have no specific plans to share at this point. But standing still is not an option with today’s changing customer expectations and competitive marketplace. We always study and evaluate any scenario and opportunity to creative value for the company and key stakeholders and we make and execute strategic decisions at any time.
