Published on December 13, 2013

TB EDITORIAL: Stern’s advice still relevant today

AKRON (Dec. 13, 2013) — American Car Care Centers Inc. (ACCC) was founded in 1989 as a program aimed at helping wholesale distributors and their primarily smaller independent tire dealer customers compete more effectively in the retail tire and auto service marketplace.

The goal was to provide dealers with economies of scale in purchasing equipment, supplies and advertising, offer educational and managerial help and give them with a proprietary tire line to sell.

The distributors gained by helping to keep their tire dealer customers strong and viable.

Ironically, nearly 25 years later, ACCC’s board of directors has decided to dissolve the marketing group, in large part because of its own success.

The distributor owners have gotten so large, in part due to consolidation and acquisitions, that they are bumping into each others’ exclusive marketing territories and no longer have room to grow.

Simply put, the organization has outgrown its bus¬iness model—mean¬ing it’s time to move on to a new chapter.

ACCC was born out of the results of a study conducted 30 years ago by Louis Stern, a professor at Northwestern Uni¬versity, which suggested that tire dealers must develop economies of scale to provide them with competitive advantages, or their future was likely to be bleak.

Mr. Stern’s scholarly study of the challenges facing the U.S. tire retailing industry had been commissioned by the then-National Tire Dealers & Retreaders Association, a forerunner of today’s Tire Industry Association.  

The professor outlined his conclusions in the preface of the study, stating: “Independent dealers must develop economies of scale needed to provide the competitive advantage of low-per unit costs. The twin pillars of this strategy are acquiring buying power and developing management effectiveness.”

Among his recommendations: become an active part of an existing large-scale organization; acquire or merge with other local dealers; and form dealer- or wholesaler-sponsored cooperatives.

Even with ACCC’s impending closure, that guidance is as valid today as it was back then. There is no shortage of dealer marketing groups successfully helping independent tire dealers be competitive.

The need for independent tire dealers to band together to gain economies of scale and efficiencies remains a crucial tactic in competing with the ever-evolving retail and commercial tire marketplace, just as Mr. Stern concluded.

 

This editorial appears in the Dec. 9 print edition of Tire Business.

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