ROCHESTER, N.Y.-Joseph Danesi said he had hoped to never smell rubber again after retiring in 1989 and closing his eight Joe's Tire Mart outlets in upstate New York. But now he's back among the tire racks as tire department manager of a new concept warehouse store that may change the tire business playing field in parts of the Northeast. Mr. Danesi, once a major Goodyear tire distributor, said he was prodded out of retirement by his longtime acquaintance, Brian Thomas, who founded Warehouse Auto Centers Inc. in Rochester over a year ago and opened its first store in March.
The company has formatted the no-frills store in Rochester to attract do-it-yourselfers, professional mechanics and installers, and commercial accounts by offering ``deep discount'' prices on a wide selection of name-brand automotive hard parts, engine fluids, protectants and waxes, and accessories, such as car stereos, floor mats, wheels and tires.
The tire department, which accounts for about 26 percent of the store's sales, offers Michelin, BFGoodrich, Uniroyal, Firestone, Bridgestone, Pirelli, Summit and Brigadier, but will special order tires that are not available in the store, Mr. Danesi said. The only auto service offered is the installation of tires and batteries for an add-on charge.
Warehouse Auto is attempting to emulate other discount warehouse retailers. And in the highly fragmented $60 billion automotive aftermarket, Warehouse Auto has lofty goals of setting up a chain of outlets and shoring up some of the market share in the Northeast.
``...(S)imilar to how the home improvement market was fragmented before Home Depot entered the market, or the office supply market before the entry of Staples, the automotive market is ready for the emergence of a dominant warehouse format auto parts retailer,'' the company said in its corporate profile statement.
The concept is based on a low overhead structure permitting mark-ups and gross margins substantially lower than those of distributors and retail stores.
To avoid the expense of separate warehouses or truck fleets, the merchandise is shipped directly from manufacturers to the store, often on pallets that can be moved directly to the sales floor by forklifts.
The company said it can also bypass high rent costs by occupying plain, unfinished warehouses with steel pallet racking and a limited amount of fixtures.
Already, the Rochester store has reported larger-than-projected sales of $500,000 in its first month, according to Eugene O'Donovan, the company's CFO and a principal stockholder.
``This reinforces my belief that the warehouse phenomenon that has exploded the sales of Home Depot, CompUSA, Staples and other category killers will also work in the automotive aftermarket,'' said Mr. Thomas, publicly held Warehouse Auto's CEO and majority owner, in a statement.
Last October the company held its initial public stock offering, which generated $4.5 million for the start-up of its first two stores.
With the objective of targeting major metropolitan areas, company officials are eyeing a site in the Buffalo, N.Y., area for their second store opening this year.
And if additional funding is obtained, the company hopes to open as many as six outlets next year, according to Mr. O'Donovan.
Potential markets for the outlets include Albany and Niagara Falls, N.Y., Pittsburgh, Cleveland and Dayton, Ohio, he said.
The company expects each store will average about 30,000 square feet-including bays for tire installation-and generate annual sales of $6 million to $10 million.
Mr. O'Donovan said Warehouse Auto differs from existing auto parts retail giants, such as Pep Boys, because it targets the commercial wholesale market, rather than focusing on auto service.
And unlike warehouse clubs, there are no membership fees-individuals and business customers are charged the same prices, with the exception that commercial accounts receive volume rebates.
Sales to fleet operators, service stations and car dealerships currently account for 10 percent of total sales, but Mr. O'Donovan said the company hopes to boost that to 30 or 40 percent.