AKRON-Low prices, improved technology and consumers' lack of brand loyalty have been helping retailers sell their private brand lines-and garner a decent gross margin. Many U.S. retailers offer a mix of name brand, associate and private brand lines. But there are some who devote most of their floor space to the private brands and work to develop name recognition of these products in their markets.
``Consumers have preconceived notions-positive or negative-with certain major (brands). When you have your own brand, you're selling yourself,'' said Chris Jones, president of Tire Barn Warehouses of Anderson, Ind. Private brands make up about 90 percent of total tire sales at his 17 stores.
Mr. Jones and other dealers believe they can generate more profit and offer their customers better value with private labels.
The quality is on par with the major brands and, depending on the line or distributor, the warranties are comparable or better than those offered on the name brands, they said.
When trying to sell a customer on a private brand tire, dealers often note these features and may even identify the manufacturer. But the price differential is usually the clincher.
``You can give a customer a 20-30 percent better price (on a private label vs. a major brand),'' Mr. Jones said. ``Normally, that's inducement enough.''
Given the price difference, a weak economy and souring brand loyalty, customers often don't care if the tire they're buying is a ``no-name,'' according to Ernie Caramanico of Amityville Firestone in Amityville, N.Y.
The fact that only a small percentage of consumers are intent on buying a particular brand gives dealers the opportunity to ``guide'' them to a particular line.
John Sidney of American Quality Tire Co. Inc. in Independence, Mo., admitted his sales people immediately steer customers to the private brand tires and only show the major brand selection upon request. The private labels are positioned as economy-good-better-best and total about 80 percent of the store's sales, he said.
People don't seem concerned that the tire has a private label, he said, but they usually ask who manufactured it.
Some dealers, like Doug Therrien of Central Tire in Sanford, Maine, heavily promote and advertise the private line as they would a major brand. In Central Tire's market, ``people think (Hercules) is a major brand'' because of the dealership's advertisements over the years, he said.
But not all dealerships are able to advertise private brands since there is no manufacturer cooperative program available to help defray the costs. That's a need often filled by marketing groups and distributors who also provide their dealers with road hazard warranties and guarantees.
With or without those features, a number of dealers are joining the trend to add private brands to recoup diminishing profits.
However, in a unique strategy aimed at bucking such a trend, Jensen Tire Co. of Omaha, Neb., advertises in newspapers and on television that it does not carry any private brand tires, only major brands.
Its Gen. George S. Patton-styled spokesman in the ads is ``Major T. Brands'' who expounds on the Jensen's name-brands-only policy.
The campaign, according to owner Bill Jensen, was launched 18 months ago to meet the fierce price competition presented by the arrival of several NTW and Western Auto outlets in his market.
``We wanted to buck the trend and the focus groups that say `generic is in, price is in,' '' Mr. Jensen said. By buying in quantity for its 11 outlets, the dealership is able to sell more tires at lower prices with margins comparable to those before the competition onslaught, he said.
Not all dealers can undertake such a strategy, and many are lured by the attractive gross margins private labels can generate for them-often between 25 and 40 percent.
``It's the only place left where the tire dealer has a reasonable and acceptable profit,'' said Roland Lesieur of Maynard & Lesieur Inc. in Nashua, N.H.
And private labels are no longer cast as just the bottom-line price leaders on dealers' shelves. Many are included in the good-better-best and even high-performance selections of a dealer's line-up.
This may be due to the improvement in technology in recent years, many marketers say.
``In the last five years there's been significant improvement in quality,'' Mr. Jones said.
``I think it has to do with the new ownership (of tire manufacturers) taking the quality end of the business more seriously.''