MEMPHIS, Tenn.-When Charles Darwin proposed his theory about the ``survival of the fittest,'' he didn't really have the private brand industry in mind. Or did he?
Industry insiders believe there will be a continued winnowing of the ``wheat'' from the ``chaff'' in private label marketers.
And at least one of those marketers sees salvation in the form of large buying groups, which it just so happens to be.
Del-Nat Tire Corp. itself was an object of industry consolidation when, on Jan. 1, 1989, it become the offspring of a merger of two long-time private brand companies, Delta Tire and National Tire.
Today, the Memphis-based firm calls itself ``the fastest growing and largest privately held'' private brand organization in the industry. Just ask Don Helker, Del-Nat's vice president of sales-if you can catch him between phone calls. It tends to ring off the hook, he laments, slyly adding with a chuckle, ``and that means business is very good.''
He describes the company as ``low-key''-and says it continues to grow each year, despite an aversion to ``flaunting itself.''
``Exclusivity'' has always been an advantage of private label tires, and it works for the Del-Nat program. ``We do everything by territory,'' Mr. Helker said, by giving ``a plot of geography'' to a dealer, whether it's by state, states, counties within a state, or a dealer's marketing area.
To bolster its stable of 66 stockholders and 40 direct distributors worldwide, the company is ``very aggressive'' in signing new members, adding nine since last year, he said.
The biggest benefit of Del-Nat's program to tire dealers is ``being an owner of something,'' Mr. Helker pointed out, ``where they have some control of their future and their destiny in the tire business.
``With the tire manufacturers, there's no guarantee today of where the dealer will be a year from now, much less five years from now.''
Del-Nat's program belongs to its members, he explained-``they're building something they own, not contributing to a rubber company, because everything they do with Del-Nat comes back to them in the form of profit-sharing.''
That can be mighty good news for dealers witnessing the ``dwindling'' low-price advantage that private brands have experienced, according to Mr. Helker. Citing the oft-mentioned complaint of many in the business, he said that as every major domestic tire maker more heavily pushes its associate brands, they're ``squeezing'' the profit margins on private labels.
It's a ``no-holds-barred'' environment, he claimed. The tire manufacturers are ``the biggest threat to the private branders, only because they can do whatever they want to with associate brands, and can go strongly into any market they want to.''
Mr. Helker sees some smaller private branders ``falling by the wayside''-not only from increased competition among themselves, but from associate brands and the demand by makers that they sell a certain number of units. That, he said, will make groups like Del-Nat stronger, ``because smaller dealers will have to tie in with someone like us for their longevity, to keep healthy and competitive in the market.''
Del-Nat said its primary goal is to have the industry's most complete product offering ``at the most competitive price.'' The sheer size of the buying group allows volume price breaks unavailable to smaller groups or individual dealers.
Its owners and direct distributors market in every state through 127 wholesale distribution centers which, in turn, distribute to more than 20,000 independent dealers nationwide.
Del-Nat operates separate programs for the Delta and National brands and discourages its stockholders from belonging to both ``so we don't tie up both brands with one individual,'' Mr. Helker said.
Last month the company opened a 100,000-sq.-ft. addition to its main Memphis distribution center.
The company said it only distributes through dealers, sells to ``no mass merchandisers or price clubs'' and has no plans to go in that direction. Del-Nat stockholders-all independent dealers with an equal interest in the firm-set the company's policies.
Mr. Helker has been in the industry 27 years, the last two with Del-Nat. Previously, he spent 20 years in sales and marketing with the Kelly-Springfield Tire Co., specializing in private brands.
He said Del-Nat conducts annual seminars for its members, as well as periodic training sessions covering topics ranging from products to marketing techniques. In May, for example, some 100 persons from the National-brand group and more than 100 from the Delta group met separately for weekend sessions.
For dealers searching for a private brand niche, Del-Nat carries a wide variety of specialty tires-``anything from wheel barrows to road graders,'' Mr. Helker said. ``There's such a need for that type of product, and our members are making hay with (that) niche. That's one of the principal features of our program....''
And Del-Nat is joining the many private branders who seem to be hoping for rain. By next January, the firm plans to begin offering its version of an aqua-channel tire, Mr. Helker said.
What kind of dealers are attracted to a company like Del-Nat? It's not the extremely large independents who have the ability to negotiate terms on their own.
``We seem to have our most success with the retailer with (eight to 15) stores,'' Mr. Helker explained. ``Or a wholesaler in a smaller geographic area, or a combined wholesale/commercial/retail dealer with substantial business, but not enough buying power or clout to do things on his own. He's worrying about being squeezed....''
Recently, Mr. Helker asked Del-Nat stockholders to tell him why they joined the group. ``Security'' was a top concern.
One member said when he ``consolidated into our program, he did away with five suppliers.''
And another said he used to spend 75-percent of his time buying tires. Now he spends that same amount selling them.