AKRON-National Tire Dealers & Retreaders Association President James Faught warned tire manufacturers that selling their products through various distribution channels is hurting their major retail channel-the independent tire dealer. Speaking to tire company engi-neers and executives attending the first International Tire Exhibition & Conference (ITEC), Sept. 21, in Akron, Mr. Faught discussed dealers' concerns regarding the retail side of the industry.
The dealer distribution channel holds a 54-percent share of the replacement market, while warehouse clubs and discount stores are consolidating or going out of business, Mr. Faught said.
Yet, ``manufacturers, and particularly flag-brand manufacturers, have opened and appear to be continuing to open new channels-namely warehouse clubs, mass merchandisers, discount houses and the like-with little concern regarding the effects on current dealer distribution.''
When a tire maker opens a new channel in a market where it already has an established independent dealer, the distribution of its products often is merely shifted from one channel to the other-not increased, Mr. Faught noted.
``You wonder when manufacturers are going to wake up to the fact we are independent tire dealers who, God forbid, are entitled to make a profit on the products we handle, and that we are not there just to provide market share for anyone,'' he said.
Other channels-particularly warehouse clubs-offer little brand loyalty, have no allegiance to the overall tire business and are only concerned with floor space, he said.
``When sales per square foot is all that counts, next month your space in that club, as a tire manufacturer, might well be converted to toilet paper.
``Think about that! Then think about how you get the dealer business back after you messed up a long-term relationship. It won't be easy.''
Mr. Faught went on to tout the strengths of independent tire dealers over other retail channels: ``Independents can and do outperform other channels and must continue to outperform them in order to enjoy continued success....
``Consumers frequently buy from a specialist. And who are the specialists in the tire business? It is the retail tire dealer, regardless of size.''
During his address, Mr. Faught also reviewed the results of the NTDRA's survey of dealers' relationships with their tire suppliers. Of the 17 manufacturers rated, on a scale of 1 (low) to 5 (high), the overall average was 3.42, leaving ``considerable room for improvement,'' Mr. Faught said.
He also noted that dealers generally believe tires are built well-too well. ``We don't need an 80,000-mile tire in the market,'' Mr. Faught explained.
He also admonished tire companies that claim it is too costly to participate in such dealer gatherings as the NTDRA's annual trade show, which this year had few tire company exhibitors.
Mr. Faught said that in lieu of the dealer support services many manufacturers are abandoning, their next best option is to bring their dealers to a trade show/convention such as the NTDRA's, which this year included 28 educational seminars and 1,100 exhibit booths. ``An audience of over 4,000 dealers and employees would be exposed to your merchandise,'' he said.
Some manufacturers still have buyers fairs, he said, where they give away compact disc players, microwave ovens etc. ``Ask yourself: How many more CD players can a dealer need? What he really needs is education for making a profit.''
He urged ITEC attendees to ask their respective companies if they participated in the recent NTDRA convention in Dallas. ``If it didn't, ask why your company was not interested in an opportunity to meet 4,000-plus dealer prospects and help edu-cate and update the ones you already serve.''