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August 07, 1995 02:00 AM

BEATING THE ODDS: CUSTOMER RELATIONSHIPS, ADAPTING TO CHANGE HAVE ENABLED DEALERS TO DOMINATE MARKETPLACE

Gregory James Kennedy
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    David White, a high school English teacher and football coach, quit his job in 1972 and started a one-man tire dealership in Roanoke, Va., which since has grown to seven outlets and five Bandag retread plants. In Homer, Alaska, a town of no more than 4,000 residents, Mike Harmer has been quietly running his two-bay tire dealership-sans automotive service-since 1991. Before that he had a dealership in an equally desolate area in Canada's Yukon Territory.

    In May, 1994, Dick Davis boosted profits at his 35-year-old tire dealership by moving off the beaten path and into a commercial park rarely frequented by retail customers.

    What do Mr. White's White Tire Distributor's Inc., Mr. Harmer's Peninsula Tire and Mr. Davis' Davis Tire & Wheel Inc. have in common?

    Although they go about it in different ways, each is a thriving independent retail dealership-like many others-surviving in an era of manufacturers' outlets, discounters and mass merchandisers.

    In fact, the National Tire Dealers & Retreaders Association estimates independent tire dealers command 54 percent of the replacement market-one of the largest market share percentages enjoyed by independents in any retail category.

    TIRE BUSINESS asked industry officials and dealers themselves why independents have fared so well through the years. Their answers pay tribute to the determination of the independent tire dealer as well as shed some light on what dealers must do to survive the coming years.

    ``The fact that independent tire dealers have 54 percent of the replacement tire market illustrates the high level of trust they enjoy from the motoring public,'' said NTDRA Executive Vice President Philip P. Friedlander Jr.

    Tire dealers operate in a service- oriented field, unlike many of the retail fields that have shed most of their independent business owners. In fact, the nature of the tire business compared to grocery or hardware retailing, helps explain the high level of success independent tire dealers have had over the years, according to Northwestern University's Louis W. Stern.

    ``You can walk down the street and get a can of peas, but you can not walk down the street and get a good tune-up,'' said Mr. Stern, who conducted the NTDRA-commissioned ``Tire Industry Study'' published in 1983.

    Compared to other types of retailers, tire dealers have been able to better fend off the aggressive price competition of mass merchandisers and discounters by offering different products, including major and private brand tires, focusing on tire- and wheel-related services and ``paying attention'' to their customers' wants, he said.

    ``Most tire dealers like what they do, and they understand the importance of repeat business,'' NTDRA's Mr. Friedlander said. ``Independent tire dealers work hard at developing a personal relationship with their customers.''

    But they've had help in developing those relationships-maybe more than other independent retailers, Mr. Stern said.

    ``The main difference is that the NTDRA has done a reasonably effective job in trying to keep its members knowledgeable in trends about the industry and about business practices,'' Mr. Stern said.

    The NTDRA noted that its customer-service seminars are among the most attended each year at its convention and trade show. Sales of public relations and customer-service video tapes are ``brisk,'' as well.

    Tire dealers also benefit from NTDRA and American Retreaders Association insurance programs, training seminars, networking opportunities and legislative clout.

    Manufacturers, on the other hand, provide cooperative advertising and other marketing programs to a greater degree than the suppliers of other types of independents, according to Mr. Stern.

    Although tire dealers have profitedfrom the nature of their service-oriented field and the support of associations and suppliers, their ability to adapt to changing business environments also has helped them help themselves.

    Dealers have ridden a market-share roller coaster that fell from 89 percent in 1926 to 38 percent in 1963, according to a Federal Trade Commission study. But that market share since has significantly increased.

    Throughout the past 75 years, dealers have faced changing buying attitudes, dramatic increases in treadlife and waning support from their manufacturers, according to Joseph A. DePaolis, vice president of business development at DeCarolis Truck Rental Inc., who previously spent 25 years with Johnny Antonelli Tire Co. Inc.

    ``Quite frankly, the independent tire dealer has not fared well enough,'' the former NTDRA president said. ``(Partly because) they are continually being stabbed in the back by the manufacturers.''

    Dealers have watched more and more of their business migrate toward lower-priced national buying accounts and discount outlets. However, according to Mr. Stern, dealers began changing their product mix in 1976 to help ease the impact that loss of business has had on their bottom lines.

    Dealers who sell only tires, he said, have become a thing of the past. Instead, they have increased their reliance on automotive and commercial service and retreading as profit centers.

    William Babek, owner of Babek Commercial Tire Systems of Avenel, N.J., and current ARA president, agreed that dealers have done a steady job of adding services that satisfy their customers' needs.

    ``If people just wanted to replace tires, they could go to mass merchandisers, but they want their tire-related problems solved,'' he said.

    The tenacity of independents has served them well in the past. But what of the next five to 10 years?

    Both Messrs. Babek and DePaolis said they believe independent dealers will become more popular among the motoring public as the larger dealers and marketers continue to grow and lose touch with their customers.

    The stagnation of wholesale club and discounter market share around 9 percent is evidence that independents can indeed hold their ground, Mr. DePaolis said, stating independents should ``be smart and market themselves as the neighborhood store.''

    The NTDRA's Mr. Friedlander also contends dealers must continue their efforts to focus on customer service.

    ``. . . Independents (cannot) sit back with their feet on their desks,'' he said. Targeting a narrow geographic market helps, Mr. DePaolis said. So does one other thing: Faith.

    ``The independent tire dealer has to have faith in himself that he is the best guy out there to sell that tire and nobody else is,'' he said.

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