AKRON-Seven of North America's largest tire dealerships have banded together, forming a retailing alliance with annual sales of nearly $400 million. Giants in their own right, together the seven dealerships stand to capitalize on nationwide programs and even greater economies of scale as part of Tire Alliance Groupe Inc. (TAG).
The alliance's founding members are: Don Olson Tire & Auto Centers, based in Clearwater, Fla.; Michel Tire Co., Cincinnati; Parnelli Jones Inc., Ventura, Calif.; Somerset Tire Service Inc., Brook Bound, N.J.; Tires Plus Groupe Ltd., Burnsville, Minn.; Tire Warehouse Central Inc., Keene, N.H.; and Town Fair Tire Centers Inc., East Haven, Conn.
The seven companies posted nearly $400 million in retail sales last year at 422 outlets across the United States.
The group intends to launch a ``three-pronged attack'' that, initially, will focus on communal purchasing of tire- and automotive-related products beginning in January, according to Larry Morgan, chairman and CEO of Don Olson Tire.
Tentative plans call for expanding the group's services to take advantage of volume purchasing and customized infrastructure items like computer software and insurance.
A third phase would create nationwide warranty, marketing and advertising programs that would take advantage of a common identity.
Cooperative purchasing for software and insurance could be one of the key advantages of TAG, according to Bridgestone/Firestone Tire Sales Co. President John Lampe, who said he did not think the already large dealerships will stand to significantly improve their tire buying prices.
Still, TAG members are attempting to work out supplier arrangements that would begin next year, according to group officials who met with tire manufacturers in Chicago during the first week of August.
``We were very elated with the response from the suppliers,'' Mr. Morgan said.
That fact was echoed by Kelly-Springfield Tire Co. President and CEO Lee Fiedler.
``We look forward to working with the Tire Alliance Group and feel they have a good idea going for them,'' Mr. Fiedler said. ``. . . I'm optimistic the program is right for this group because of their commonalities. . . . However, I don't believe it is the right method for every dealer.''
Parnelli Jones Inc. President Daniel Beach, acting as TAG spokesman, said the nature and number of supplier contracts is still unknown.
Alone, TAG members probably would have difficulty securing a private brand, according to BFS' Mr. Lampe. Together, however, with annual sales this year of 5.5 million units, the group could secure its own label-something TAG is interested in, Mr. Beach said.
Members of TAG initially met in the spring of 1994, when the dealers began networking ideas and discussing mutual problems, according to Mr. Morgan.
``We're (large dealerships) not excluded from the market pressures that affect what I call the small (dealerships),'' he said.
Banding together will enable group members to more efficiently and effectively compete against mega-retailers like Sears, Roebuck and Co.'s Sears Automotive Group, which includes Western Auto, NTW and Tire America, and other mass merchandisers and discounters, Mr. Beach said.
Although TAG initially wanted a small number of member companies to get the program operating, the group eventually will attempt to ``fill in the holes'' in its marketing areas, he continued.
TAG members must be primarily-at least 75 percent of sales-retailers, with annual tire sales of more than 500,000 units, Mr. Beach said. Those numbers might change, but the group will keep ``strict criteria'' for membership.
For one, the group intends to remain ``retail-based,'' as opposed to wholesale-based groups like American Car Care Centers Inc. and Metro 25 Tire, whose founding members were large wholesale dealerships, Mr. Beach said.
Currently, TAG is interviewing candidates for the position of executive director, he added.