LAS VEGAS-Small, independent tire dealers still reign supreme among tire retailers in the U.S., but large regional dealerships are close on their heels, according to David Schaub, president and COO of Michelin Americas Small Tires. Small dealerships control 30 percent of the tire aftermarket, Mr. Schaub said, while regional firms have a 29-percent share.
``The battle for market share is on. It is in every market in the U.S.,'' Mr. Schaub said.
In a speech at the recent Automotive Aftermarket Industry Week trade shows in Las Vegas, Mr. Schaub gave the following assessment of the U.S. retail tire market:
Warehouse clubs, such as Sam's Club and Price/Costco, have a 7-percent share of the replacement tire market. Their growth has slowed and they have limited inventory. They have low overhead costs of 8-12 percent but have extraordinarly high employee turnover. ``Many times you can't even find a tire person in the shop,'' he said.
Mass merchandisers hold a 10-percent market share, Mr. Schaub said. Four mass merchandisers currently offer tires: Sears, Roebuck and Co., Wal-Mart Stores Inc., Montgomery Ward & Co. and Kmart Corp.-though Kmart recently agreed to sell its 860 U.S. service centers to Penske Corp.
Growth slowed for the mass merchandisers in the early 1990s, Mr. Schaub said, although he thinks Sears has recovered from the beating it took after it was accused in 1992 of defrauding customers by selling them unnecessary services and repairs.
Wal-Mart, the world's largest retailer, is on the highest growth pace among the mass merchandisers and has the lowest costs, Mr. Schaub noted, while Montgomery Ward, working to gain market share, has major advertising but also high employee turnover. Kmart, with 60 percent turnover in the back-shops, has had one-fourth the through-put of Sears, though it operates the same number of service centers, he said.
Major national tire dealerships, such as National Tire Warehouse (NTW) and Tire America (both units of Western Auto Supply Co.) and Discount Tire Co. of Scottsdale, Ariz., control 16 percent of the replacement tire market. These chains, of which there are 10 or 11, have a presence across the U.S. and are opening stores faster than any retail group, Mr. Schaub said. They move large numbers of tires, have big advertising input and impact and very low people turnover.
``Some of these people are sharp enough in the way they run their businesses that if a store manager makes less than $100,000 per annum, they don't want him,'' he said.
Mr. Schaub called these large, national operations ``extraordinarly effective'' and expects them to be dominant and keep growing.
Strong regional retailers, such as Tire Kingdom Inc. in Florida and Dobb's Tire & Auto Centers Inc. in the St. Louis area, command a 29-percent share of the replacement tire market. There are more than 40 of these dealerships nationwide, Mr. Schaub said. ``They focus on every consumer in that market, and they go exactly after that market.''
Small independent dealerships, of which Mr. Schaub said there are roughly 22,000 nationwide, control 30 percent of the market. These mostly family-owned businesses know what they're doing, he said, but in urban areas they are under ``excruciating'' pressure.
In one marketing area where MAST was conducting research, it found that 10 independent tire dealerships had gone out of business over an 18-month period, he said.
Company-owned tire stores, operated by Goodyear and Bridgestone/Firestone Inc., control 8 percent of the replacement market. ``They are in a change process because they are not making money in those stores, according to my understanding,'' Mr. Schaub said. He noted they are adding new store types, such as Goodyear's Just Tires and BFS' Tire Station, ``which are moving to look like independent tire dealerships to have a greater impact in the market.''