HIGH RIDGE, Mo.-Dobbs Tire and Auto Centers has prided itself in doing its homework when it comes to choosing locations and marketing itself in the St. Louis area. And now, as the dealership marks its 20th year in business, it is studying up on the challenges it faces in the next five years. After 20 years of growth in the St. Louis market, Dobbs Tire ``has a nice market share,'' said Don Dobbs, founder, chairman and CEO. Most of the stores are located in neighborhoods, and the company commands about a 15.5-percent share of the market-the same share held by Tire America, which has 12 stores in the area.
Tire America, a subsidiary of Sears, Roebuck and Co., is a strong competitor with virtually unlimited capital and resources from its parent, according to Mr. Dobbs, but while Tire America's main business is tires and some undercar service, Dobbs sells tires and complete automotive service.
Mr. Dobbs predicts delivering such service will be the most challenging task for his dealership in the next five years.
``The technology, equipment and training will become extremely difficult,'' he said.
For Dobbs Tire, underhood service, including diagnostics, accounts for 15 percent of its total auto service sales, which represent half the dealership's total revenues.
Overall, Dobbs Tire plans to maintain its 50/50 ratio between auto service and tire sales, though ``the squeeze on gross profit on the tire end concerns us,'' Mr. Dobbs said. Yet Dobbs Tire's size has helped-allowing the dealership to attain good volume purchasing and get a ``better bang for the buck'' in television and radio advertising, he said.
The dealership held a month-long 20th Anniversary Sale in August-an event that marked two decades of expansion and evolution from a single Goodyear franchise outlet to one of the largest independent dealerships in North America.
Ironically, when Mr. Dobbs started his company after 14 years of working for Goodyear, he thought he would open only three stores so each member of his family would have one to operate. But the operation just kept growing.
Some growth came from acquiring other small dealerships in the market, the rest from leasing or buying sites. ``We've been fortunate in choosing our locations and doing our homework,'' Mr. Dobbs said.
In 1992, Dobbs acquired all the Goodyear company-owned retail stores in the St. Louis market in an unusual arrangement with its tire supplier and later became an authorized Goodyear wholesaler.
But the cozy relationship between dealer and supplier hit some bumps when, in 1992, Dobbs broke the unwritten Goodyear-dealer rule by adding other tire brands to its shelves. The move became a trend among other Goodyear dealerships facing market competition.
``It is difficult for multiple-location dealerships to go with just one brand,'' Mr. Dobbs explained. ``For a single-store operation or small operation, you should choose a supplier and get in bed with them. For us, we're a little different.''
Today, Dobbs Tire and Goodyear have a good relationship, Mr. Dobbs said. Still a major Goodyear retailer, Dobbs also handles Toyo, Michelin and Cordovan.
During all the activity in the early 1990s, Dobbs Tire also got more aggressive in the wholesale end of its business, which now accounts for about 15 percent of its tire sales.
``The (wholesale) division is the fastest-growing part of the company,'' he said. ``It appears that the smaller dealership, maybe out-state or around the city, needs the service of the independent wholesale distribution point. We function as that point.''
Mr. Dobbs expects his wholesale business to grow to 25 percent of tire sales. The dealership services customers within a 50-mile radius of St. Louis.
The dealership plans to open three to five more stores within the next five years in some untapped areas.
Earlier this year, Dobbs Tire opened three new locations that sport state-of-the-art facilities with 10 bays and the latest computerized diagnostic equipment-``they are prototypes of what we think we want to go to market with,'' Mr. Dobbs said.
Mr. Dobbs said in the future he will concentrate on the real estate concerns of the business and become less active in its day-to-day operations. In October, he turned over his responsibilities as president to his son, David, who also will serve as COO.
David Dobbs, and his sister, Laura Killoren, are the third generation of the Dobbs family involved in tire retailing. Don Dobbs' father operated his own tire shop in the 1940s and 1950s in St. Louis and helped finance the start of Dobbs Tire.