CHICAGO—It's not called ``black gold'' for nothing. Faced with underutilized service bays at a number of its stores, Chicago-based Sears, Roebuck and Co. is continuing to slide into oil as a profit center to augment its automotive business. Along the way, it's creating a bit of at least perceived quick-lube competition within its own walls.
In the second such test market of quick-lube operations in as many years, Sears announced a deal on Nov. 8 that will bring Valvoline Instant Oil Change (VIOC) outlets into 20 Sears Auto Centers in three major markets next year, and eventually to more than 150 centers nationwide over the next three years.
VIOC, a division of Ashland Inc., will initially enter Sears shops in the Dallas, Minneapolis/St. Paul and Kansas City areas.
A year ago, after inking a similar agreement with Jiffy Lube, the industry's quick-oil-change leader, Sears brought that Houston-based Pennzoil Co. subsidiary into six Sears outlets, in Kentucky and New Jersey. That ``experiment'' is still going strong, with Jiffy Lube opening its 100th in-Sears outlet several weeks ago in Pennsylvania.
The two quick-lube companies are competitors, acknowledged Bob McHenry, spokesman for Sears' Automotive Group. However, both will continue to expand within Sears—though not in the same markets, so as not to confuse customers.
``We're hoping the test markets work out for both companies,'' he said.
Since it began overhauling its automotive enterprises in 1992—following disastrous allegations of automotive service fraud—Sears has been trying to maximize the use of what Mr. McHenry said was an excess number of service bays.
``It's not that we're not doing as much business,'' he said. But when the company decided to concentrate on its core automotive business of tires and related services, batteries, brakes, shocks, struts and front-end repairs, it found that ``we get customers in and out a lot faster—that's what's driven us. So we found that the bays we have are beyond our means.''
VIOC, the nation's second-largest quick-lube organization, will remodel, equip and operate the service areas in Sears as company-owned outlets. Mr. McHenry said Jiffy Lube's Sears venture is a combination of franchise and company-owned.
Larry Detjen, VIOC president who also serves as The Valvoline Co.'s senior vice president of U.S. products, said the company was excited about partnering with one of America's leading retailers. ``Retail partnering has proven to be a very effective method of providing consumers added convenience through more locations and the one-stop shopping concept.''
In addition to oil changes and lubes, Val-voline quick-lube outlets offer radiator flush and fills and 14-point maintenance checks without an appointment.
According to a Sears press release, VIOC is considered an industry leader because of its Maximum Vehicle Performance (MVP) program—a state-of-the-art computer-based vehicle maintenance tracking system, called the first and only system of its kind in the quick-lube industry. MVP keeps an ongoing service and mileage history for a customer's vehicle and tracks manufacturer oil and fluid recommendations and schedules.
Paul Baffico, president of the Sears Tire Group, said both Sears and VIOC ``provide quality products and services and are committed to customer service and satisfaction. Our services complement each other and together will provide our customers with the convenience of one-stop shopping for many automotive services.''
As it does with Jiffy Lube, Sears will receive a percentage of Valvoline's Sears-generated revenues.
Based in Lexington, Ky., VIOC has nearly 500 service centers in 30 states, including 125 franchise stores. The company's service centers also offer free, environmentally safe used-oil disposal, and it was the first major quick-lube chain to actively solicit used mo-tor oil from do-it-yourselfers. VIOC said it has collected and recycled more than 2 million gallons of used oil.
Mr. McHenry said that of the approximately 800 Sears stores nationwide, 780 of them have auto service centers, and 450 of those have excess bay capacity.
``We hope when this project is totally completed that Jiffy Lube or Valvoline will be in all 450 of those stores,'' he said.
There is no consideration being given, however, to incorporating quick-lubes into Sears' free-standing subsidiaries, which Mr. McHenry said do not have any excess service bay capacity.
Its Tire America, Western Auto, Parts America and NTW stores bring Sears' total network of automotive product and service outlets to 2,500.
The quick-lube outlets are licensed businesses, similar to Sears Optical and Sears Portrait Studios, which are operated within its stores by other companies. The latter, for example, is run by a firm called CPI, the country's largest portrait and photo finisher.
However, because Jiffy Lube and Valvoline are strong brand names that can stand on their own, Mr. McHenry said Sears agreed that those companies should keep their own corporate identities.