AKRON (July 2, 1998)—Are you pricing your tires too low? With profits hard to come by, dealers should pay closer attention to how they're pricing private brand tires. Properly merchandised—that is, priced high enough to yield a decent profit—private brands offer an excellent return on the dealer's investment and freedom from having to compete with the mass merchandisers on price.
As retailing consultant Gary Wright noted in this issue, the exclusivity of private branding discourages comparison shopping, allowing the dealer, rather than market conditions, to establish a tire's price.
Some astute dealers take advantage of this. They price their best private label tires just under the cost of comparable manufacturers' brands. Then they throw in extras such as free mounting and balancing, extended warranties, lifetime flat repair and periodic tire rotation to sweeten the deal.
Too many dealers, on the other hand, sell private brands short. They price them as an inexpensive alternative to branded products and settle for whatever profit they can manage on the transaction.
They're overlooking an important and sorely needed profit opportunity.
Image, value and trust are three essential ingredients to successfully merchandising private brand tires, according to Florida dealer Dick Erickson.
He should know. His Jacksonville-based Sun Tire Services Inc. generates 90 percent of its tire sales from private brands-in a marketplace renowned for cut-throat tire pricing.
Customers need to be convinced of the dealership's competence and integrity before they'll purchase a brand of tire unknown to them, Mr. Erickson has found. That calls not only for top-quality products and service but also knowledgeable sales people who are confident of the product's value.
As Tire Business goes to press, a strike against General Motors Corp. threatens to send additional thousands of tires into an already price-sensitive replacement market. Should that occur, dealers will need to exploit every opportunity for turning a profit on tires.
Private brands, properly priced, should be an important ally in their struggle.