DALLAS—Prospects are looking up for Goodyear's underperforming company-owned retail stores. Following the best sales year ever for the outlets in 1998, Goodyear is looking to start growing the chain by 30 to 50 stores annually.
``About 18 months ago, we put together a revolving budget for 50 locations,'' said Marco Molinari, Goodyear's vice president of sales and marketing.
The tire maker has about 720 company-owned outlets in the U.S., with 37 new stores currently in the planning stage.
For the time being, Goodyear has enough overhead at its Akron headquarters and in its nine sales regions to expand without adding people, Mr. Molinari said.
Ten years ago, Goodyear had more than 1,000 company-owned stores but pared that number over the years as leases were lost or not renewed, poor-performing stores were closed or sold, and market demographics changed.
Now, buoyed by 1998's success, the company is looking to expand the chain.
``These new stores will strengthen Goodyear's position as the leader in North America,'' said John Peer, director of retail operations. ``Our retail business has been growing steadily, and we have backed that growth with solid advertising promotions and stores that are well staffed with professional associates.''
Goodyear will build and acquire new stores in both of its retail formats: the 644 Goodyear Auto Service Centers, which sell tires and offer complete automotive service, and the 74 Just Tires locations, which focus on tire sales and offer limited services.
Mr. Molinari would not reveal 1998 sales for the retail chain, which has struggled over the years, but said the unit showed a net improvement of $15 million at the operating level over the previous year. That translates into sales growth of about 5 percent—twice the average rate for the industry as a whole, Mr. Peer said.
Per-store tire sales grew by an average of 0.6 tires per day last year to about 15 to 20 tires a day. ``If we can continue to grow at that rate, I'd be very happy,'' Mr. Molinari said.
The Just Tires outlets, some of which sell close to 60 tires per day, showed an even greater improvement, growing by four tires per day per outlet, he added.
``We're making money now,'' Mr. Molinari said, adding that the stores are in a good position to contribute still more to overall corporate profitability.
Mr. Peer attributed the turnaround to the addition of several key staff members in late 1997 and 1998 who have provided strong, consistent leadership, as well as to the development of new incentives for employees and team-based training programs.
Mr. Peer said many of the new locations will feature a more contemporary and flexible 10-bay design. They will be more appealing to customers, inside and out, he said.
Goodyear also has been updating its existing stores. The company refurbished about 20 percent, or about 150 locations in 1998, and expects to do the same number this year, completing the process by 2001.