ST. CLOUD, Minn.—It's becoming a familiar scenario for many independent tire dealers: A wholesaler seeks to build sales for itself and its retail accounts by banding dealer-customers together under a common name for marketing purposes. Royal Tire Inc.—a prominent Minnesota tire retailer, wholesaler and retreader in its own right—created Tire One in 1995 for this very purpose, and the network of affiliated dealers has grown from 36 that first year to 142 now in three states. Concurrently, Royal Tire's wholesale business has doubled.
Royal Tire's goal is to have 200 locations in the year 2000, growth that should provide the impetus for another 50 percent increase in wholesale business, Rick Lang, Tire One/wholesale manager of Royal Tire, said.
``It's had a pretty major impact on us,'' Mr. Lang said.
Royal Tire operates 14 retail and commercial outlets and four retread shops in addition to its wholesale operation. Last year sales were about $32 million.
Tire One is a ``program distribution'' that provides dealers with everything from uniforms to parts to on-site training—at minimal cost, Mr. Lang said. Similar programs exist for independent retail operators in other fields—Ace Hardware or Car Quest auto parts stores, for example.
Dealers who join Tire One pay an annual computer fee of $60 and a monthly fee and service fees on Tire One credit card purchases. Dealers also agree to keep a minimum inventory of tires purchased from Royal based on the dealership's size and market.
Royal stresses that Tire One is not a franchise and the cost for a dealer to join is very small compared with franchise fees. ``We want to give them a franchise look without a franchise price,'' Mr. Lang said, adding, ``We try to keep most items at no cost to the dealer.''
Mr. Lang said Tire One was formed as a buying group to combine ``regional marketing power from advertising'' for independent dealers, to whom it offers protected territories.
In 1995, Tire One signed up 36 dealers, who already were Royal Tire wholesale customers; 12 more joined in 1996. During the last two years the number of locations has ``just skyrocketed'' to its current 142 dealers with 143 locations in Minnesota, Wisconsin and North Dakota, Mr. Lang said. The company also intends to expand Tire One into South Dakota and Iowa.
The Tire One network is a mixture of traditional tire dealers, independent car repair garages, car dealers, gasoline service stations, and farm cooperatives.
``We're trying to get our dealers to go together and fly the same flag and make a regionally strong image,'' Mr. Lang said. He said member-dealers are concerned that ``the big boys keep getting bigger and bigger,'' and these independents recognize the need to band together to compete.
Tire One has had some other positive effects on Royal. ``It's really given Royal Tire a whole new image in our marketplace,'' Mr. Lang said. He added the Tire One program has ``been a wake-up call to the competition.''
In advertising, Tire One provides quarterly sales insert sections for dealers to place in local newspapers, materials for radio jingles and yellow pages ad layouts at no charge.
Tire One also takes two large tents around to host special sales at dealerships.
Tire One has a six-member advisory board to ``give us direction on the things they want.'' Mr. Lang said the credit card program was set up two years ago on the recommendation of the advisory board.
Members also put employee training near the top of their list, Mr. Lang said.
Tire One has seven ``canned'' training programs for presentation at member dealerships. Most of them are not tire-business specific, but deal with subjects like telephone sales techniques and listening to customers.
Tire One maintains an Internet site (www.tireone.com), where it lists all member dealerships and provides a locator service with which consumers can locate the Tire One outlet nearest them. The Tire One site also includes links to the Web sites of those member dealers who have one.