Since its inception at the turn of the 20th century, the retail tire business has seen numerous changes. Some have been propelled by technological developments, others by the entry of new competitors, and still others by changes in the overall economic climate. Through it all, one fact has remained constant: Independent tire dealers and distributors have sold more tires to U.S. consumers than any other type of retailer.
That's not to say their lot has been easy—far from it. Faced with formidable new competitors and difficult economic conditions, independent dealers saw their share of the U.S. replacement tire market steadily erode from a high of almost 90 percent in 1926, to less than 39 percent in 1964.
However, dealers' ability to adapt to changing conditions, to identify and meet the needs of their customers, enabled them to not only halt the decline, but rebound to the point where they now control more than half the replacement tire market.
Some of the events and developments that have influenced the course of tire retailing over the past century are outlined below.
1890-1920—The Birth of an Industry: The pneumatic rubber tire, first developed for bicycles, found a new use on automobiles. As the popularity of the automobile grew, a need arose for outlets to sell and service the tires on which they ran—a need fulfilled primarily by independent small-business owners.
1920s—The Golden Age of the Independent Tire Dealer: Independent dealers and distributors, practically the only source for replacement tires, emerged as a distinct business category and organized a national association. By 1926, they accounted for nearly 90 percent of the replacement tires sold in the U.S.
That year, the first of many serious competitors entered the market, sparking the price competition that has remained a constant in the tire business.
1921: The National Tire Dealers Association is formed, precursor of today's Tire Association of North America.
1926: Sears, Roebuck and Co. entered the retail tire business and signed a private-label contract with Goodyear, using its huge buying power to obtain very favorable terms. Other large retailers/mail-order houses, such as Montgomery Ward and Co., followed suit.
1926: To answer this new competition, Firestone opened its first retail stores, designed to offer consumers one-stop shopping for gasoline, automotive service and tires. The other major tire makers eventually added company-owned retail outlets.
1930s—Tough Times, Tough Competition and TBA: The Great Depression, and the resulting drop in demand for both automobiles and tires, thinned the ranks of independent tire dealers. At the same time, the major oil companies were converting their ``filling stations'' to ``service stations'' and developing major TBA (tires, batteries and accessories) programs to supply them. Though each service station sold relatively few tires, their sheer number made them a significant factor, and their replacement market share grew from less than 1 percent in 1929 to almost 25 percent in 1948.
1940s—War, Rationing and Diversification: Though World War II had U.S. industry running at full tilt, tires for civilian use remained a scarce commodity, rationed by the government. To survive, tire dealers had to offer other goods and services, including tire repair, vehicle service and retreading. Some took on lines of appliances, auto accessories and even furniture.
1950s and '60s—Suburbs, Shopping Malls, Department and Discount Stores: The migration of consumers to suburban communities gave rise to new types of retail environments, namely shopping centers and shopping malls, often ``anchored'' by major department stores and/or discount retailers. Several of these new retailers chose to offer tire and auto service departments, which they often leased out.
Initially, independent tire distributors operated most of these leased departments, but in the early and mid-'60s, several of the largest of these operators were acquired by major tire makers, who were in the process of expanding their network of company-owned stores.
Between the end of 1958 and the middle of 1964, the ``Big Five'' U.S. tire makers (Goodyear, Firestone, U.S. Rubber, B.F.Goodrich and General) added a net total of 596 company-owned retail outlets.
As a result of the rise in discount/ department stores and the growth in tire-maker-owned outlets, the market share of independent tire dealers slid from about 52 percent in 1946 to just under 39 percent in 1964.
1970s—Bye-Bye, Service Stations; Hello, Radials: The big oil companies reversed course and began converting service stations to self-service filling stations, replacing service bays with convenience stores. Ultimately, they phased out their TBA programs as well.
Steel-belted radials, first introduced in France by Michelin in 1948, began to make serious inroads in the U.S., rapidly replacing fiberglass-belted bias-ply tires, which had just been introduced in 1965. By 1975, radials dominated the original equipment market and within five years outnumbered bias-ply tires in the replacement market. Today, with the exception of mini-spares, virtually no bias-ply passenger tires are sold in North America.
1976: Price Club founded—one of the first membership warehouse clubs.
1980s—Dealing with Competition and Consolidation: With their suppliers in the throes of a global consolidation that would leave only Goodyear and Cooper Tire & Rubber Co. as major U.S.-owned tire manufacturers, independent dealers were learning to cope with increased competition from low-price retailers, such as the warehouse clubs and mass merchandisers with huge purchasing power, such as Sears and Wal-Mart Stores Inc., and cheap imported tires.
Meanwhile, longer-lasting radials were increasing the intervals between consumer tire purchases.
For many dealers, moving more heavily into automotive service provided a means of maintaining more frequent contact with customers, as well as realizing higher profit margins than in the fiercely competitive tire sales business.
Dealers also increasingly banded together into buying groups to increase their purchasing power and compete more effectively with other large-scale retailers.
During this decade, the top independent dealership franchiser, Big O Tire Stores Inc., went public, and two new national marketing programs were launched: Metro 25 Car Care Centers Inc. in the early '80s and American Car Care Centers Inc. in 1989.
1990s—Bring in da Noise, Bring in da Trucks: The ``noise'' in this case refers to the continual proliferation of tire sizes and styles, as auto makers used tires as one means to differentiate their products. The epitome of this trend was the debut early in the decade of the Acura NSX, a high-end sports car, shod with unidirectional, asymmetric tires in different sizes on the front and rear wheels, necessitating a unique tire for each of the four wheel positions.
The growth of the light truck market—pickups, vans and sport-utility vehicles—continued unabated, and as the decade closes, light trucks are poised to outsell passenger cars. Complexity of tire styles and sizes is fast creeping into this market segment as well.
As the year 2000 approaches, independent tire dealers have returned to the pre-eminent position in tire retailing, accounting for approximately 55 percent of all retail tire sales and, via wholesale distribution, handling nearly 65 percent of all replacement tire shipments from tire makers in the U.S.