HOFFMAN ESTATES, Ill.—Sears, Roebuck and Co., parent corporation of National Tire & Battery, has closed 33 unprofitable NTB outlets in Michigan, New York and Florida, reducing the chain's total outlets to 307. At the end of the business day on Sept. 29, Sears shuttered 13 NTB outlets in Michigan, 11 in the Miami area and nine in upstate New York. The sudden closings eliminated the jobs of approximately 350 NTB store employees, most of whom were not told the company's plans beforehand.
Customers' telephone calls to the affected NTB outlets are being transferred to the nearest Sears automotive center.
David Albritton, spokesman for the Sears Automotive Group, said the company will honor all warranties and service contracts connected with NTB purchases. NTB credit card holders also will be given the opportunity to transfer their account to a Sears credit card.
Mr. Albritton said some affected employees will be offered similar positions in other company-owned operations. He added that Sears plans to work with local employment agencies to assist the former NTB employees find other jobs. All of the positions eliminated by the closings were at the store level. Those of employees at the district management level and above were unaffected, he said.
He said the 33 outlets were shut down because of their low profitability. Although they represented approximately 10 percent of NTB's total outlets nationwide, they contributed less than 6 percent of its revenues, he said, adding that the company will continue monitoring the performance of its remaining NTB outlets.
When asked if Sears might be seeking to sell the entire NTB chain, Mr. Albritton declined to comment, dismissing such a suggestion as mere speculation.
Such a move would be in keeping with Sears' recent behavior, said George Whalin of Retail Management Consultants in San Marcos, Calif.
While he said he didn't have any specific information on Sears' plans for NTB, Mr. Whalin said the retailer has been trying to sell or find partners for unprofitable operations, such as its chain of stand-alone furniture stores.
A decision by Sears to put NTB on the block `` would not surprise me at all,'' he said.
Mr. Whalin also questioned Sears' strategy with NTB, which included converting the stores of two existing, well-established chains—Tire America and NTW (National Tire Warehouse)—and giving up whatever brand equity they possessed in favor of trying to create an entirely new identity, one still not associated with Sears. In essence, NTB competes with Sears' own auto centers, he said.
Mr. Whalin also said he thought NTB's size, at 350 outlets, was not large enough to compete effectively with large regional and national dealership chains, such as Discount Tire Co. of Scottsdale, Ariz.
NTB was plenty large enough, however, to get the attention of Dunn Tire Corp. when NTB decided in 1997 to enter Dunn Tire's primary markets—Buffalo, Rochester and Syracuse, N.Y., where Dunn Tire considers itself the dominant tire dealership.
This was new territory for NTB—neither Tire America nor NTW had operations in this part of the country, said Randall Clark, chairman of Dunn Tire. NTB invested a great deal to open brand new, large and expensive stores, Mr. Clark said. Now, less than two years later, NTB has closed them all.
``We make no bones about it: We targeted them,'' Mr. Clark said. ``We reacted as though they were a very serious threat.''
Dunn Tire developed a very specific plan to compete with NTB, Mr. Clark said. The dealership, which currently operates 24 retail outlets, spent hundreds of thousands of dollars to refurbish its older stores and made a point of sticking to its lowest-price guarantee, he said.
It is Dunn Tire policy to dominate the local media, Mr. Clark said, and the dealership typically out-advertises its competitors by four or five times. With the arrival of NTB, Dunn Tire boosted its ad spending to out-advertise NTB by a factor of at least three, Mr. Clark said.
One advantage Dunn Tire had over NTB, he said, was the ability to make instant decisions at the local and regional level. ``We could react much quicker to the competitive process.''
The independent dealership focused on maintaining what Mr. Clark called ``sustainable competitive advantages.'' Besides its command of the media and its price-competitiveness, these include the professionalism of its staff, store appearance and customer service.
``If we can maintain those advantages, we can meet any competitor,'' Mr. Clark said.
Reflecting on the dealership's battle to compete with NTB, Mr. Clark said: ``We weren't happy to see them come, but Dunn Tire is a better organization as a result, because it caused us to attend to issues of customer service, cleanliness—things you should be attending to every day anyway.''
Reporter Chris Collins contributed to this story.