LAS VEGAS—In the vast sea that is the tire industry, it's pretty easy for an operator of a small- to mid-sized dealership to feel like a guppy swimming with the big fellas. One minute you're treading water. The next.|.|.|gulp, and its curtains. Or rather, hors d'oeuvres.
Over the years, Tom Wright, the new president of the Tire Association of North America (TANA), apparently has given his water wings a workout while eluding "Jaws."
Perhaps that's what led him to invoke his fellow "guppies" to take the battle to the sharks—characterized by Mr. Wright as the mass merchandisers with whom dealers compete on a daily basis.
Face them head on, he urged in his speech accepting the association's leadership reins during TANA's "President's Breakfast" Nov. 3 in Las Vegas.
"I suggest we have to be piranha—when those suckers come around, let's nip 'em good," implored the owner of Wright Tire Service, a one-outlet dealership in Anoka, Minn.
Addressing where the industry is headed—not in 20 or 30 years but in only two or three—Mr. Wright noted that the future "most certainly will require us to sell more tires, more add-ons and more aftermarket services.
"And for less money than we've ever had to before."
How can a dealer remain successful in an aftermarket environment that literally changes daily?
After mentioning several possible approaches—change product mix, recruit new employees, alter training, open a new location, run more or fewer ads—he settled on "knowledge" as the answer.
"Remaining successful in the tire business now and in the future is going to depend more than ever on our having a better understanding of the products and services our customers want—before even they realize they want them," he said, adding that the biggest challenges dealers face can be stated simply:
Competing with mass merchandisers for market share;
Dealing with the rapid consolidation occurring in the industry; and
Finding, developing and retaining qualified employees.
Wright Tire has a serious competitor, a Pep Boys—Manny, Moe and Jack outlet, down the street from it. "When I first heard of Pep Boys five years ago, I thought it was a breakfast cereal," Mr. Wright joked. "It isn't."
In reference to Sears, Roebuck and Co.'s recent closure of 33 of its National Tire and Battery (NTB) stores, Mr. Wright cited as the chief reason: "Because NTB didn't understand the markets in which they operated nearly as well as the independent tire dealers who were already there....
"The future belongs to the smartest dealers, not necessarily the ones with the most stores—or even the biggest checkbooks," he continued.
Industry consolidation remains a dominant factor, Mr. Wright said, pointing out that in the 1980s, 13 manufacturers shared 80 percent of the world tire market. Today, only 10 companies share it, and the top three now control 55 percent.
That scenario will affect dealers because they won't have as many manufacturers to rely on to get the products they need. So dealers must have "a lot stronger relationships with manufacturers than many of us do today," he said.
"But perhaps the biggest impact consolidation is going to have is that we have to learn to trust manufacturers and share information with them much more than many of us do now."
Within a matter of months, not years, point-of-sale systems will enable dealers to order directly from manufacturers, he said. The flipside is that suppliers, in turn, will be able "to know exactly how many of their products we're selling in our stores."
That can be a good thing for dealers—"if we use it as an opportunity to get a better handle on our inventories. If we use it to track what add-ons sell better with what products—and to which customers. If we use it to increase our knowledge of who buys how much of what for how much when."
The future "belongs to the dealers who have the most knowledge," he restated, and one key to success is finding, developing and retaining good employees—a point upon which Mr. Wright and outgoing TANA president Jim Shook agree.
Before passing the ceremonial gavel to his successor, Mr. Shook said one of his chief goals was turning the association into a premier training organization—a need consistently identified by independent tire dealers as their primary concern.
TANA is well on its way to becoming that, he said.