MEMPHIS, Tenn.—Private brander and tire cooperative Del-Nat Tire Corp. has dipped its toe into the retail tire waters with the acquisition of two single-location dealerships in northern Indiana. Memphis-based Del-Nat, which decided a year ago to enter into tire store ownership, acquired the two outlets in a 50/50 partnership with one of its stockholders, Dwight Fouts Tire Inc. of Kokomo, Ind., said Bob Gardner, Del-Nat president.
Dwight Fouts, owner of Dwight Fouts Tire, will run the stores, Mr. Gardner said, and will look to expand the chain to around 15 locations, all in the northern Indiana area. "We're already talking to some individuals" in that area, Mr. Gardner said.
The new stores will operate independently of Fouts Tire and carry the "America's Greatest" banner, he added. Del-Nat and Mr. Fouts bought the first dealership, the former Merrillville Tire, in Merrillville, Ind., last August, and acquired Hebron Tire, in Hebron, Ind., in January.
Mr. Gardner said Del-Nat has established an acquisition team, consisting of stockholders Bill Kepple of Export Tire Co., Export, Pa., and Ray Carr of Ray Carr Tires Inc., Harrisonburg, Va., who will help him in analyzing potential acquisitions and working out details.
Currently, Del-Nat is talking with two other stockholders about establishing similar 50/50 arrangements with the idea of building chains in clusters of about 15 stores.Those stores would not necessarily use the "America's Greatest" banner, he said.
Del-Nat has no specific acquisition goals in 2000, Mr. Gardner said. "The opportunity has got to be right," he explained. "We're not going to rush into it."
Still, he anticipates more deals this year, noting the cooperative also is open to acquiring chains less than 20 stores in size. While he has set no timetable for expanding Del-Nat's retail operation, he is emphatic on two points.
Del-Nat management will not run any of the retail locations and won't open stores that will interfere with the business of its stockholders.
"We don't have the management in Memphis (to run the retail stores) and won't," Mr. Gardner said. "Any entity we buy will already have management in place...or the partner will run it."
He encouraged dealers interested in selling their operations to contact him.
Del-Nat's foray into retailing is aimed at increasing the company's buying clout with suppliers.
"The whole name of the game is to keep expanding volume to provide adequate supply and pricing to our members," he said.
Currently, Del-Nat has 70 stockholders and 70 distributor members, he said, including two new stockholders in western Canada—Tri-West Trading Ltd. in Calgary, Alberta, and Conestoga Wheel and Rim in Winnipeg, Manitoba.
Del-Nat's decision to expand into retail is one of several steps the company has taken after working with an outside marketing company "to make sure we're secure in 2000 and beyond," according to Mr. Gardner.
That effort included the creation of an export program three years ago to establish distributorships outside the U.S.
Del-Nat is adding two new tire lines in 2000, both made by Cheng Shin Rubber Industry Co. Ltd. of Taiwan and both currently coming on stream. The Delta Essex brand will be offered in metric sizes and in a 60-series high performance line. Similar sizes will be available under the National Metric and National HP labels.
Early next year, the cooperative will add the Akuret Ultra HP in 17- and 18-inch rim sizes.
Also on tap for the future, Del-Nat is planning a 200,000-sq.-ft. expansion to its warehouse in Memphis, bumping the facility to 500,000 total square feet.
"If things go right we'll be under construction within 60 days, Mr. Gardner said.
Del-Nat will close a nearby 50,000-sq.-ft. warehouse once the new facility is built, Mr. Gardner said.