DENVER—When the first Great American Tire & Automotive Service Center opened last fall in suburban Denver, it marked the initial test marketing of a retail concept that may become all too familiar to dealers nationwide in the coming years.
By this time next year, Great American Tire should be well on its way to 35 stores in seven major metro markets, the first step in a long-range plan for 300 to 350 stores nationwide.
Great American Tire's principals believe they've identified a niche in the market that they hope to exploit. That niche actually is an old one, rediscovered but refurbished.
"We're trying to recreate that feel of the neighborhood service station, only updated to 21st century specs," said Mark DeRose, chairman and president of Great American Tire.
Mr. DeRose and his partners began formulating their strategy a few years ago when they realized that service stations across the U.S. had eliminated more than 100,000 service bays as they were converted to gas stations/convenience stores.
Great American Tire's quick roll-out is the result of a business alliance the company has formed with Equilon Enterprises L.L.C. and Motiva Enterprises L.L.C.
These two somewhat obscure entities control the marketing of Texaco and Shell gasoline throughout the country, and Equilon/Motiva and Great American are cooperating on launching a new generation of gasoline service stations that, besides dispensing gasoline, will feature a convenience mart, a quick-service restaurant, a car wash, and a full service tire dealership, including tires, wheels, automotive service and quick lube.
"Our vision is to combine complementary businesses on a single site, to create a compelling and convenient service for our customers," said Chuck Shepherd, general manager, business development for the Equilon/Motiva alliance.
As a Michelin Americas Small Tires Alliance dealer, Great American Tire features the Michelin, BFGoodrich, Uniroyal and Cavalier brands. The chain also carries a range of more than 150 custom wheel styles from 10 different manufacturers, according to its Web site: www.gatire.com.
"We're looking to leverage the marketing synergies available to us," Mr. DeRose said. "There are considerable cross-marketing opportunities in this set-up, both at point-of-sale and through other means."
While cross-marketing features prominently in Great American's business plan, "the fastest way to get fired around here is to sell someone something they don't need," Mr. DeRose emphasized.
Starting with five stores in Denver this year, Great American plans to open five stores next year in the Atlanta, Dallas, Phoenix, Seattle and Washington, D.C., metro areas, as well as up to 10 in Chicago. The site search team is targeting new suburban neighborhoods and communities growing up around major metropolitan areas, Mr. Shepherd said.
Most of these will be part of Texaco Star Mart locations, except in the D.C. area, where the stores will carry a new Shell store identification, Mr. Shepherd said. Equilon/ Motiva is opening at least a like number of new Texaco and Shell stores without a tire and automotive service center on site, he added.
The proposed store sites in affluent, fast-growing communities fit well with the image Michelin North America Inc. has for its MAST brands, said Dave Walker, MAST director of sales for the western U.S.
Neither Mr. Shepherd nor Mr. DeRose would comment on the venture's cost, other than to say co-locating the businesses lowers start-up costs by spreading them across more profit centers.
The roll-out is taking place in multiples in order to present a stronger front, and be able to spread the marketing and promotion budget more effectively, Mr. DeRose said.
The new stores will be either 10- or 14-bay designs—taking up 7,500 to 8,500 square feet—with three bays dedicated to the Texaco Xpress Lube quick-lube business, Mr. DeRose said. The quick-lube service promises a 15-minute oil change, and offers other routine maintenance services as well, including transmission fluid and coolant flushing, serpentine belt and headlight replacement etc.
Architecturally, the Great American Tire stores will be designed to blend with the adjoining Texaco or Shell service station on the property. The businesses will share a 2- to 2.5-acre site. Legally, Equilon/ Motiva owns the sites and sublets to Great American, Mr. Shepherd said, but the venture's emphasis is on generating business by cross-marketing each others' services.
Inside, the stores will offer customers an uncluttered look, hands-on computer terminal information stands, and open, side-by-side sales kiosks designed to represent the salesman-customer interface as cooperative, not confrontational, Mr. DeRose said.
"Selling tires at retail is way over-complicated," Mr. DeRose said. "We want to clean up the showroom and make a lifestyle presentation to the customers."
The interior concept was drafted by Retail Group, a Seattle-based design studio, Mr. DeRose said.
Outside, the company will seek to maintain an uncluttered look as well, he said, by not allowing any work to take place outside of the bays.
Mr. DeRose declined to say what annual sales the owners expect a Great American Tire store to record, but said the sales mix would be roughly 35 percent tires and wheels, 40 percent automotive service and 25 percent quick lube.
For the most part, the stores will be open 7 a.m. to 7 p.m. Monday through Friday, and 8 a.m. to 5 p.m. Saturdays, and will offer customers free shuttle service. A typical store will require 15 to 16 full-time and four to five part-time employees, Mr. DeRose said.
Mr. DeRose, 39, and his unnamed partners—both institutional and private investors—got their start in suburban Denver, running several Amoco Certicare service stations under the Western Standard Service Co. name. Mr. DeRose himself started out in his teens washing car windows at gasoline pumping islands.