AKRON—First, a dictionary definition: "Synergy—combined or coordinated action."
That's what franchisers and executives of several large marketing cooperatives promise independent tire dealers will derive from membership in one of these groups: benefits like economies of scale in advertising, pricing and a host of other services that will make their dealerships more successful and profitable.
Dealers also are promised a piece of a national identity and more leverage with tire manufacturers as part of a larger group.
Tire Business spoke with executives of several of these groups about their programs and plans for expansion, marketing, technology and training.
Year-to-date sales for American Car Care Centers Inc., based in Memphis, Tenn., are up about 20 percent over 1999, said President and COO Len Lewin.
ACCC's current roster lists 965 locations, he said, along with 19 member distributors who are shareholders in the company.
"We've been on a continuous campaign over the last 24-30 months to upgrade the standards of ACCC and the standards of our dealers," he said. Passing the 1,000-store mark may come soon, he said, or it may take a while.
"It's a very dynamic situation," Mr. Lewin said, because some dealers drop out rather than make improvements, and that offsets increases when new dealers join.
ACCC's "Ad-Pack" marketing program for its dealers has "been doing tremendously well," Mr. Lewin added. Ad-Pack is a comprehensive marketing package that includes prepackaged TV and radio spots, a CD-ROM and direct mail ideas and layouts.
About 70 percent of ACCC's 965 affiliates are "solid participants" in Ad-Pack, said David Crawford, ACCC director of marketing. ACCC has numerous small, independent dealers with one to three locations, he said, and "independent dealers really love this stuff (Ad-Pack)."
At Big O Tires Inc., a subsidiary of Memphis-based TBC Corp., year-to-date revenue is up 11 percent and unit tire sales have grown 6 percent at the franchiser's 459 locations, Big O President John B. Adams said.
Big O's goal is to add about 25 stores annually, and the firm expects to end this year with about 470 outlets.
"We're looking at opening up a company-owned Big O outlet component," Mr. Adams said. The eight company-owned stores in Kentucky and Indiana will form the basis for expansion in that region, he added, including future locations in Ohio.
Big O also has modified its franchisee financing program to include paying for construction of a franchisee's new building, while the franchisee buys the land, Mr. Adams said. Then, three to five years later, the franchisee buys the building from Big O, using the equity built up from the land to leverage the loan. This protects dealers from escalating rent costs.
Big O is negotiating with a major company for a national marketing promotion, Mr. Adams said, but he declined to provide any details. He said he hopes the agreement can be announced during the upcoming International Tire Expo in Las Vegas.
Marketing group Tirecraft Auto Centers Ltd. of Sherwood Park, Alberta, plans to add 10 to 12 stores in the next year, President and CEO David E. Cosco said.
The company has targeted Ontario, Canada's most populous province, by adding two more dealer development people there. "I think Ontario has a great deal of potential for us," he said.
Tirecraft will pursue "slow but steady growth," Mr. Cosco said, and is looking for dealers committed to customer service. "I'm more concerned with the quality, not the quantity."
Monroe, Ind.-based Best One Tire & Auto Service, created by the Zurcher Tire Group, began an extensive advertising campaign earlier this year. Best One, which has 80 dealer members with 130 retail and about 50 commercial tire locations, has no specific growth goals, said John Miller, director of retail development. "We have a number of (potential) locations in the pipeline," he said.
St. Cloud, Minn.-based Tire One, created by Royal Tire Inc., has 194 stores flying its banner in the upper Midwest and hopes to reach 200 locations by year-end, said Rick Lang, consumer division manager.
"We try to be a business partner with them (member dealers)," Mr. Lang said.
Dealers must meet target numbers, especially inventory and sales, and purchase 80 percent of their tire inventory from Tire One. The targets are based on the performance of Royal Tire's own 13 stores, he said.
Tire One has selected South Dakota for expansion, he said, noting that younger, more aggressive tire dealers, especially, see the advantages of joining a marketing program.
Heafner Tire Group Inc., owner of the Winston Tire, T.O. Haas and Tire Outlet Plus chains, also is launching an affiliate dealer program called "AutoEdge."
Heafner has not yet released details of the program, although it said it has 47 AutoEdge locations operating already.
In Wisconsin, Bauer Built Inc. has built its fledgling Tire Shop retail dealer program into a network of 63 outlets, and looks to reach 100 stores by year-end, said Jerry Bauer, president of the predominantly commercial-oriented company.
Tire Shop aims to provide a marketing umbrella and support services for Bauer Built associate dealers who cannot satisfy minimum purchasing requirements for other existing purchasing programs, Mr. Bauer said.
ACCC currently is rolling out the American Way Business Management System (AWBMS)—a complete point-of-sale (POS) system that links the front counter with the back shop. "That is one of the greatest achievements of this year," Mr. Lewin said. AWBMS has been in development for three years, he added, "but we're finally comfortable we have something we're proud to go to market with."
Mr. Lewin said ACCC is pursuing a "cautious rollout" of this product to make sure the corporate level of support is sufficient before a large number of the 950 ACCC dealers switch to the new system.
Big O has a new Internet site (www.bigotires.com) that went on line about two months ago.
Technology is "a very high priority," Big O's Mr. Adams said.
"In terms of our exchange of information electronically between our customers and our distribution operations," he said, "we've not done what we should be doing." Mr. Adams, who assumed Big O's top job in June, is taking a two-pronged approach to improving the franchiser's use of technology.
While developing the Big O Web site, the company also created a proprietary "extranet" that permits information exchange between the company and its franchisees.
Big O officials also are working with Bandag Inc. subsidiary Quality Design Systems Inc. to adapt that firm's Tiremaster point-of-sale software. About 200 of the 459 Big O locations now are using Tiremaster, Mr. Adams said, and he wants to enhance integration of Tiremaster's system with Big O's extranet.
Tirecraft also wants to have all its stores online by the end of 2001, Mr. Cosco said. The Canadian firm's 35 company-owned outlets already are connected via Tirecraft's Virtual Private Network (VPN), which operates on the Internet.
Tirecraft's VPN is compatible with systems from Costar Computer Systems and Triad Systems, and the firm recently revamped its Web site (www.tirecraft.com).
Two newer marketing groups—5-year-old Tire One and 1-year-old Best One—are both developing their own software systems for roll-out in 2001.
When its system does go online, Best One dealers will "gain some enormous economies of scale," Mr. Miller said. They will be linked with suppliers electronically to make transactions faster and more accurate.
Tire One also is developing its own online system, specifically to help member-dealers in inventory and ordering, Mr. Lang said.
"I don't think we spend enough money or attention on that matter (training)," said Big O's Mr. Adams.
Better training is needed for two reasons: high employee turnover in the retail stores and the increased cost and complexity of today's cars, light trucks and sport-utility vehicles, he said..
Big O will look at producing more videos, which are shorter and deal with a specific technique to be followed by specific testing. He also wants to put as much training as possible on Big O's extranet, so it is available at any time.
His goal: is to "make our people in the stores as functional as possible as quickly as possible."
ACCC's member distributors handle training on an ongoing basis, Mr. Lewin said, and ACCC holds one or two national training meetings each year.
The extensive media coverage the tire industry has drawn because of the Firestone recall has increased the need for training, he said. But Mr. Lewin believes the member distributors are closer to their local markets and will do a better job developing programs to locate and retain good employees.
Tirecraft also is beefing up training in customer service this year, Mr. Cosco said. "They (our dealers) seem quite keen on doing that," he said.