JACKSONVILLE, Fla. (Oct. 18, 2001)—Neon to the left of you, chrome to the right.
Break out the shades, baby, and don't kid yourself that this is your average, everyday tire store…maybe just a bit brighter. The crucial word here is “edgy”—speed-shop edgy.
So, you ask: What if they built a tire outlet but left out a lot of the more pedestrian products and instead filled it with rack upon display of eye-blinding custom wheels and enough performance rubber to outfit a fleet of “tuner” cars? And what if they threw in some shifter knobs, “Eurotails,” lowering kits? You know, slick eye candy stuff guaranteed to get those young, expendable-income types practically salivating on the black-and-white checkerboard floor?
Well, they have. Tire Kingdom Inc. (TKI) has, that is.
In order to capitalize on what it describes as a “red-hot market” that could approach $1.5 billion, the Florida-based retail chain has launched, in Jacksonville, what it's calling “TK Performance.” The store concept is the first of what the TBC Corp. subsidiary hopes will be a sort of subset chain differentiated from its typical TK tire outlets by look, inventory and clientele.
“We put a lot of time into this in terms of developing the blueprint, how it was going to look inside and out,” said Orland Wolford, the 54-year-old CEO of Tire Kingdom. Fruits of the nine months of project planning have been carried through from an interior basking in neon to the exterior design, and even the parking lot.
The company has quickly discovered all that glitters can indeed be gold.
With the store open only a few weeks, Mr. Wolford acknowledged it was on pace toward a projected $190,000 in sales its first month—without any initial advertising or marketing. A couple days after the outlet's Oct. 12-14 grand opening—with a sales day of $14,000 under his belt—General Manager Ben Hammond was bumping his boss's prediction up closer to $200,000.
That was after he told Tire Business he'd shuffled nearly 1,000 persons through the doors during that three-day period.
It's “totally different” from a typical TKI store, Mr. Wolford said, describing the glitzy performance outlet that boasts some $400,000 worth of custom wheel inventory alone and more than 300 wheels on display. While the store's size is about 5,300 square feet compared with the regular 6,600-sq.-ft. TKI store, where it really embarks upon a new path is in its product offerings and layout.
Eventually, once the shop hits its stride, Mr. Wolford expects to pull in monthly sales approaching $300,000. A typical TKI store does an average of $110,000-$120,000 per month, though that varies by store and market.
“Around our area, there aren't a lot of (tire dealers) going into this (performance) business,” he said. Major competitors such as Tires Plus, Discount Tire, Allied, Firestone and Goodyear simply “don't have tire and wheel performance shops.”
In addition to the aforementioned Eurotails and such, TK Performance has “redefined automotive customization,” the company claims, by providing lowering springs, air-intake and exhaust systems—it does its own pipe bending—as well as an array of other speed shop-type services. For instance, Mr. Hammond said the shop just installed a grille on a new Ford truck. It ended up being a two-hour endeavor because techs had to cut out the original grille, and sometimes with jobs like that, special pieces also must be fabricated.
“Some of the installs we do are fairly labor- intensive,” he said. “You can't just slap on a set of tires and wheels in a half-hour.” With the custom stuff, it can take at least an hour since “you have to finesse it. There's a plethora of things to do.”
And that can be the difference between a 30-percent and a 50-percent margin. Typical TKI stores make money on brakes, front-end work, tires and tune-ups, he explained, “and we can make that on installations. We can charge more because no one else can do it.”
Still, it's a mental tug-of-war.
“Do you want to spend two hours installing a grille that you're going to make, yeah, 60-percent margin on, but it's a $300 ticket?” Mr. Hammond asked. “Or would you rather make 30 percent on a $6,000 or $8,000 ticket? You've got to do the math….”
In the back shop, the store layout features gray epoxied floors, an alignment machine sunk into the floor “so we can do every kind of vehicle possible,” he said, and state-of-the-art equipment from Hunter Engineering. “It's all very impressive. When customers come in and see it, they feel very comfortable in spending their money. We've found a niche market and we're tapping into it.”
Spend, they have.
The concept, to put it bluntly, is “youth intensive,” Mr. Wolford said.
Take a look at the store's target demographics outlined by Mr. Hammond: Caucasian and Asian customers 18 to 26, and then a “totally different” market—21- to 35-year-old African-Americans. Jacksonville is “a split market” ethnically: approximately 70-percent black, he estimated, with the remainder Caucasians and other groups including Asians who favor the so-called “tuner car” market.
“Now that I'm 38 years old, I'm at a different time in my life,” he said. “My future's more important than my car.”
But he believes “the youth of America…don't look that far ahead in their future.” They—the target TK Performance customers—“live at home; go to college; mom and dad pay their bills; they work and spend every penny they make on their car…. They don't care about 401k plans or stock portfolios. They get their paycheck and think about what they can do next to their car.
“They're young and they have all that expendable cash.”
The new store's average ticket price thus far has been about $1,800, but Mr. Hammond said the current hot sellers are 20- and 22-inch wheel/tire packages averaging between $2,500 and $5,800 per sale. The store's biggest sale, though, was the $8,500 a customer paid for four top-of-the-line 23-inch custom wheels (no tires).
Catering to such a niche clientele with specialized products and services requires a trained staff, and that starts off with the head guy. Mr. Hammond, a wrench turner who got into the automotive business about 15 years ago, eventually ended up doing custom accessories installs. Training for his staff includes bringing in vendors to conduct seminars about products and installations.
But it's an ongoing challenge, he added, because “the trends and products change so quickly. It's basically learn as you go.”
One store employee who has done custom wheel and tire work for 10 years teaches other staffers, while a key mechanic who handles jobs including alignments, front-end work and suspensions conducts what Mr. Hammond called “cross-training.” Yet he lamented that with changing employee schedules and a store that's open seven days a week, it's nearly impossible for a worker to know every job all the time.
“It's a very difficult business to run as a chain because it's so technical,” he said. “You have to have the right personnel in place in each store, develop the right team of people, and pay them very well to run this business.”
Being open seven days, however, has provided some benefits. “Our major advantage over any competitors in this market,” he said, “is they have five-day weeks and are closed on Sundays and Mondays.” He's found the tire industry's notoriously slow Mondays to be one of TK Performance's busiest days thus far.
Overall, Tire Kingdom currently has 181 stores. Mr. Wolford expects the chain to close 2002 with about 230.
In the near term, he believes TKI will end up with eight performance-type outlets, with the goal of eventually putting one in each of the company's major markets. Already, he's seen the other outlets benefit from the sole TK Performance store—which happens to have a regular Tire Kingdom directly across the street from it.
“Our performance business is up,” he said, “and we're now putting more of that inventory in the other stores rather than keeping it in a warehouse.”
Mr. Hammond—a former wheel manager with TKI before Mr. Wolford came on board—is far more ambitious, hoping within five years to see at least 20 performance stores.
Perhaps the hardest part of the new venture is, ironically, dealing with the very customers TK Performance is trying to seduce. “With this business, it's more like show, show, show, show, sell. Lots of customers shop you to death,” Mr. Hammond admitted.
“They're dreamers. They're getting ready to (buy something) but may not be financially secure for six months.
“So they come in, look, ask, price things, look some more before buying. We spend a lot of time answering questions before finally getting the sale.”
But with the sales rung up thus far, it's apparently been worth the effort.