LONDON, Ontario (Jan. 23, 2002)—Despite the competitive nature of the Ontario retail tire market, a prosperous economy in many areas helped bolster independent tire dealers' sales this past year.
Tire dealers face the usual pricing pressure from the warehouse clubs and car dealerships that sell tires, but several independent dealers said their businesses are thriving because they adhere to that tried-and-true mantra: service, service, service.
Craig Longrigg of Jim's Tire Service in Kitchener, Ontario, said he faces tough competition from Wal-Mart Stores Inc., Costco Wholesale Inc., Canadian Tire Corp. and Sears, Roebuck and Co. because they sell tires for what he gets at cost. But he managed to increase sales 25 percent last year through marketing, increasing his clientele and offering “good service.”
The single outlet dealership plans to offer full automotive service in the spring to offset the usually slow tire sales of winter.
Likewise, Forest City Tire Ltd. of London increased sales 18 percent over the previous year—and without doing any advertising. “We try to give good service,'' said co-owner Wally Jackson. “We have a large repeat clientele. We treat customers fairly and honestly.”
The single retail store does a large amount of mechanical work, and Mr. Jackson noted there is a prevalence of older cars on the road.
Forest City and fellow independent dealerships have done a reverse on an old standby strategy: If they can't join the so-called “big box stores” in offering discount prices, beat them by expanding automotive service.
Often independent tire dealers have to service the problems of tires sold at the warehouse clubs and discount chains, complained Don Ashman of Central Tire Ltd. in London. “They don't do the product any service and only sell price,” he said. “Every day we get people coming in with tires they bought from warehouse clubs because they didn't get the service they needed.”
O.K. Tire of Langley, British Columbia, which is focusing on expanding in the East, including in Ontario, said it has been successfully pulling those types of customers into its affiliate dealerships lately.
“We have found we are drawing a lot of customers that traditionally go to the box stores,” said CEO Kenneth MacLeod. “They like the confidence, service levels…the 'down home' way of doing business.”
The common thread among dealers is their dependence on a loyal customer base. “Over the years we've built up our customer base,” said Central Tire's Mr. Ashman. “It takes years. You could start today, but it will take years to build.”
A loyal customer base, as well as “excellent” market conditions, helped the 4-year-old Tri-City Tires & Auto Service in Kitchener to increase sales last year.
“We have a really good following. They are very loyal,” co-owner Frank Russell said of his clientele. His shop also plans to expand its auto service business with the addition of a fifth service bay.
A loyal staff also helps. Frisby Tire Co. of Ottawa, with five locations, distinguishes itself from the competition with its veteran staff—“the most experienced in town,” said Don Frisby. He has many longtime employees, and most of the managers have worked between 10 and 15 years at the dealership. That reputation, along with a strong local economy, helped the dealership increase sales last year.
Overall, dealers are upbeat about the market and the economy. Even the slump in the trucking industry has the potential of helping tire dealers this coming year, according to Ontario Tire Dealers Association President Wayne Moser of Bast Tire Service in Waterloo. With a decrease in new truck sales, used trucks will need replacement tires, he reasoned.
“If the truck market goes down, then we're going to go up (in tire sales).”
But despite the rosy sales reports and forecasts, dealers still face the usual business headaches, with insurance costs and inventory control ranking at the top. Some dealerships said their liability and general insurance costs have increased 50 to 100 percent as insurers try to recoup their losses in the aftermath of the Sept. 11 tragedy.
OTDA's Mr. Moser said dealers also are concerned with the direction tire manufacturers are taking by having dealers stock more product and commit to more tires so they can plan their production runs. “So inventory costs are always an issue,” he said.
Some dealerships, such as Al's Tire Service in Burgessville, are trying to consolidate their product lines to cover all their customers' needs with less inventory.