About four months since it bought two Tire Distribution Systems Inc. (TDS) retail stores, Delta World Tire Co. said the transition is on track for its 11th and 12th stores.
President Kevin Cates said the Lake Charles, La., store is ahead of schedule, and the Pascagoula, Miss., outlet is meeting expectations. The New Orleans-based dealership bought the two retail stores from TDS in September with expectations of having them fully incorporated within six to 10 months, Mr. Cates said. TDS is a wholly owned subsidiary of Bandag Inc.
A Bandag spokesman said of 84 commercial TDS locations, about 30 also have retail, and TDS still operates seven locations that are strictly retail.
Delta Tire, which had 10 outlets in the Gulf Coast region before buying the two TDS stores, has its sights on a steady growth of one to two stores a year, Mr. Cates said.
``We don't have any immediate plans to try to grow out of that geographic area in the foreseeable future,'' he said. ``But we plan steady growth within that geographic area.''
The key to both the TDS expansions and growth in general, Mr. Cates said, is to find opportunities that fit squarely within the original business model. For example, he said, TDS retained much of the stores' medium truck business, but that only made the stores fit more precisely into Delta Tire's focus on passenger and light trucks.
``It was a good transition for both organizations,'' he said.
Sometimes dealers who are looking to expand will buy businesses that aren't quite in their business model because they're a good deal. However, Mr. Cates said, although ``I think we all love deals, but sometimes you have to say no.''
Another important part of Delta's expansion plans is keeping well-known local managers in charge of stores in order to hold on to loyal customers.
``We try to take over locations that have an existing customer base and a good people base,'' Mr. Cates said. ``In terms of the employees, we want to keep as many of the employees as we can because I think that helps us retain the customer base.''
For the TDS outlets, the store manager of the Lake Charles store stayed through the acquisition, but Delta Tire had to hire a new manager for the Pascagoula outlet. Delta chose a longtime local manager for the store, who is well known in the area if not at the former TDS store, Mr. Cates said.
``We try to have strong store managers who have strong ties to the local community,'' he said, adding all these details are carefully worked out before the final deal is signed.
For Delta Tire, the expansion strategy has been profitable. The dealership started in 1997 with five locations. One other store since then was built by Delta, and the remaining six had been existing locations.