Just like in U.S., Japanese dealers find that patrons shop for price, service
YOKOHAMA CITY, Japan (March 4, 2003)—Even in Japan, where clogged streets and cars abound, tire retailing is a tough business.
Much like their American counterparts, many Japanese consumers shop for tires based on price, and Japanese dealers must offer the highest quality service to drum up repeat customers.
Tire Business visited a tire store in Yokohama City called Tire Town Komaoka, which is owned by a regional sales subsidiary of Yokohama Rubber Co. Ltd. (YRC) called Yokohama Tire Sales Co. Kanagawa. YRC and its competitors all operate subsidiary companies that in turn own retail outlets.
YRC has 450 affiliated dealers in Japan—both independents and franchises, according to Hiroyuki Shioiri, YRC's assistant manager for international tire product planning, consumer tires and auto accessories.
The tire maker has three retail store formats—Grand Slam, Tire Town and Tire Garden. Tire Town can be likened to a supermarket because of its vast inventory, whereas Grand Slam is a specialty retailer focused on high-performance product, and Tire Garden is a small, convenience retailer.
Of YRC's 41 Tire Town outlets, eight are independently owned. Sixty-two of 117 Grand Slam stores are independently owned, while all 320 Tire Garden stores are company owned.
Much like other tire stores in Japan, Tire Town Komaoka crams its merchandise into every precious square foot of space. Tires are stacked outside and inside the storefront, as well as near the store's three service bays and also outside the bays. Much of the showroom is filled with racks of wheels and narrow aisles. The store has no sitting room with TVs or magazines set aside for customers.
Prices of tires ranged from $51 to $1,088—and that premium price is for a Conti Sport Contact tire meant for BMWs and Mercedes Benz vehicles.
Tire Town Komaoka's manager, Yuji Asuke, said trying to compete with the prices other retailers sell at just isn't possible, particularly when holding companies like Yokohama's want more volume and market share, then change their policies to emphasize profits. Much like U.S. dealers, he said profitability is a major concern, and customer service is more important in gaining profits than pricing.
To garner more profits, Mr. Asuke said he proposes new wheel and tire sizes to his customers and points to demo cars at his shop that are shod with those tire/wheel packages. The demo cars particularly appeal to tuners who can see firsthand what their vehicles could look like and then be willing to pay for more expensive tires and wheels.
Mr. Asuke said he makes certain the dealership offers all services and products tuners are looking for—from high-performance tires and custom wheels, to stereos and suspension systems. All demo cars at Tire Town Komaoka not only exhibit the dealership's products but also the work of its employees, he said.
About five years ago, the majority of tuners were concerned about the performance of their vehicles, he explained. Now, he said he's noticed that “cosmetic” tuners—those primarily focused on vehicle appearance—are gaining in numbers.
During Tire Business's visit with Mr. Asuke, a customer pulled into Tire Town Komaoka in a white Nissan Skyline GTR. Mr. Asuke wasted no time in attending to that customer and his needs. And understandably so, for that particular customer is a VIP at Mr. Asuke's store after spending approximately $100,000 to modify his car. And, fittingly, the car was equipped with Yokohama Advan tires.
Tuners are considered by dealers as the easiest customers to build relationships with because their tires and wheels need to be changed frequently, Mr. Shioiri said. Japanese tire makers want to increase business between tire dealers and tuners because dealers often don't take advantage of this growing market, he said.
Tuners comprise 30 percent of Tire Town Komaoka's sales—two-thirds of whom are cosmetic tuners, according to Mr. Asuke. Families comprise the rest, so he tries to create a family-friendly business that draws repeat customers. One of his strategies is to write thank-you letters to all customers the same day as the sale and mail them immediately.
About 50 percent of Tire Town Komaoka's sales come from tires, Mr. Asuke said. Wheels generate another 20 percent of sales, other merchandise (stereos, oil, etc.) tack on 20 percent and 10 percent comes from automotive service.
Unlike in the U.S., Mr. Asuke said he has no problem finding and keeping employees—few ever leave Yokohama. In fact, he receives job queries from mechanics of dealerships that have closed even though he doesn't need more help. He employs four.
In Japan, 35 percent of all tires are sold by dealers, followed by gas stations, which sell 22 percent, Mr. Shioiri said. Car parts shops sell 17 percent of all tires, followed by repair shops at 10 percent and car dealers with 9 percent.
No price clubs like Sam's Club or Costco do business in Japan.
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