SOUTH RIVER, N.J. (March 30, 2005) — A growing body of DIFM (do it for me) car owners along the Eastern Seaboard is driving Strauss Discount Auto steadily into the vehicle service business—including tires and complementary parts and services.
In the past two years, Strauss has converted about two-thirds of its 100-plus auto parts stores in New York, New Jersey, Delaware and Pennsylvania to auto service superstores with an average of seven service bays per location.
The firm's two newest stores opened recently in Philadelphia, with four to five more scheduled for this year. Strauss expects to have converted all its existing locations to the new format within three to four years and then start expanding. The chain eventually hopes to grow to 200 locations, according to Glenn Langberg, chairman, CEO and owner.
Mr. Langberg, a commercial real estate developer, bought control of Strauss in 2000 and with the help of 34-year Strauss veteran Joe Catalano, now president, hatched the repositioning strategy to transform the retail parts store chain into an automotive service-driven one.
“We recognized that the DIFM market was growing much faster than the DIY market,” Mr. Langberg said. “There was an increasing sophistication in repairing a car that was driving this shift.
“We wanted to take advantage of our name recognition here to tap into the repair business while still being committed to our traditional retail,” he said.
The revised strategy has seen Strauss' sales breakdown change to nearly 50/50 service/retail from roughly 35/65 only a few years ago, Mr. Catalano said, with revenue from retail staying relatively equal and service growing. Overall sales were $200 million in 2004.
The company is making a strong play for the diagnostic service business, investing more than $1 million in the latest engine diagnostics equipment and hiring certified technicians for each location with service bays, Mr. Catalano said.
“The diagnostics business can be a headache,” he acknowledged, “but to us, headache equates to opportunity in the long run.”
To strengthen its position in the vehicle repair business, Strauss has opened for its technicians three training centers staffed by its own personnel and involving its vendors as well, Mr. Langberg said. With the increasing sophistication of car repair, he said, techs need constant retraining. “In a few years, you won't be able to do a brake job without proper diagnostic tools and training,” he added.
Strauss is striving to have its technicians ASE-certified, but Messrs. Langberg and Catalano emphasized the firm is committed to technician excellence through its training programs.
A typical Strauss customer owns a vehicle coming off lease and is looking for a reliable service point, Mr. Catalano said. “We're trying to become that destination for those customers.”
An essential part of the plan is to become a full-line tire store, Mr. Langberg said, without specifying what percentage of business tires should represent.
After dealing primarily in a variety of private brand tires over the years, Strauss started selling Cooper tires a few years ago and added Michelin and its BFGoodrich label last year. The company's Web site also lists Cordovan.
Strauss is counting on the different clientele the service business will attract to help fuel its retail parts and accessories business as well, Mr. Langberg said. The firm expects those individuals who choose to wait while their cars are being worked on will browse the retail side of the store and make some additional purchases.
The typical new-style Strauss store covers 10,000 to 12,000 square feet and has 30 to 35 employees in multiple shifts. Stores are open seven days a week, typically 7 a.m. to 7 p.m., although some stay open later at night.
The firm's plan to grow to 200 stores most likely will take place within its current geographic footprint, Mr. Langberg said, noting the chain's area of coverage is the most densely populated in the U.S.
“Having the type of coverage and hours we do adds up to convenience,” he said. “Our customers are close to a store either at home or at work.”
Staying in these key markets allows the firm to leverage key expenses such as advertising and logistics, he added. Strauss also has enhanced its revenue stream by expanding its fleet-maintenance program and starting an Internet-based store.
Strauss uses a variety of advertising vehicles to promote itself, including sponsorship of radio broadcasts of New York and Philadelphia sports events and stadium signage.
The company traces its roots to two automotive service and parts firms—Strauss Auto of New York City and R&S Auto in Newark, N.J. The two firms, founded in 1929 and 1919 respectively, merged in 1982 to create R&S Strauss, which expanded into metro Philadelphia and Delaware in 1986 by acquiring Penn Jersey Auto before changing the name in 1995 to Strauss Discount