Going upscaleBy William Schertz, Senior Reporter
EUCLID, Ohio—As Jim Enger will tell you, it's hard to be everything to everybody.
In 2011, the owner of Enger Auto Service & Tire Inc. scaled back his business, selling three tire shops and allowing the leases to expire on another three.
The outlets, he said, were not performing well, in large part due the company's increasing focus on high-end tire and auto service sales.
After the recession hit a few years ago, Mr. Enger said the company adjusted its business model to define itself as an upscale tire and service business.
“To be everything to everybody, we looked at it as, 'OK, we can do that, but where are we really having a great deal of success and where are we making money?' By focusing on the bottom line instead of the top line, we've made tactical business—I wouldn't say changes—but evolutions,” he told Tire Business. “...It goes back to our core of being highly focused on profit.”
The stores with leases that expired were Lou's Tire Barn outlets in Ashtabula and Perry, Ohio, and the company's store on Mayfield Road in Cleveland Heights. The Lou's Tire locations are vacant, while the Cleveland Heights store is now a Goodyear company-owned outlet.
Mr. Enger said the company sold its south Akron, downtown Canton and Parma Heights stores to Parts Pro Automotive (which does business as Auto & Tire Service Specialists), Ziegler Tire & Supply Co. and Isenhart Tire & Auto Service, respectively.
Employees at those stores were included in deals, while employees at the leased stores were consolidated into Enger's 13 other tire and auto service locations.
“These locations, they were in diverse neighborhoods,” he said, noting that with the recession of the last few years, “it's really put a strain on the middle class customers from blue collar working class areas.
“It's turned into more of a do-it-yourself market than a do-it-for-me market.”
Mr. Enger said his business is primarily catering to the upper-end customer “who has the ability to buy the premium tires and get their cars repaired the proper way.”
The remainder of his outlets are located in more well-off areas.
Sticking to high-end markets allows Enger Tire to sell more premium-brand tires, Mr. Enger said.
“When you look at the Michelins, the Goodyears, the Bridgestones, the Hankooks, the higher-end, better-tiered Continental tires, those customers generally have 17-, 18-, 19-inch wheels and are somebody who has the ability to spend $1,000 on a set of tires,” he said.
“Our typical customer spends between $600 and $1,200 on a set of tires, and we're very busy selling the products because our stores are located in the proper areas....
“Our preference is to get a smaller margin on a much more expensive tire than a higher margin on a low-tier tire, because those customers generally will buy the brakes or the struts or the suspension or the timing belts.
“We do a lot of timing belts and water pumps and other upper-end mechanical repairs,” he said.
Focusing on high-end automotive service is about more than just having locations in well-to-do neighborhoods and selling the same services at a premium, Mr. Enger noted. It's about offering more upscale work, too.
“(Other dealerships) all are really concentrating their business model on the low-hanging fruit, which would be the easy maintenance—the tires, the brakes, the easy suspension. We love that business segment, but we take it a step further and we really go after the oil leaks, timing belts, head gaskets, rear ends, transmissions, electrical components—higher skill level work,” he said.
“That's less shopped and less competitive in that arena.”
As for his plans going forward, Mr. Enger said right now the company is focused primarily on taking care of its existing customers.
“We feel there's pent-up demand from last year and there's going to be a lot of sales,” he said.
“We're staffed well, we're positioned well in the market, we got some great marketing coming up with a real emphasis on upper middle-class women in our target area and women on the go.”
Mr. Enger said women have become especially valuable customers for his business model because they have “a very keen sense” in regards to vehicle safety and maintenance.
“As the car industry changes (and) evolves toward more of a maintenance than repair business, (women) have a tendency to follow the maintenance schedules closer and say yes to the required maintenance on the vehicle, which is a very lucrative market,” he said.
Enger Tire has no specific plans in place for additional locations, but Mr. Enger said the company is always looking for a good deal.
“The wheel doesn't stop spinning over here at Enger Tire. We're always looking for opportunity,” he said. “I think you have to.
“ There's a lot of distressed merchandize right now in the market and there's a lot of commercial real estate available, but the key is, 'Is it prime commercial real estate?'
“We really like the nicer areas to be able to really hone in on the customer we want.”
Mr. Enger said he would like to add some more upscale locations in the next year or so. And he would prefer to own all of his locations rather than lease and build each new store from the ground up.
To reach this reporter: wschertz@ crain.com; 330-865-6148.
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