Mighty carves out successful niche

AMELIA ISLAND, Fla.—Mighty Auto Parts began its 50th anniversary celebration July 10 to the thumping sounds of garbage-can drum band Rhythm Extreme as the members rhythmically opened and closed the doors of an early model Volkswagen Beetle. Whether that vehicle was a usual part of the show or not, it effectively symbolized the auto parts company's founding in 1963, when then-owner Dick Wallace began selling tire repair materials out of his own VW bug. Today, the company Mr. Wallace founded still offers tire repair materials along with thousands of other automotive parts all tailored to the DIFM—”Do It For Me”—segment of the repair industry. “It's very gratifying and rewarding, satisfying to celebrate our 50th,” said Ken Voelker, Mighty's president and CEO, during an interview at the Omni Amelia Island Resort, where the company had gathered more than 650 franchisees, general managers, salespeople, home office employees, friends and family to celebrate the milestone. “I think it shows that we have evolved in the marketplace. We've been in tune with our customers' needs and built programs that have helped them to be successful and that we've continued to grow and thrive in a really challenging industry.” Part of the company's success “is because we have not tried to be all things to all people,” Mr. Voelker said. “We've carved out a niche, I think it bears repeating, the DIFM, preventive maintenance space, and built programs that have been successful in that niche of the market.” Mighty's program is different than other warehouse distributors, according to several attendees at the meeting. “The big difference between Mighty and the other competitors in the auto supply business is primarily they not only supply the product to you, but they help you manage your inventory,” said David Walworth, national account manager for REMA Tip Top/North America Inc. Automotive, who was exhibiting at the trade show held during the five-day event. “Everybody else wants to sell product. Mighty sells it but then they manage it so that you have what you need, you need what you have.” That means that if a part is not needed or not moving, Mighty will make an adjustment to the shop's inventory. “So if you buy the wrong valve stem and it doesn't work, they bring it out and they put the right valve stem in.” Mr. Walworth said this is why Mighty has been successful over the years. It comes down to service and relationships, he said. “You can get the best price (from other WDs), but you won't get the best service. So pay a decent price, get good service and you are a win-win.” Mighty has 118 franchisees offering its system of auto parts supply, including six company-owned franchises. Along with tire dealers, franchise owners include new and used car dealerships, independent repair shops, auto parts franchises and national quick service providers. One of the newest franchisees is Northwest Tire Service Inc. based in Bismarck, N.D., which joined the Mighty system in March. The 11-store dealership had been considering becoming a Mighty franchisee for more than 10 years, said Paul Wald, retail sales manager. “What we've learned over the years is that our company is very good at tires and we are not very good at automotive services,” said Mr. Wald, explaining why the dealership finally decided to add the franchise. The company found that in some instances it was losing customers to competitors “and we want to keep them in our stores and we also think it will add profit.” Northwest Tire's outlets also are spread out widely across the state—as much as 600 miles between locations—and as a result, the dealership has been working with multiple vendors in the parts side of its business. While the dealership views its tire sales as “very consistent,” with the same products and the same pricing, that was not the case in auto parts. “We go into our parts rooms and we've got a mishmash of everything,” Mr. Wald said. In addition, with multiple suppliers, Northwest Tire is not a big enough player with anybody, “and so we don't get the training and the service that we need. “We think that with Mighty we will be as consistent in the auto parts as we are in tires, and from what I see, they have very good training in the automotive service, and that's what our company needs.” Northwest Tire is calling its franchise, based in Mandan, N.D., Mighty Auto Parts of North Dakota. Initially, its focus will be on stocking its own stores. Later it will look to wholesale parts to other businesses, President Dan Pearson said. The dealership planned to go into “a major training mode” with Mighty starting in late July. Asked how its new franchise was going so far, Mr. Wald said “it is doing exactly what we wanted it to do, and having the product stocked in the stores has increased sales already.” Mighty—now owned by Grupo Gon-her, a global manufacturer and OE supplier of automotive parts based in Mexico—is focused on distributing service items and maintenance items that wear out, rather than things that break, Mr. Voelker said. He described Mighty as a “glass half-full company with positive customer service as one of its five values, the others being respect for the individual, commitment to integrity, reward for performance and focus on growth.” With today's cars lasting an average of 11.9 years, Mighty's approach to distributing parts has evolved from its roots as a collection of “wagon jobbers” to what Mr. Voelker described as a network of specialty wholesale distributors. “By specialty WD, I mean a focused set of products,” he explained. The company, he stressed, is not in the repair business. “We're in the service business, and we think that's the right place to be in the automotive service market—preventive maintenance.” To service this market, Mighty provides a horizontal product offering of preventive maintenance items across all vehicle makes and models. This approach is especially appealing to some of the company's tire dealer franchisees, Mr. Voelker said. “They want to service all makes and models. They don't have a product program to help do that. Mighty fills that need.” Along with its training programs and what Mr. Voelker called “consistency of OE product quality,” Mighty also offers inventory control in the backrooms of Mighty's customers. “It's almost outsourcing inventory management of their parts room to the Mighty guy,” he said. While the company is primarily a North American franchise, it has begun to branch out internationally and now has franchisees in Canada and Saudi Arabia. The company also looks to grow the business of its existing franchisees and to fill in open markets in the U.S. where it has no representation or is underrepresented. Currently the company has franchises in 75-80 percent of the markets that are densely populated enough to support the Mighty model. “But that still means we have 20-30 percent that are not available and we have some open spots, and we are after them,” Mr. Voelker said. “We're on them.” To reach this reporter: dzielasko @crain.com; 330-865-6131.