(Editor's Note: This story is part of our #TireBiz30 in which we feature one archived story every day of September to celebrate Tire Business' 30th anniversary. Each story represents one of the most relevant news story published in our pages for that year.)
CHICAGO — Goodyear, in a dramatic move to regain lost market share and boost tire sales, will begin distributing several lines of Goodyear-brand tires through Sears, Roebuck and Co. stores April l.
The two American corporate giants announced the distribution plan March 3 at a joint press conference at Sears' headquarters in Chicago.
Sears, which operates more than 850 tire and auto centers in all 50 states, will stock seven lines of Goodyear passenger and light truck tires, including a newly redesigned Arriva all-season radial that will be sold exclusively through the huge retailer. Sears also will market the Corsa GT, Eagle GT + 4, Eagle GA, Eagle VRlZR, Wrangler AT and Wrangler HT lines.
The distribution agreement does not extend to Sears' Western Auto Supply Co. subsidiary and its Tire America and National Tire Wholesale units. Goodyear Chairman Stanley Gault said he expects Sears to sell between 1.5 million and 2.5 million Goodyear-brand tires in the first year.
Sears, the country's largest tire retailer, now sells 9.5 million tires a year, offering its own private label lines, as well as name brands such as Pirelli, Yokohama, B.F. Goodrich and Bridgestone—all of which it plans to retain.
Goodyear's decision to distribute its tires through a mass merchandiser is a radical departure from its longstanding practice.
For decades, the company steadfastly has stuck with its chosen distribution network - independent tire dealers, franchises and company-owned stores- instead of opting for other retail avenues used by competitors, such as warehouse clubs, discount tire chains and mass merchandisers.
Beyond Sears, the company said it has no plan to offer similar arrangements to other distributors.
By adding Sears to its distribution mix, Goodyear hopes to capture sales from customers it claims "rarely" frequent Goodyear stores and whose business will cause little disruption to its current dealer and company-owned retail network.
But in moving outside its traditional distribution channels, the tire maker risks losing the hard-earned loyalty of its 5,000 independent and franchise dealers, most of whom sell only the Goodyear brand.
"This dramatic step was not taken without serious consideration of the consequences for our dealers and company stores," said John Fiedler, Goodyear's executive vice president of North American Tires, who engineered the deal with Sears. "We believe the impact will be small and, in many ways, beneficial to our customers."
Goodyear also believes it had no choice. The tire maker has been unable to recoup a 3.2-percent decline in U.S. replacement market share (4.9 million units total) since 1987, a situation that, if it continued, could have affected Goodyear's ability to maintain its extensive brand advertising and research and development programs, Mr. Fiedler said. He expects the increased sales resulting from the Sears alliance to positively impact such activities.
Goodyear has tried several strategies to recapture the lost sales, including buying distribution and increasing its emphasis on automotive service, but none were successful, Mr. Fiedler said.
The most recent strategy, the addition of two non-Goodyear-branded economy lines-the All American and Concorde-failed to draw new customers and ended up diluting the focus on the Goodyear brand, the company said. The tire maker recently replaced those lines with Goodyear-branded tires at comparable prices.
Additionally, Goodyear said it has not kept pace with shifts in tire distribution that have occurred over the past two decades, including: the rise of warehouse clubs, the growth of discount tire chains; the decline of small independent tire dealerships and service stations offering tires; and the upheaval in mass merchandising.
"The simple answer is that the market is changing and we must change with it or become the victim of change," Mr. Fiedler said. Lining up with Sears made the most sense, he explained.
"This decision was made following extensive study that indicated the Goodyear-Sears combination would be the best in terms of minimal consequences to our current distribution," he said.
When compared with other alternatives, Sears offered a "unique synergistic match of two very loyal customer bases who have minimal overlap."
"Studies have shown that Sears' loyal customers are going to ·shop Sears for tires," said Mr. Fiedler. Sears auto centers reportedly replace about l.7 million Goodyear tires annually with other brands.
"These were sales going to our competitors," said Mr. Gault, "because the remarkable loyalty of Sears customers led them to buy the best tire for their needs from among those offered by Sears."
Mr. Fiedler said Goodyear's agreement with Sears doesn't lessen the importance the company places on its independent dealers.
"Goodyear has always considered the independent dealer as the foundation of its distribution and plans to continue that strategy in the future," he said. While Sears will get the Arriva line exclusively, Goodyear has no current plans to offer the mass merchandiser other lines such as the new Aquatred wet-weather radial or the Invicta all-season tire.
Mr. Fiedler said Sears will set its own prices on the Goodyear tires. "However, (Sears') pricing is very comparable to that of Goodyear dealers and stores," he said, so there should be no price erosion.
Sears will position the Goodyear tires as premium lines, said Forrest R. "Woody" Haselton, president of retail for Sears Merchandise Group. While not providing details, he said the company will promote the Goodyear lines "very aggressively."
The current arrangement is the first linkup between Sears and Goodyear since 1936.
What issue concerns you most heading into 2019?
|The threat of more tariffs.||
27% (27 votes)
|The new Congress in Washington.||
35% (35 votes)
|Price fluctuations for the products we sell.||
10% (10 votes)
|More disruptions across the industry.||
29% (29 votes)
|Total votes: 101|