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February 13, 2018 01:00 AM

Monro to revamp store look, review tire portfolio

Bruce Davis
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    ROCHESTER, N.Y. — Monro Inc. is looking to modernize its retail stores over the coming few years for a more consistent appearance and layout regardless of brand heritage and structural differences.

    The initiative, called "Monro Forward," will encompass measures to update how the company communicates with customers by simplifying and updating materials such as service estimates, invoices and inspection forms, Monro CEO Brett Ponton told the financial community in a recent third-quarter conference call.

    Mr. Ponton did not disclose the scale of investment Monro is budgeting for the initiative, which seeks to provide a "consistent best-in-class" experience for customers at the company's 1,100-plus retail stores, which do business under 10 different brand names, reflecting the company's growth-by-acquisition strategy of the past decade.

    Monro is segmenting its stores by format and size to determine the investment and timeline required for this "light" store refresh. Details should be forthcoming with the release of the fourth-quarter/year-end financial results in May.

    The company will start with a pilot program in three markets and then roll it out across the rest of the stores over several years.

    At the same time, Monro is reviewing its tire portfolio, looking to optimize its product mix in order to align each store's inventory more closely with its local demographics and vehicle population, Mr. Ponton said.

    On a broader basis, Mr. Ponton said Monro's tire assortment review identified several gaps on its tire portfolio, particularly in the mid- to higher price points.

    Monro Inc. photo

    Ponton

    He did not elaborate on the company's brand selection but said Monro is re-evaluating its in-store product materials and visual merchandising as part of an effort to refine its selling approach. The revised tire merchandising strategy should be implemented by the middle of fiscal 2019.

    These efforts are designed to help employees so they "can properly educate consumers on the benefits across our good, better and best product options."

    Monro offers a dozen tire brands: eight manufacturer brands — BFGoodrich, Dunlop, Falken, Goodyear, Hankook, Kelly, Michelin and Pirelli — three private/import brands — Autogrip, Blacklion and Pantera — and an "economy" option.

    Carrying out this strategy effectively is expected to maximize the company's average ticket and drive higher conversion through an improved customer experience in merchandising strategy, Mr. Ponton said.

    At the same time, Monro intends to stop "bundling" the price of installation into its advertised prices, a practice that has left many customers thinking that Monro's prices are $17 to $20 higher than many of its online competitors.

    Monro expects to complete updating the tire merchandising strategy by the middle of fiscal 2019 — which would correspond with the third/fourth quarters of calendar 2018, he added.

    Additionally, Monro plans to introduce an interactive tablet that will should streamline the sales process and enhance the customer experience, Mr. Ponton said.

    To implement these changes effectively, Monro said it is testing handheld web product tablets with software designed specifically for the tire retail/auto repair industry that it expects to be rolling out company-wide by the end of the quarter.

    These tablets will allow Monro's field managers to evaluate and manage their stores' performance across key performance indicators (KPI), Mr. Ponton said, including the ability to track traffic, sales mix, staffing, margin, customer appointments and customer reviews.

    From a marketing strategy angle, Monro intends to move away from being too oil-change promotion-focused to a more customer-focused program that leverages the company's customer data to deliver messages with the appropriate product and service offer at the right time, Mr. Ponton said.

    "By engaging with our customers in a smart and appropriate way," he said, "we can improve customer retention, drive higher marketing productivity while putting forth a marketing message that encapsulates the true breath of our service offering and reinforces our strong value proposition."

    The company also has hired a customer analytics firm to help it with customer acquisition, taking into account market segmentation and demographic information with a geographic area surrounding each of its stores.

    Leveraging these customer analytics can help Monro identify which of its stores are under-performers relative to the size of their potential target market as well as help identify favorable greenfield store locations and/or acquisitions.

    Another element of the Monro Forward initiative is employee training, starting with a comprehensive learning management system called Monro University. Emphasis will be on ensuring that the company's 7,000-plus field technicians are up to speed on the technology in newer vehicles.

    As of year-end 2017, Monro had 1,138 company-operated stores and 103 franchised locations, vs. 1,098 and 132, respectively, at year-end 2016.

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