Mid-Year Report: Dobbs enjoying surge in service demand

Dobbs Tire & Auto Centers Inc., with 42 stores in Missouri and Illinois, expects sales to increase 10% this year, versus 2019, after experiencing a surge in auto service work.

Dustin Dobbs, vice president and director of retail sales, told Tire Business that 75% of the dealership's retail sales is generated through automotive service. As more people plan to travel and hang on to their old vehicles, they are seeking more maintenance and repair work.

How would you describe business thus far in 2021?

Business this year really has started off as one of our strongest on record. Service has been the driving force on this. Tires are holding steady. There's pent-up demand with everybody getting out, using their vehicles, getting service work and repairs that they were putting off before.

Let's face it, no one was using their cars with the pandemic and that has started to pick up and, for us, it really started to pick up in the middle of last year, in July, and continued through this year as well. In January and February this year, which in our industry is a down part of the year, this year it was not. It was very good for our company.

Were you surprised?

We weren't, and we were also very lucky in our area. St. Louis County has been shut down but Jefferson County and St. Charles County haven't had any real restrictions or mask mandates or shutting businesses down. People had been traveling outside the St. Louis market to go to dinner and go do things.

Where in other areas of the United States it's been locked down pretty hard and people weren't able to do things, we haven't seen that as much around here. I guess that's one reason it wasn't as surprising for us. As soon as people were allowed to get out and get moving, they already were around here.

How would you describe consumer confidence?

That's a bit of a loaded question. It's been fairly good. We figure it will continue through the summer, if the inflation doesn't hit the consumer too hard at this point. We're seeing some issues as far as tires and parts.

You hear people talk about lumber (prices) going up, you see gas going up. It's still a little early for us to tell by being in the Midwest. I don't know how much from the East Coast and West Coast has really got to us yet. I think it's going to be a couple more months before we see anything hit really hard on consumer confidence, honestly.

Right now it's great. People are traveling. ... The stimulus (checks) really helped everyone and got them to repair their vehicles, get their tires they needed on those vehicles. So we'll have to see what happens after that runs out and everything starts going again.

We'll see what happens to prices on everything in the market, the inflation across the market, not just our market but across the United States in every industry and see where that goes.

Have you seen any shift in consumers choosing lower-tier tires?

We have seen that shift not so much just because of the pandemic, I would say in general. For sure during the pandemic we were selling our entry-level Tier 3 and Tier 4. Sales went up obviously compared to our Tier 1 and Tier 2 for sure, but we've been seeing a pretty solid shift of that over the last couple of years as well. It wasn't as great as it was during the pandemic.

Our Tier 1 and Tier 2 were each taking up about 35% to 40% of our market share and Tier 3 was 20%. That's really shifted to a third/third/third for us over the course of the last four or five years.

We feel that there is a number of different reasons for that. One being internet sales of tires. People are allowed to get information on anything they want and they can buy off a manufacturer's website, you can go to Amazon, you can go to Walmart, you can go anywhere and buy these tires online and do some research. So we're seeing that more and more.

And on top of that, let's face it, some of these Tier 3 manufacturers' technology is catching up and they are making a good product at Tier 3 and Tier 4, where before people really shied away for something like that.

They don't care about the big brand names as much, we feel, anymore, and we've done some focus groups over the last couple of years to see that. They are looking to shop on price, and they don't care if it's a brand name or not. They need what's best for them and their family. I think the pandemic really highlighted that even more to some families during that time.

Are your experiencing product shortages this year?

We experienced some low fill rates at the beginning from the manufacturers, and obviously it's been a constant battle to keep the tires in stock on our product screen. We have started to see the fill rates getting better. We think the manufacturers are finally catching up. …

Where it was a battle was going here, going there to get what was needed. We're not having to do that as much now. But there still are some shortages. It's just not as in your face as it was three months ago for tires.

For parts, we haven't seen much of a shortage yet. We are starting to see all these [car] dealers' lots are empty because their supply is drying up. There may be people who want to get a new car and can't right now because of supply reasons or finance reasons. So they are repairing their vehicles.

Literally over the last couple of weeks, we've started to see some parts being delayed — three to four weeks out on some things, two to three weeks on some things. So I think the parts shortage is going to start and that could be something that really affects us over the course of the summer as far as getting that stuff because of the shipping and production issues.

The aftermarket parts companies are having to keep up with the demand because more people are wanting to fix their cars rather than get a new car.

What kind of trends are you seeing in the marketplace?

We're seeing people holding onto their vehicles longer and repairing them rather than trading them in. As far as reacting to them, we're continuing to give them great service, make sure we keep them safe on the road. With the increase in travel occurring, we hope to capitalize on that for the rest of the year. …

Our business only fell off the last two weeks of March and April (2020). May really picked back up, and I don't want to say got back to normal by any means, but very close. That's why we say the trends we see, people holding on to their vehicles, they're wanting to go on trips, they're wanting to spend money on their vehicles, they're wanting to spend money on tires, for us it's been very beneficial.

What are some of the procedures/changes your company implemented to tackle the challenges of the pandemic? Which, if any, do you expect to keep going forward?

We had a lot of these things implemented before. What I would say is we saw more people utilizing them than they were before. We've always had touchless drop-off or night drops where someone schedules an appointment with us, fills out a form and drops it in the night drop and then we get their keys.

Then we've always had a text-to-pay option. We send them a text when the vehicle is done, they pay for the vehicle, we lock the keys in their vehicle. So both of those were being utilized more.

We've always been wiping down vehicles using steering wheel coverings, seat covers, using floor mats and things like that in these vehicles, which in this pandemic was a very hot topic, making sure that these vehicles are sanitized and cleaned and taken care of and touchless delivery and the payment option being a text-to-pay as a payment option. These things we all had in place. Those are some of the main things we saw people utilizing more during the pandemic.

We used to be open 7 a.m. to 8 p.m. Monday-Friday and 7 a.m. to 7 p.m. on Saturday. We shortened those hours. We're now 7 a.m.-6 p.m. Monday through Friday and 7 a.m. to 5 p.m. on Saturday. Obviously that has to do with being able to staff those locations and give the service that we expect. And that is one area we do not see going back. Our business has held, the trend has held as far as us being able to do the same amount of business with a shorter time period. Obviously we can maintain that with a few less people as well.

What do you see as your biggest challenge for the second half of the year?

I think this is industrywide: People aren't learning the trades and people are by far our biggest challenge. The technicians, the people that want to come in and do this work is our biggest challenge. …

We're doing what we can as far as we're focused on training our associates, promoting from within from our techs and our tire techs.

We have numerous training options from Hunter Engineering and alignment specialist training, training we've developed with Federal-Mogul and Garage Gurus, the Drive program that takes our guys from a basic tech to most advanced technicians, from vehicle maintenance all the way to diagnostic jobs.

And then for our tire techs, we're doing the TIA training. We're doing a program we partnered with NAPA called the BAT (Build A Tech) program, where we take those tire technicians that we see have potential and move them to the next level so they have a career path to move up.

That's how we're trying to entice these guys in the trades: 'Hey, come work for us. We have these training programs. We can give you a career path.' And that's how we're trying to meet that challenge.

We're doing the same thing with our sales team and management. … When they come on board, there is an eight-week training where we go over all the ins and outs of Dobbs Tire & Auto Centers and how to deal with customer issues, how to deal with adjustments, different sales practices, different manufacturer processes. Just giving them every piece of information we can to help them succeed in their career and tell them that Dobbs is the right place to work is how we're trying to really hit that challenge head on.

In the course of the last six to eight weeks we've really hired a number of quality sales associates, guys coming from other people in our industry, not even from our state or in our market, from outside our market coming to get that training, to have that career path.

We're starting to see that pay off for the sales side of it. Technicians are a little bit more difficult because everybody is holding on to these guys with everything they can.

How did your sales in 2020 compare with 2019?

We were down in sales and service about 6%; in tires we were down about 10%. It was that six- to eight-week period that hit us. With that being said, because of the changes we made, we still ended up in a very profitable position at the end of the year.

What are your expectations for this year's sales?

Right now through April 2021 versus 2019, we're seeing a solid 10% increase in sales, a solid 10% increase in service and really across the board a solid 10% increase in tires as well.

I believe we'll end up in the $115 million mark by the end of the year. That would be a pretty solid safe bet for us in sales.