BUFFALO, N.Y. — As stay-at-home orders are lifted, Robert Clark, managing director of retail operations at Dunn Tire L.L.C., predicts an influx of business in the next several weeks as customers come in for overdue state vehicle inspections and changeovers from winter to summer tires.
The Buffalo-based dealership, which operates 26 stores in New York and Pennsylvania, is facing a new normal for its employees and customers, he said.
Q How's business been so far this year?
A Complicated. It started out relatively flat with last year. We're a very seasonal business, so our January performance was largely based on what the weather in Buffalo is doing. This January we did not have very much snow, so our business was relatively flat with last year, a little bit up, but relatively flat.
Then coming into February and March with the coronavirus, that has really dramatically changed everything about the way we do business and the impact to our business. We are operational in both New York and Pennsylvania, and in both states our type of automotive service was deemed an essential business. So thankfully we did not have any close-downs. We did not have any forced shutdowns of any of our locations.
We did modify some business hours for about a three-week period of time that we basically ran from 8 a.m. until 4 p.m. as opposed to some of our stores are 7 a.m. to 7 p.m. We took a little bit of hours away from our stores just as a cautionary step to try to minimize the traffic. But beyond that, our business stayed open the entire time.
We did not have any layoffs of any significance. We were able to keep full employment and keep everyone on board. Our business for about a three-week period of time, into March, we were running 30%-plus behind where we were last year. And since that three-week period of time, starting in April, we've been regaining that. At this point in time, we're actually over-performing from where we were last year.
I think it's a little bit of the famous phrase: Pent-up demand that people talk about. A lot of our business comes from not just new tire sales but changeovers and maintenance-related services.
So a lot of the boost in the business came as people waited until March, April, even May and we still have quite a bit demand out there versus last year's numbers as far as tire changeovers. So people during lockdown weren't going anywhere, weren't taking care of these things and now that it started to loosen up a little bit, we've seen a pretty good influx of that business, just coming a little bit later than it normally does in the year.
Q In addition to changing your hours, what did your operation have to change during the state-imposed closures?
A We immediately started doing an evaluation within the stores and again, this was very early on in the pandemic where the information, (I still don't know if the information is very clear on the medical recommendations and how things spread) but very early on we took logical steps to get implemented, including hourly cleanings of all common work spaces. We sanitize individual pens that are on the counters. Those kind of things took place immediately.
Most of our employees already had face coverings and masks because of the nature of the work — we offer those to our employees on a regular basis, pandemic or not. But we certainly increased supply of those and mandated that all of our store employees wear them when they are going to be working in our locations.
Q Do you think that's going to continue moving forward?
A We will continue that at this point, indefinitely. As far as the guidelines and regulations that we pay attention to and adhere to, again doing business in both New York and Pennsylvania, our decision is to go with the most stringent recommendation from either of those states.
With the masks, as an example, there was some variation between whether you had to wear them all the time if you're in a location or not. And it was a little bit different between the states.
We took the approach that for employees of Dunn Tire, if you are in the work environment, you are going to come within proximity of six feet of another employee just by the course of natural business, so we mandated that all employees wear them all the time — with the exceptions where you are by yourself on break in our break room and you are eating and drinking coffee or something like that. Anywhere you are going to be involved with the public or other employees within six feet, you must be wearing that mask.
And I don't expect we'll change that until the medical recommendation and the federal and state governments say, "OK, either here's an alternative to that practice or it's no longer necessary based on vaccination or something along those lines.' But we have purchased reusable masks that are actually branded with our Dunn Tire brand that we have issued to all of our employees. …"
They are fairly comfortable. Being a tire tech and working in the back of an automotive garage when it's 80 degrees and humid is not a pleasant work environment, sometimes, and having anything tied around your face doesn't help with that. I've been very happy with our team's compliance. … Our employees are taking it as seriously as they should be and our customers are also taking it very seriously.
We have a policy that customers coming to visit our stores must wear a mask while they are inside our store. And if they don't want to wear a mask, they can wear it to the counter, drop off the vehicle and come pick it up later.
We've had to ask some customers that did not want to wear the mask to leave the buildings, unfortunately. Those have been very few and far between. For the most part I think everybody in the community are together on this. … We've been getting very, very favorable reviews for the most part on our handling of the situation and the virus.
Q How would you rate consumer confidence now?
A Shaky. I think we're in little bit of a honeymoon phase right now. The coronavirus and the shutdowns have obviously caused a significant uptick in layoffs and unemployment in general, but I think the stimulus packages and the response from the government has allowed people to get through this difficult time with some additional support.
So I think the real economic impact of what happened, I think we're going to start to feel it and see it in our communities when the additional $600 a week unemployment benefit and those kind of things start to come to an end. I think we will see where we really are as far as the unemployment rate goes at that point and as far as what the consumer confidence with liquid money is.
Q Did your company receive the PPP and other federal business loans?
A We did apply for and received those loans. And almost all of it was passed directly through in the form of an employee loyalty program that we implemented.
All positions, except for the executive team, were given additional dollars per hour or incentive in their weekly salary check in order to thank them for their loyalty and being on the front lines as an essential business and keeping us open and intact. …
The most significant impact to our employee base, myself included, has been childcare. That's been a tough element and the loyalty program that we put in place to basically pass along that loan money that we received, hopefully helped quite a bit in those areas. That's a challenge and it's going to be an ongoing challenge until things get truly back to normal.
Q What are your expectations for the retail business for the rest of the year?
A I don't see any reason to think that we are going to perform at any lower levels than we did the previous year. So I expect our business to be at a minimum flat. I actually think we are going to see some growth here over the next couple of months versus what we did last year. I hope that's a true statement.
We're obviously preparing ourselves and one of the positive things about Dunn Tire is we're very light at the top as far as management and what it takes to make decisions when things change within the organization.
We're pretty nimble and we're going to have to be because I think there are going to be supply shortages. We could have another resurgence of an outbreak in one of our markets or one of our areas where we've got to deal with the impact of that. We're going to have to be nimble if we're going keep on pace with what we did last year.
But I think, based on what I see today, and again, you talk about the consumer confidence, I think the consumer confidence right now is relatively high and I think a lot of that is because of the safety nets that are out there available to people.
People are willing to come out, they are holding us to the higher standard of cleaning and making sure it's safe and everything like that. But they are not staying in their houses anymore. I expect the rest of the year to be very similar to last year, hopefully a bit up.
Q What tire sectors have been strong through the pandemic?
A We have seen sort of an interesting shift in our allocations based on OPP (opening price point) tires, up to premium. I would say the most significant shift that I've seen in the retail stores is the premium number has come down a little bit and the opening price point section has grown for us. I think that is largely driven by the essential workforce hitting the road vs. non-essential or people that had jobs where they could work from home.
Q What are some of the challenges for the retail tire market going forward?
A I think it is uncertainty. The predictability of our business has changed as a result of the medical situation in the country. It just adds another dynamic when it comes to staffing levels and resource planning and inventory planning.
It's just added a level of complexity to things we need to be on the look out for. I hope there are no significant outbreaks anywhere in the regions, or anywhere in the country for that matter, but certainly in the regions where we do business. But if that happens, and I think they could based on the nature of this virus, we're going to have to deal with it as it comes.
Barring any of those things, I think consumers for the most part are now tired of staying at home and are craving a little bit of normal in their life. So I think we will be just fine long-term, again if we have significant supply shortages caused by this, or if we have a significant medical shortages based on some of our stores being in areas where there is another outbreak or a second shutdown, then certainly we would be impacted.
Q What are some of the pleasant surprises you've seen?
A I think the most pleasant surprise was from the employees' reaction to the situation and the customers' reaction to the situation as well. There was a lot of good open dialogue and communication where obviously our employees, just like everybody else in society, had a set of concerns and we had to address those and work with them to get themselves in a position where they understood as a company what our position was and what we were doing.
The overall team effort from the employees I think was very refreshing. We didn't have people panic, we didn't have people running out of the stores. We had people thinking through, following the procedures, following the process and, as a result, we had nobody come down with the virus within our workforce. And I think that's because of our workforce that that's a true statement.
Q Have employees been amenable to wearing the masks and gloves and all the inconveniences?
A Having done the jobs that those guys are doing there, it's not going to make their day better to have to wear additional things on their faces and it's not pleasant. I think from the management team and the way we approach things, we have to be empathetic to the situation.
We've taken the position of understanding that things might not get done as quickly as they did last summer when we were putting things through, like 40 minutes to do four tires. If you need to slow down and take additional breaks, have additional water breaks, whatever, to offset some of the discomfort, then absolutely do that.
Our teams have been very receptive and responsive and I think it's because it doesn't come as a mandate, it's more of an educational piece.
Our director of human resources as well as other members of our team have been very consistently communicating from the very beginning about what are the recommendations, keeping everybody up to date on the available resources to them, whether they be WebMD or those kind of online providers that we have with our insurance company that we can offer to employees. So the education was very good and very early and we built up a level of confidence over the years with our employees that we're all in this together.
The response from our customers, as well, has been very positive. Some of the services that we're doing, we don't do as quickly as we did a few months ago because of some of these precautionary things and our customers have been very understanding.
You might have to wait a few more minutes in line at our counter because we're doing some cleaning of the pens, and we're doing some cleaning of the work spaces and those kind of necessary things. We've had very good response across the board.