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June 26, 2020 08:00 AM

Mid-Year Report: Jensen Tire says consumers shopping again, but for lower-priced tires

Kathy McCarron
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    Bill Sitzmann / Jensen Tire & Auto Inc. photo

    Mike Jensen, president and CEO of Jensen TIre (center) with his sons Mike (left) and Nick.

    OMAHA, Neb. — Even tire dealerships in the American Heartland were negatively impacted by the COVID-19 pandemic that prompted stay-at-home orders in most states. But Jensen Tire & Auto Inc., with 21 retail locations in the Omaha metro area, remains positive about business for the rest of the year.

    The dealership is even looking for property to open another store later this year in one of its existing markets.

    President and CEO Matthew Jensen told Tire Business that sales at the beginning of the year were running well until the pandemic hit.

    "It seems to be picking up here in the last three or four weeks. But the last six to eight weeks have been pretty tough. No doubt about it. I've never seen anything like it," Mr. Jensen said, adding, "I think with the weather warming up, we're beginning to gain traction out here in the Midwest."

    During the slowdown, sales slid about 25% for auto service and tires, he said, but the dealership didn't have to lay off any of its 235 employees.

    "It's so hard to find people anyway out here — I think everyone is in the same situation — that we decided to just hold on to everybody."

    Jensen Tire's Elkhorn, Neb., outlet

    He said receiving funds through the federal Payroll Protection Program helped.

    "When you don't have any revenues coming in at all, it was very helpful. It's one reason why we could hold on to our employees."

    Mr. Jensen said the dealership implemented several procedures to help stop the spread of coronavirus, including having his employees check their temperatures twice a day, wear gloves and masks, sanitize the stores on a daily basis and use steering wheel and seat covers in customers' vehicles.

    Under state orders limiting public gatherings, the dealership shortened its hours of operation so as to disinfect the premises for an hour before opening and an hour after closing. Normal hours resumed in May.

    "What we're doing now, where we're cleaning every three hours, we're cleaning in the morning, cleaning in the afternoon, the deep clean before we leave and in the morning, I think that will be an ongoing thing from here on out," Mr. Jensen said.

    "I think wearing masks, wearing gloves, is a thing we're going to see from here on out now. Taking temperatures of our people twice a day, those are just things we got to do."

    During late May and early June, the dealership saw an increase in business, he said, speculating that more people are starting to travel.

    "We've seen a major uptick, mostly in the service business more than tires. But we're seeing an increase in invoice count," Mr. Jensen said, adding, "I think people, right now anyway, are beginning to maintain their vehicles.

    "I couldn't say that eight weeks ago. People were hanging onto their money then, not knowing it they were going to lose their jobs or if their partner was going to lose their job. But I think they feel a little bit more comfortable now, and they're beginning to open up the pocketbooks a little bit."

    That feeling apparently doesn't extend to premium tires, though. Mr. Jensen said customers seem to be opting for Tier 2 and 3 brand tires over the higher-priced Tier 1 brands.

    "Very few people are buying the high-end Michelin and Goodyear anymore. They're looking at second- and third-tier purchases," he said, predicting, "When it comes to Tier 1 products — the Goodyear, the Bridgestone, the Michelin — we're not going to sell nearly as many of those as we once did. We're going to see a lot more of the Tier 2 and Tier 3 when it comes to tires."

    That seems to indicate shaky consumer confidence going forward.

    "People are reluctant to go out and do anything. Obviously, offices are closed down, people are working at home, there's less miles driven. People are just scared. They're frightened and I think a lot of business owners, right now, they're skeptical of what's going to happen. Is there going to be another pandemic here before long? And then being it's an election year, everything together, makes it real tough. ...

    "People felt a little bit more positive going into this year and even earlier this year than they do now. Politics have a lot to do with that, though," he said.

    "People are concerned that maybe this virus will come back and cities will shut down again."

    However, Jensen Tire is trying to keep a positive outlook for the rest of the year, he said.

    "The thing now is to keep positive and keep our people positive. So all in all, I think we're hopeful as long as we don't have any more of this COVID come back. ... We'll never make up all the ground that we lost in the last eight weeks, but we feel we'll have a good second half of the year."

    Mr. Jensen is concerned about how a reduction in vehicle miles traveled during the pandemic will impact business going forward.

    "We've never experience something like this before. Hopefully it doesn't happen again. There's a little bit of concern now that everybody's working remotely . We're a little concerned that we're not going to see nearly the traffic by some of these office parks that we do a lot of business in. We're finding out that these companies are finding it so much easier now to work remotely than to bring everybody in to these office spaces," he said.

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