Mid-Year Report: VIP plans growth amid consumer confidence

Auburn, Maine-based VIP Tires & Service has been riding the wave of upbeat consumer confidence and spending this year, according to President and CEO Tim Winkeler.

He told Tire Business that the dealership, which operates 63 stores throughout New England, is continuing to grow, with plans to open two stores this summer, in Burlington and Shelburne, Vt., as well as opening a store in southern New Hampshire near the end of year.

How would you describe business so far in 2021?

I would say it's very strong. We're running significant increases, obviously everybody is running significant increases after COVID, but we're also tracking versus the prior year and we built a business plan with a budget for expectations. For the year, we've had wins every month and we see the momentum getting stronger.

How would you describe consumer confidence?

Consumer confidence is improving. Obviously the stimulus helped when that hit; we immediately saw increases across the board and certain items that are somewhat discretionary that customers tend to say yes to more often when consumer confidence is better.

Since the stimulus happened, and even as that impact has waned, we've continued to have strong consumer confidence and, I think specifically in our region, they are talking about record levels of travel in New England this year. With so many people driving for their vacations, weather has been good, I think generally consumers are in a great state of mind right now up here.

What types of product shortages have you experienced?

We've seen shortages on certain tire SKUs, certain models and from certain manufacturers. But it's sort of like Wack-A-Mole: a certain SKU is out of stock and a month or two later that one is in stock but a different one is out of stock. We've seen that with several of our tire manufacturers.

We've also seen it across oil filters and brake rotors. I guess one of the great things about our industry is with so many different providers out there, whether it's different tire manufacturers, different distributors and all the different auto parts distributors out there, there's always somebody who's got what we need. So the product shortages really have not hampered our business at all.

What kind of trends are you seeing in the marketplace?

The biggest thing we continue to see is finding and developing technicians. That, in my opinion, is the mega-trend within our industry. How do we attract more people to the industry and then how do we provide them the career path and the training and the development to make it a career?

We spend probably as much or more time on that topic than we do anything related to consumers or products or anything like that. So we've improved compensation, we've improved our benefit offerings, we've signed up with a professional technician training program that we're offering this year.

In 2021 we'll be offering 18 or 20 different sessions all taught by master-level technicians and a range of classes from entry level to undercar to advanced diagnostics.

Those are some of the things that our people have told us they'd like to see us do more of is give them opportunities to advance their own knowledge and education so they can advance their career and stay with VIP and be able to earn more money and provide better service to our customers.

So that's the megatrend that we're focused on right now is developing technicians and providing them the tools and resources and career paths to make that their career path.

The number of employees that leave VIP each year has continued to trend down. Every year we've seen that number reduced and we've also, in just the last two months, I think we've had 10 of our technicians achieve ASE Master Technician status. … We pay for all the study guides, we pay for all the test fees and everything so there is no expense for one of our associates to get that education and to get those certifications. So we've seen a lot of our technicians take advantage of that this year.

Did you implement contactless services, such as text-to-pay, during the height of the pandemic?

We were already in the middle of a major point-of-sale software implementation, which we went live with in October. So that new point-of-sale system that we implemented has the ability for text-to-pay and contactless service.

We were able to leverage the technology to offer that to our customers and we definitely had customers who took advantage of that. We promoted that. We allowed people, if they wanted, to stay in their vehicles and do things over the phone and online. We now have a technology system that supports all that.

Most customers still want to see you face to face. We don't force anybody to use that kind of technology. Some people would prefer it, especially during the pandemic, and it seemed it was a little more popular than normal.

And even today, we have some people who use the website and text-to-pay, but when I'm at the stores, a vast majority of our customers still want to come in and talk to people face to face.

Given the fact we operate primarily in smaller towns — we have only one or two stores that are in what I would call an urban or big city environment and it might be different there — but the vast majority of our customers still park their cars and come in and they want to see their service professional face to face.

What is your biggest challenge for the second half of the year?

Specifically for us we got two new stores (in the Burlington, Vt., market) opening up this summer, so right now staffing those stores and having the right talent trained up and ready to go when those stores open is one of our biggest challenges right now.

Another big challenge for us is figuring out at what pace to get back to some of the normal things. We do a big annual conference in September for all our managers and we're planning to do that again this year even though we didn't have it last year. A lot of them are looking forward to it this year, so some of our challenges will be to get some of those events and gatherings back in place that we all missed out on in 2020.

Traffic is up, our consumers are feeling good, our employee retention is the highest it's been, so I think for us it's really just continuing to focus on the customer every day and ride the wave because the economy is going to be very, very strong for the last half of the year.

So for us, it's just about taking care of our customers and benefiting from the economic tailwinds that are going to be out there.

How do you expect your 2021 sales to fare compared with last year?

For the full year in 2020 we were actually up low single digits over 2019. (Total sales in 2020 were just under $90 million.)

So we saw that as a win. 2021 has been strong so far and we believe it's going to stay strong and maybe even accelerate. I think we will definitely be up double-digits over 2020.

We're definitely forecasting significant sales growth and traffic growth and I think that will be across the board, tires and mechanical service, because I think people will be out driving more miles this year.