Auto Service World
Feature   June 1, 2003   by Andrew Ross, Publisher and Editor

First Annual Retail Intelligence Issue

Coming To Terms With Change: Keeping It In Perspective

It is no secret that successful retailing is a subject that many jobbers have struggled with. Some have gone so far as to eliminate it from their repertoire altogether. However, in light of the evolving aftermarket in Canada, it is important for all jobbers to re-evaluate.

Accordingly, Jobber News Magazine presents its First Annual Retail Intelligence Issue.

According to many in the aftermarket, despite some shining examples, as a whole the industry has failed utterly to create a cohesive, consumer-friendly environment. This is why, for example, NAPA Canada president Larry Samuelson spoke so compellingly at the organization’s 2002 National Business Conference. On the verge of launching the rebranding of the UAP chain under the NAPA banner, Samuelson said, “Our target market is the six- to 12-year-old vehicle. Vehicles younger have traditionally been captive of the dealer; older vehicles have been left to the retailer. Our total target market has not changed, but the number of vehicles 13 years and older is expected to continue to grow. This is a real opportunity.”

Samuelson said that the traditional jobber has all but driven away DIY business, leaving some 65% of the DIY market share for Canadian Tire.

“We can make a real case that retail cash business has been given by default to Canadian Tire. The traditional parts store has behaved as if they didn’t want this business,” said Samuelson.

While you may or may not agree with his assessment, there are simply too many poor jobber showrooms out there to say that his comments are completely without foundation.

To be fair, dealing primarily with the trade and the big dollars that those customers command, it is easy to overlook the showroom in front of the counter.

Not to be ignored, though, is the positive impact that the retail cash sale can have on the bottom line. While the numbers for your operation may differ, one jobber’s estimate to which I was privy held that each retail dollar was worth 14 points above a trade sale.

The difference was due to the need to deliver, carry receivables, and other services afforded to the trade customer. In this light, it seems worthwhile to pay a little attention to the shelves and displays.

You have surely seen photos of wide aisles and brightly lit showrooms, and maybe even dreamed of having such a set of displays–someday. Maybe you have scoffed at the suggestion, assuming that it would be a waste of money, considering you don’t get any consumer business anyway.

Obviously there are a lot of factors that can determine the type of non-trade customer who may come into your store. Everything from the ethnic mix of your surrounding area to the type of businesses or residences that are nearby should be considered, but everyone prefers to be greeted by pleasant surroundings when they do come into a store.

Still, in some ways jobbers have more opportunity than the traditional retailer.

“In a traditional auto parts store, you have a lot more leeway,” says Tony Barolin partner in marketing communications firm Barolin & Spencer. “They’re more likely to staple things around the counter, for example.” Chain stores, by contrast, often only allow internally generated displays. Barolin, who has helped create everything from product marketing to packaging for brands like Hella and KYB, says that the flexibility of the parts store allows it to use manufacturers’ resources more readily and advises jobbers to take advantage of these resources, but to be vigilant about their use.

The biggest mistake jobbers make is leaving materials up too long.

“If it doesn’t get dog-eared and faded, it becomes commonplace. They should put a program in, and every season move this to the left and that to the right. Don’t wait till it’s so faded you can’t read it to change it. You should really be refreshing things or you’ll lose people’s interest. You don’t have to throw it away, but you have to change it around.”

That is what other stores do, he says, and it works.

“Sometimes it’s annoying. They want you to see their stores and notice other products. That’s basically what jobbers should do: look at the store each season and move things around.”

If you’re not sure how your store should appear, be a customer.

“There are people who never come in the doorway the way a customer does,” says Barolin. “What are you telling your customer when he comes in the door?”

While not every jobber is a slumbering retail giant, even a store that can increase a tiny 5% retail to 6% effectively increases its cash business by 20%. Certainly worth considering.

Ride Control and Exhaust: Unexpected Partners In Retail Opportunity

Decades of strong consumer advertising, and current trends, have made these categories ripe for retail.

Despite the fact that neither ride control nor exhaust products should, at first glance, deserve a high profile with consumers, they nonetheless enjoy that place of honour.

The reasons are varied. Ride control, or the shock absorber as most consumers know it (setting aside the important distinctions between shocks and struts), enjoys a high level of product awareness with consumers for the simple reason that it has been the subject of much consumer marketing over the years. By contrast, consumers are usually aware of exhaust products, because when there is a hole in a muffler, it is hard to ignore.

According to research from Frost & Sullivan, “Performance-upgrade and off-road products emerge as the bright spots in the shock absorber and strut aftermarket. These segments continue to grow steadily despite a slow market, mostly because of their client base. These consumers are enthusiasts that are much less price-sensitive than most vehicle owners, focusing on performance, technology, and brand reputation. They are willing to spend money and replace perfectly good parts to modify their vehicles.”

Which raises another similarity that the ride control and exhaust market share–anaemic growth of the core replacement market.

Maybe because of this commonality, or the fact that they have been linked at service chains for decades, they share a bond of sorts in the marketplace. They are strange bedfellows indeed.

An effective retail approach for these markets must by necessity recognize both their differences and their similarities. For one, it is important to recognize that different product lines within the categories have differing retail potential. These days this is often defined by the performance consumer, but not always.

Knowing where the potential lies is one of the keys to being successful with retailing these categories.

“When we first were given the project for KYB AGX shocks, they were not typically a front-of-store product,” says Tony Barolin, partner of marketing communications firm Barolin & Spencer. “We were trying to overcome a negative when they introduced it as Selecta-Ride. They didn’t sell that well.

“We realized that there was a differentiation issue.” So, says Barolin, the bright red graphics and colourful packaging were created to give the retailer some shelf appeal to work with.

“It was a point of sale message, not a point of sale grab,” adds Barolin. “We created pizazz and hype.”

Barolin says that using items like application posters and countermats to assist customers were also helpful additions to the retail toolkit. How much potential can be unlocked depends on a number of factors, not the least of which is the consumer.

“It really depends on the area and the kind of clientele that visit the parts store,” says Chuck Gonwa, marketing manager, KYB America LLC. “In the prairies, truck shocks would be the most attractive. If you are in more of a performance, import area, something like the AGX adjustable would be the most attractive. If it’s inner city low income, you’d probably want to go with the least expensive products, like the GR2. It depends on what is hot in the area.”

Gonwa says that store owner is really the final arbiter of his approach; knowing the market is key.

It is also important to recognize the difference between retail and DIY. “There are people who w
ill buy the product over the counter and take it over to their favourite installer,” says Gonwa. “It’s not strictly a DIY market. It really never has been with struts, because of the complexity of the job.”

For the exhaust market, many of the same tenets apply. Believe it or not, there are consumers determined to purchase their own parts, even if they do not plan on installing them on their own. Even if they don’t plan on the cash-and-carry approach, though, it pays to display your wares.

“We have had some jobbers take a full exhaust system and suspend it from the ceiling to show that they have it available,” says Dean Clarke, regional manager central Canada, Tenneco Automotive–right from the front pipe all the way back to the tip.

“And it doesn’t have to be performance. Jobbers can get creative,” he adds. One jobber, he says, took an entire system and suspended it over an island merchandiser. “It’s really effective at showing people what is in a system.” He says that manufacturers like Tenneco also have items like cutaways, demonstrators, and other point-of-purchase materials that can help raise customer awareness.

“One of the most important things to retail is to let the consumer know what they can get at their store. Most hard parts, like exhaust and ride control, you can’t put a huge display out front. So you have to do some creative things to let the consumer know what they can get at the store.”

One example of an approach that is gaining momentum because it can simplify this process is what could be termed the “umbrella brand.” A good example of this is ArvinMeritor’s Supreme Performance exhaust line-up.

The company has taken a number of pre-existing brands and combined them under one basic identity. Vortex mufflers, for example, are designed for the domestic performance customer. The Volt Performance line targets the import performance market. And the well-known Cherry Bomb line, which includes glass packs as well as other mufflers, could be said to be for the performance traditionalist. Separately, these different segments might drive a jobber to distraction. Together they seem somewhat easier to handle, even if they’re going to be installed by a professional down the road.

With such a flat market, and so much pressure from service providers to drive down prices, one person who can get left out in the shuffle is the customer. While not a retail issue per se, it is a retailing issue. Ann Marie Kannally, director of marketing, Autopart International, says that her company has had good success in providing OE-style direct fit exhaust parts for the growing import car park. “There are more and more imports. The more densely populated metropolitan areas tend to have a much higher proportion of import vehicles, but the import truck market has also grown dramatically in the past few years. The foreign vehicle nameplates have gained a significant share in that market.” She says that there are still distinctions in the marketplace, despite the widespread popularity of imports.

“The import driver tends to be more sensitive to the feel of the vehicle. That feeling is very much impacted by the exhaust: the feel and sound of the car.” They are on the whole also less price-sensitive, she says.

“The person who is driving a 1970s Cutlass is definitely price-sensitive. The person driving a $40,000 BMW is not price-sensitive. They are very much in love with their vehicle. They’ll want it to sound at least as good as it did, if not better.”

The exhaust business, it must be said, has not been one traditionally looked at as much of a retail business. The popularity of chrome and stainless steel tips, though, can provide such an entree.

Even a traditional company like Jones Exhaust has been expanding its line of tips.

“We have introduced five new chrome tips with four-inch inlets,” says Jim Cartwright, national sales manager for the company. “Probably 80% of our product ends up in the hands of the installer. Our product isn’t for the DIYer, who buys clamp-on or screw-on exhausts. Ours is all weld-on applications.” Still, items like the tip with the Chevy bow-tie cross-section do have a certain retail appeal.

“We’ve recently joined the Performance Warehouse Association, whose membership sells more to the retail and jobbers. We’ve just been trying to sell to them for a little less than a year. We had just about exhausted all of the undercar warehouses, so we thought it was time to try to sell a different type of customer.”

That sentiment may be familiar to many jobbers, and is one of the key motivations behind seeking to build a different aspect of your business.

Considering this, and the willingness of a growing segment of consumers to replace, as the research said, “perfectly good parts,” combined with the fact that most service providers are not positioned well to display or market upgrade products, it may be a task that fits into your overall plan.

Lift Supports Have Strong Retail Potential

While it does not fit neatly into any existing product category, gas springs, or lift supports, do have a growing retail potential.

There are a few reasons for this. One is that they are small, easy to display, and are not intimidating to the consumer. They can be easily carried out of a store, and for anyone handy with tools, can also be easily installed.

One other important factor that is generating sales potential is the annoyance factor. If a consumer has been clobbered by the lift gate on their vehicle a couple of times, they are likely going to want to do something about it.

According to ArvinMeritor, current data indicates that 85% of new light vehicles being produced have at least two gas-charged lift supports, and many of the most popular vehicles being produced, the SUVs, have up to six. The company says that, on average, lift supports last five to six years.

If there is a barrier to the jobber finding success in retailing these products, it is the perception that they are a dealer-only part.

Manufacturers have a range of merchandising options for you and your customers, to help dispel this misconception.

For product categories such as these, it is important to allow the consumer to discover the product on their own, as they may be unaware that it is an easily replaceable part, both in terms of installation and cost.

Top 10 Tips on Talking About Brakes

When talking to a retail customer about brakes, you need to understand, above all, that they probably know nothing about brake parts or a brake system. What they will respond to is safety and your recommendations.

1. Make sure your store is equipped with a full set of merchandising and sales tools. A facing of brake friction does little to help explain the brake system. Virtually every brake supplier has some form of information material, from elaborate graphic representations to simple pamphlets. They can all be useful.

2. Ask if this is the customer’s first brake job. This will help you determine what level your discussion should be at, but not whether you should have one. One brake job does not an expert make.

3. When talking about friction, know which of your lines feature platform-specific friction formulations. This feature will make sense to the layman. Also, know which ones have slots, chamfers, and shims like the OE pads. And know which ones do not. If there are improvements on the OE design that have been incorporated in the aftermarket friction, know what they are and point them out. Changes may include reduced noise or dusting.

4. Speaking of noise, understand that it is the number one reason for consumer complaints on brake jobs. The irony is that some of the friction with the best stopping power also has noise characteristics. Understand the interplay between these issues. If you’re not clear on it, talk to your rep.

5. Understand that there are no mandatory standards for brake products in North America. There are, however, voluntary testing standards such as D3EA and the just-launched BEEP. Understand what these are and what they can mean about increasing the comfort level
of the consumer with aftermarket products.

6. Look for clues from the customer. If you’re talking about brand A, but they’re looking at the performance product from Brand B, be able to compare the two. Perhaps it is a clue that the customer is interested in the best-stopping pad.

7. Always ask how the customer uses the vehicle. Explain that there are a variety of products for his vehicle. If they like to tow a boat, you should put forward the Severe-Duty level of friction for that application. If they look like the kind of customer who enjoys driving hard, perhaps a performance pad is right for them.

8. When it comes to rotors, customers probably know less about them than they do about friction. There are a variety of products out there. It can be a tough sell to get the customer to understand the difference, since they often look quite similar on the outside. In this case, there may be warranty differences that will help them decide. Above all, though, you should understand that they will trust your recommendation.

9. Don’t forget that the brake system includes more than just pads and shoes, or even rotors. There are many hardware items, lines and other hydraulic components that can affect brake function and can all contribute to the most-often-voiced complaint: brake noise. Sell the customer on getting everything they need in one order, like anti-squeal compound.

10. NEVER UPSELL, DOWNSELL AND ONLY AS A LAST RESORT! You should start talking about the very best products on your shelf for a given application, outside of performance that is. Sell its benefits and, if the customer balks, work your way down. You’ll preserve more profit more often this way, and you’ll end up with happier customers.

In the end, the consumer differs from the trade customer in the level of trust they place on you. For the trade, it is a lot, but for the consumer it is total. This also means that if you steer them wrong, you get 100% of the blame.

It is an important factor that should guide your approach.

Marketing performance engine work to the sport compact customer

Success in marketing to the sport compact market is at least as dependent on marketing and being accepted by the customer as it is on a shop’s ability to squeeze 700-plus horsepower from a small displacement engine.

At least that was the sentiment expressed at the Automotive Engine Rebuilders Association Expo 2003. Two presentations, one on developing a motor oil targeted at the amateur racer and another a panel on the sport compact engine building market, focused as much on the customer as on the machining.

While the presentations certainly dealt with a number of technical issues, the overriding factors in the success–or lack of success–of the engine builders on the panel (as well as those in the audience) were customer-related.

“When we decided to make racing lubricants for our friends who like to race, when we first decided to get into the business, we put together some teams,” said Thom Smith, technical director lubricants, Valvoline Company. One of these teams concerned itself only with the market factors that would surround the introduction of the new oil “Not Street Legal.”

“The job of the market evaluation team was to determine if there was a market out there for a race-specific oil and to determine if the market was large enough to support a specific product.”

With the introduction of the oil in the U.S., this was obviously found to be the case, but equally important, they also found there were limits to the product potential.

“What they found was that the racers were restricted to standard passenger motor oils or very high-priced specialty oils. There were no reasonably priced oils specifically for the racing market. They also found that the market was very large. There are more than 400,000 racers in the U.S. What they specifically wanted was an oil designed for racing that was reasonably priced and specifically designed for racing.”

He said that for some lubrication products, he was asked why they simply didn’t take existing products that had been developed for professional racing series. “Horsepower can be lost through the transmission or the differential. We have one specifically for our Winston Cup team. When our marketing people first looked at this for the consumer racers, they said, ‘Hey, these guys will spend anything on their cars; you can do whatever you want,'” he recalled with a laugh. “Then they did a little more research. They found that they can’t afford those things. We had to come up with something that was a little more reasonable in cost.”

These were the specific lessons learned regarding the market for oil, but they are factors that also help to describe the general demographic of the performance market: namely, that the market is large and growing, particularly where the sport compact enthusiast is concerned, that they are willing to spend to improve the performance of their cars, but that on balance they do not have money to burn.

It is this reality that professional engine builders spoke of during the Race Rocket Roundtable panel discussion. Ostensibly there to discuss the building of the 1.6L Honda VTEC project engine, the discussion quickly segued into talk of consumers and marketing.

“There’s a big profit centre. I can tell you that you can do it. I know that there are a number of guys I have talked to that are leery of it. They’re frightened. There is a learning curve,” said Frank Smith, South Florida Performance, Inc., Miami, Fla.

One rebuilder in the audience offered his experience.

Coming from a starting point of a customer base predominantly interested in domestic performance, he typified the experience of many. “The muscle cars were going away. The F-body was going away. It seemed every time we looked around, there was less and less manufacturing from our domestic makes. So we decided we needed to change.

“Since then our business has gone up a couple of hundred percent.”

“The market is moving very fast,” said Steve Fox, AERA technical specialist and moderator. “It’s been eye-opening to me as far as what was going on and what computers have done. When this project [engine] was done, I had learned a lot.”

“Our first customer had been to seven different machine shops,” said John DeBates, Auto Machine Inc., St. Charles, Ill. “None of them would even look at [his engine]. I told him I could, but I was going to have to learn a little bit. I did it for him and it turned out just fine. He ended up telling somebody else, and he told two other people and it just snowballed. So, it was just a willingness to do it.

“I still have all my big American guys coming in, but I have more and more of the import guys coming in every day. It’s just word of mouth and the willingness to do it.”

“I can tell you one thing that I have done and that is align myself with two individuals in the import performance market,” said Leo Croisetiere, owner of R & L Engines, Dover, N.H. “They are not necessarily moonlighting; they are going to make it their career. First of all, they are doing the legwork for me, so I don’t have to market as hard. Second, it got rid of my headaches. They are bringing in clean machine work. It kind of works as a win-win to us.”

“So, if they’re coming to you already, spend a little time to find out what this customer is doing. Is he just the guy who is doing it one time, or is he the guy with a customer base of his own?”

He says that in such a situation, you can feed off each other.

“I have a customer with a part-time business in the computer side,” said DeBates, offering his own experience. “At night he does tuning on these cars for the kids running on the street. I get a lot of work fed though him. Like Leo, I have a feeder now. He’s handling the fuel management systems and the computers for me so I don’t have to worry about that.”

There were quite a few pieces of advice offered, including being more open-minded about how to gain recognition in the market.

“Once you can show that you can do the work, you will be surprised,” offered Smith. “I can tell you
as a shop owner, it was very frustrating for me. Going out to the track was probably one of the best things we could have done. We took a Civic Si, made it go fast and went to the track every Saturday. It brought in a tremendous amount of business for us. Word of mouth is it. You’ll do one, then you’ll do two, then you’ll do five . . .”

One of the key distinctions between the new and traditional, probably older performance customer, is their use of the Internet. Sport compact customers are big users of the web for both information and purchasing, meaning that you may have to change policies on customer-supplied parts. You must realize this customer is different to capitalize on the market.

“Separate yourself from the others,” offered DeBates. “The new consumer is sophisticated, and usually pretty educated. He’s wealthy enough to spend the kind of money to enrich your pocketbook. What he is looking for is professionalism, courtesy, and a dedicated facility that will meet his requirements. If you have the ability to provide the services he needs, then you will excel. Sooner or later, you will be able to resell the parts, but if you reject out of hand the consumer just because he brings the parts in, that’s short-sighted. Don’t be intimated by the Internet and the consumer. It’s just a bunch of catalogues.”

“You’re selling your knowledge and your ability,” added Smith. “Don’t be afraid to charge for it.”