Freezing Out the Competition

To say that the automotive aftermarket is a competitive business is an understatement of titanic proportions. Many in the aftermarket like to paint a picture of a market where aggressive service providers will cut you off for a nickel on a $10 part, and competing jobbers will do even worse for less.

It is an image of a dog-eat-dog marketplace that has been variously characterized as everything from rampant capitalism to a race to the bottom. It is a market where you can’t go it alone, where the days of the independent jobber are over never to return, and where the battle for the bays is fought every day, tooth and nail, for lower and lower margins.

These characterizations seem to ring true in a great many ways–except all the important ones. That’s because the truly successful business entrepreneur in the marketplace has learned that survival and prosperity are built not on the price of their goods, but on the value of their time and personal commitment. Former Jobbers of the Year are clear on this.

“I would say they are buying from me,” says Geoff Main, owner of NAPA associate Sussex Auto Parts, in Sussex, N.B., which was awarded the 2001 Jobber News Jobber of the Year Award along with its founder, his father, Charlie Main. Like other former Jobbers of the Year, he says that the personal touch is what has earned him business in many cases. That, and quality service. “You can be a couple of dollars higher if you can get the part quickly. Price isn’t everything when the garage has a car on the hoist,” he says, adding however that it becomes critical when nobody is in a hurry. He says too that an important part of the mix is confidence in the products he sells. He says that the NAPA’s marketing program helps to build that confidence, but in a town where everyone knows everyone else, non-customers can become customers over a casual beer. “When I approach a customer with NAPA parts, I know they are good parts. I guess I have confidence in myself.”

That confidence as well as an individual approach is the key to success in the market, over and above the flag that an individual jobber flies.

“We certainly need a good association with our supplier,” adds John Kallay, general manager, Gord Davenport Automotive in Orangeville, Ont., the 1994 Jobber of the Year. With AutoSense and ACDelco affiliations, Kallay says that a good deal of their success relies on the efforts of manufacturers’ sales representatives, and he says that he can trace success with a line directly to the efforts of supplier personnel. “As far as I’m concerned, the lines you do the best with are the ones with the best representation.” Detailing inventories, he says, is critical. “We don’t have many people who can do that. There are only three or four reps that do a really good job for us, and you really need that.” Which is to say that they need the tools to serve customers–but how they put those tools to work is up to them.

“We have built a relationship with our customers. We have [Auto Logic and ACDelco] programs with quite a few. And we have developed our own personal incentive programs, too.

“But our people are our number-one asset. Our people are the best in the area.”

“Business to me is something that at its basic core has always been the same,” says Dale Devlin, Halton Automotive, a Bestbuy shareholder and the 1996 Jobber of the Year. “You have service, price, or quality, pick two. We have always tried to have the service and quality at a reasonable price.” Tackling service issues daily is where success lies, he says, and that comes down to the quality of the staff. While he values what Bestbuy does for his business in terms of competitive buying and marketing programs, that affiliation fades into the background in daily affairs.

“It’s always there, but we tend to independently market our own companies. So, do we do anything magic? I don’t think so. We try to find some unique little twists to make yourself a bit different, but it is basically about core values. At the core, it is having the employee base day-in and day-out, to work relationships with our customers and our vendors to bring the benefits to our company.

“It’s working out very well. We’re growing every year. We have expanded the last four years very aggressively. Every month our sales go up and our customer base gets stronger.”

Devlin knows it is not all about just being nice to customers. They value the service an effective jobber can provide. That is their reality.

“Service is key–how efficiently can we get that vehicle off the hoist and keep their bays running as efficiently as possible? Value and competitiveness are involved in that mix, and even if that part is available from five sources, the good service providers aren’t going to phone all five. They are quickly going to develop a feel for where they can get value. You try to put a package together that includes some volume rebates and the best service at the most competitive price possible.

“We tell them what we do every day. We have a good experienced employee base, lots of delivery vehicles, and lots of inventory. Our only function is to buy and sell.” You can go to market with any two of price, service, and quality. That dictates everything a jobber does.

“While you see different twists and different marketing strategies,” he says of the aftermarket at large, “the core still revolves around those three items and how we function within that.”

“For our company it is the personal relationships that we have with the customer, rather than the national affiliation,” says Bob Jaworski, general manager, Auto Electric Service Ltd., selected as Jobber of the Year in 1998, along with company principal Morley Wagner. They go to market in Saskatchewan with that in mind.

“Our company is Auto Electric Service rather than Auto Value. We view it differently than some of the larger chains. We certainly display the national identity and we promote the national programs, but you’re dealing with Auto Electric Service rather than Auto Value.”

I was forced to chuckle at this, not because it was a ridiculous assertion, but because every single jobber said the same thing, which could be paraphrased as, “We market ourselves, not like the other guys who market their affiliation.” When I mention this to Jaworski, he snickers a bit too.

“I think everybody wants to say that they market their individual identity, but I think there is a difference when your ownership is on a local basis rather than a national basis.

“When it all comes down to it, people like to deal with people,” he continues. “People are the company rather than the bricks and mortar of the company. At least we hope that’s the case.”

He does say that an association with the larger group does provide a comfort level with consumers, and the ability to offer marketing programs which would be impossible to launch on their own. He admits it is of benefit with consumers and some service providers to have a recognizable association, mostly the product of advertising campaigns and NASCAR sponsorships in the U.S., but even that confidence booster can be shattered if the service doesn’t live up to expectations.

“I would base my success totally on my people,” says John Zuk, Automotive Trade Supply, Kitchener, Ont. The Uni-Select member, 2002 Jobber of the Year, says that his distribution network provides the pricing he needs to compete, but keeping his shining smile, and those of his sales staff, in front of customers is what makes it work. The glitz and flash of some of the programs just don’t fit into his profile.

“Our approach is grassroots. We believe that the garage is fighting for survival today. We have seen half a dozen techs drop out of the area to go work for dealers, tool and die makers, etc. They are working on anything but cars, and our accounts are just screaming for techs.

“The cars are using less parts and that is affecting everybody. When you see garages drop off, you have to see jobbers drop off. I think there is a big turning point coming in the next two years and we have to do business differently. I wish I knew the secre
t. There are some downsides where it is difficult to figure out how to win.”

What he has done is work very hard to improve the business management and technical skills of his clientele, as well as their understanding of value.

“In our business, we have a big push on education. We think we have been missing out on educating the customer on what the brand names really allow them to do; the advantages of the brands as opposed to white box parts. The [car owner] is not asking for cheaper, they’re asking for it to be fixed right.

“The customer wants to come in to get their car fixed and not see your face again. Service providers need to understand that when you go to the white box, you can make 50% on a $14 rotor, or 30% on a $33 rotor and make $10.” He says that it takes time to build trust on these points, and to get service providers to look at the business from a numbers perspective.

“The other part of that is coaching them that when the next customer comes in, do not mention lowering your price,” says Zuk. He says that this approach has made converts. “Leave the price out of the equation and lo and behold, they find out that and it really doesn’t matter.” There are customers who will walk out, and he knows that, but counsels that these aren’t profitable customers anyway.

“That’s hard to do, to convince a guy. We do it, though. It is back to that old triangle: price, service, quality, pick two.”

A repetitious line, yes, but gaining weight with every uttering. Repeating that to customers more often is a lesson that has been learned by Dennis Wyatt, Miller & Wyatt in Kelowna, B.C.

Watching the smoke clear from the valley after this summer’s appalling forest fire situation makes a fitting metaphor for his business, named Jobber of the Year in 2000.

“It is kind of sad, considering how our pricing has deteriorated. We struggle every year to make the same kind of money. When I look at our business, we have changed the way we go to market. We now, today, have a far more personal relationship with our customers than we ever had before. To me that is our salvation.

“You need to work closely with your customers and know how they are going to market and how to help them accomplish what they want.

“We have really worked hard with our customers and it has really been good for us. Things have changed so drastically. Customers stock less and demand more. Inventory management to me today is tremendously important as well. You have to keep your inventory clean to stay in the marketplace. You can’t be like we were at one time.” He relates a recent example where a long-time customer offered to take the firm’s old ignition inventory off their hands.

“I told him we don’t have any old stock. We have to keep our inventories clean. We have an individual who just does inventory control and it pays big dividends.”

The change in approach seems to be working. Miller & Wyatt is building a new location adjacent to the local Canadian Tire, with a brighter appearance and a 2800-square-foot display area.

“We’re going to try and get some of that good Canadian Tire walk-in business. We feel that we have such knowledgeable people, why not go after it? I am a firm believer that I’m not in this just for my health. Even my employees have to make a decent living.”

He says the tone for his business was set a number of years ago, and has taken this long to find its full stride.

“I can remember being in Banff seven or eight years ago [at the Automotive Industries Association of Canada convention] and they talked about dealer business increasing.

“Well, I looked at that and I asked, how can I counteract it? We started to concentrate on the dealer business, and in our top 20 accounts we probably have four or five dealer accounts now. That concentration has paid off. And the part I like is that they all pay their bills, which is nice.”

Overall, there is a very short list of items that all these leaders focus on. They know they can’t go it alone, so they work their distribution network affiliations well. They keep their service levels high by focusing on inventory and delivery. And they keep their margins at a level to pay for those things. Finally, they immerse themselves in the interests of their service providers’ customers, learning everything they can about their business, helping them run their business better where possible, and repeating to them over and over again what they can offer.

“But number one is looking after your customers on a more personalized basis,” emphasizes Wyatt. “That’s the big priority.”