Jobber Survey: Oil Market Puts Premium on Service Oil Market Puts

With tough competition from mass merchandisers and changes in distribution, many jobbers are having a tough time drumming up business for both bulk oil and packaged products.

“The market’s very difficult,” says Albert Mammarella Jr., president of Albatross Automotive Ltd. in Toronto, Ont. “The biggest problem we have [in the bulk motor oil market] is that a lot of the oil manufacturers seem to be going directly to the garage level.”

“But,” he adds, “many jobbers are into garages a lot more frequently than any of these oil manufacturers could ever hope,” Mammarella says. “They’ll be cutting themselves a little short.”

For some jobbers, that’s little consolation, and the reminder of why they have trouble competing is just around the corner. “We have a [warehouse club] in town and their prices are just . . . we can’t even come close to them,” says Lyle Brooks, president of Phoenix Auto Parts Ltd. in Regina, Sask.

Some jobbers that still offer bulk oil to their customers see very little profit from the process which, other than some paperwork, is handled by the manufacturer.

Mammarella says the best thing for oil suppliers to do would be to develop a relationship with some stronger jobbers and make them the sole distributors within an area.

“I know one oil manufacturer in particular is considering it,” Mammarella says. “I think that’s because they want to build their base through one individual and try to get as much out of that one individual.”

Darcy Powlik, owner of A.I.F. Supply Ltd. in Calgary, Alta., has several customers on a bulk delivery program and he hasn’t seen any signs that that will change, despite some pressure from direct sellers. If that were to happen with bulk oil, he too would find it difficult to compete.

“If they get the same service at a lesser price, how are you going to keep them there?” he says. “If they can go direct and save 10 or whatever cents a litre, guess what? They’re gone.”

Powlik thinks that jobbers need to simplify and sell parts. He predicts that products such as batteries and oil with environmental issues will eventually be dealt with directly by the manufacturers, because they’re better able to properly handle the materials.

In packaged oil, heavy competition from major retail outlets like Wal-Mart, Zellers, and Canadian Tire continues to make it a difficult market for jobbers.

“I sell very little motor oil. I haven’t been able to compete in that market for a long time,” says Ron Brown, president of Crossfire Enterprise in Halifax. “What used to be a big part of the business has now been reduced to over-the-counter sales from time to time.”

Even the customer base seems to be dwindling, says Ron Clarke, president of C & R Auto Supply Ltd., Halifax, N.S. “The garage base? We have none. The service station as we know it? They’re dinosaurs, they’re gone. And they’re shutting them left and right in Halifax and all over the country,” says an emphatic Clarke. “The Wal-Marts and those huge retailers are taking that market. I mean, they’ve had the market for a long time. Now whatever little business you had on that is gone. So how do you fight that? You don’t.”

Despite competition from the large retail outlets, Mammarella says the increasing variety of brand name and private label oils may give jobbers an edge.

“Oils have become kind of specific to vehicles,” says Mammarella. “It’s incredible, the amount of variety that oil manufacturers are telling people to put in their cars. As the varieties and the oil business change, it actually plays into our hands because we deal with it every day.”

Besides, he says, there are other things for shops to consider beyond price.

“When installers realize that they’ve got to go there, pick it up, pay C.O.D., put it in their car, and drag it over to their shop, there’s not a lot of cost savings,” Mammarella says. “So even if they spend maybe 10 or 15 cents a litre more, I think they realize the benefit of our service.”