Market Feature: Think Cold!

When summer temperatures rise, the price of winter chemicals falls.

It may seem odd to be thinking of winter when there are still quite a few good sunburn days left, but experienced jobbers know that this is precisely the time when decisions about bulk buying of winter chemicals—and deciding on which niche products to buy, too–must occur.

It is a process that is best tackled with the benefit of experience.

Stephen Main, who runs Hampton Auto Supply in Hampton, N.B., says that he keeps keen tabs on seasonal products, both for purchasing and display.

“What we do is designate a section in the business for winter or summer. If I see something that’s new and think it will catch on, we’ll create a display. We take things that are brightly colored or have a new look.” He says that focusing on the purely aesthetic characteristics of the products may seem simplistic, but it’s not. He says that in his market, for certain types of products like snowmobile lubricants, gas line antifreeze, and other impulse purchases, packaging attracts customers ahead of brand.

“We jump around through different brands. I make a whole display of summer things, the big colorful ones. They are packaging a lot of things in great colors now and when you put it on a display it looks like something has a light on. We don’t usually just calculate sales, because it’s so readily available.”

His approach for bulk chemicals is more conventional: high volume items like antifreeze/coolant and windshield washer are ordered by the trailer load.

“If you can get it four cents a liter cheaper, it works out to quite a few dollars. And we pre-sell a lot of that. We’ll call our top 10 guys and ask them to commit.”

He says, too, that he will hold the stock on site for those willing to commit, which means that they don’t have to worry about where to put it. His pricing is competitive this way, plus the service providers appreciate the freedom to order as needed. He says that it has become an effective way to lock out the direct sellers, which are an inevitable part of the market these days.

“Otherwise, they put thirty or forty bottles in a corner. If they fall over and two break open, they’ve already lost everything they would have saved,” says Main.

Not to be overlooked is the effect that weather has on winter chemical sales. Ron Jhaj, owner/manager of A-1 Auto Parts in Quesnel, B.C., says that he has noticed a distinct easing of winters of late.

“We would normally bring in three pallets of starter fluid, but the last couple of years, we hardly moved even a pallet. Winters aren’t winters anymore.” He says that, while other factors such as the rise in fuel injection use can account for some of this decline, it’s mostly due to easier winters.

“There’s a lot of old equipment out here in the bush. One customer who usually buys a pallet of starter fluid didn’t do so last year because of the mild winter. He still had some left over.”

Still, Jhaj says that he relies on sales history to determine his quantity and product mix. The customary truckload of anti-freeze should take him to about early January, at which point he’ll determine reorder quantities. (He applies a similar strategy to block heaters, incidentally.) Even so, about 75% of his stock is pre-sold, though mild winters mean that he sometimes gets some back.

It is, it would seem, better to have and to hold than not to have at all, but it is a strategy that can’t be said to apply across the board. Competitive pressures in some locales make it difficult for some jobbers to compete and profit, meaning that they view some chemical products as service items.

Winter chemical falls into this category for Furby Auto Supply in Winnipeg, Man. While one would imagine that a Winnipeg jobber would have great demand for winter chemicals, competitive pressures have compressed the market to the point that owner Ted Main doesn’t see much room to maneuver.

“We have a lot of dealers selling at cost plus 10 cents,” he says, adding that he and other Auto Sense jobbers combine on truckload quantities for improved pricing. Still, it’s a hard battle for him. “It’s not a huge section of our business. We have it as basically a convenience for our customers.”

Still, one of his biggest competitors is Mother Nature.

“It’s not a huge deciding factor [on what we order], but it does make a difference. This last winter, if it was minus 5 and someone’s car didn’t start, he would just wait till tomorrow when it’s plus 2 and it would start.” That’s a far cry from the breath-freezing winters that places like Winnipeg have become legendary for. “All these guys tell you that weather doesn’t make a difference. We’ll, it does make a difference.”

His home city isn’t the only place to get cold winters, of course. Thunder Bay, Ont., where Harry Barrow runs three Harry Barrow Enterprises outlets, has been known to get some real thumpers, too. Just not lately. And, combined with economic issues, the market has been a bit soft for the past couple of years.

Nevertheless, Barrow says that forecasting based on last year’s sales has proven accurate.

“Year to year is pretty safe, but there’s always the gut feel. But we can pick up pretty quick out of Toronto [where Bestbuy has a warehouse].” He says that getting price locked up before the season hits and then picking up as needed is a big plus.

Outside of bulk buying of anti-freeze and windshield washer, he says that items such as diesel conditioners and gas line antifreeze continue to be generally in demand. This isn’t true of all products. He picks out starter fluid as an example of a product whose demand has waned over the past few years.

On other products, the big pressure is on pricing.

“It’s hard to get the price up. Price is very flexible. As soon as you need it, the price seems to go up. It’s hard when the price goes up because you’re scared you’re going to get left holding it.” He says that with other players in the market treating high volume products as loss leaders, it may be wise not to play during times of shortage.

Sometimes it’s better to say you don’t have it rather than buy it when the price is high,” says Barrow. “You have to be price aggressive. If you have the price you sell it.”

Avoid Dex-Cool Errors

There is anecdotal evidence that service personnel have installed the incorrect coolant in some of these vehicles in error.

Dex-Cool products are not the same as all “extended life” products, though they are intended to provide extended life. The distinctive orange color of Dex-Cool coolants should be hard to ignore, but when cooling system service has been performed the system may have been drained, so the original coolant is not present for comparison. In such cases, it is wise to refer to the vehicle’s owner’s manual as failure to use the proper coolant may accelerate the deterioration of cooling system components and passages.

While there is no widespread evidence of errors, service providers–including fast lube outlets you may supply–should be reminded to be extra vigilant when it comes to servicing late model General Motors products that may require the use of Dex-Cool type antifreeze coolant.