Push or perish

Jan. 1, 2020
Amid bruising economic conditions, widely varying industry opinions and considerable reluctance to even discuss the matter, warehouse distributors and jobbers on the hunt for price breaks and other helpful programs are being encouraged to keep asking

Amid bruising economic conditions, widely varying industry opinions and considerable reluctance to even discuss the matter, warehouse distributors and jobbers on the hunt for price breaks and other helpful programs are being encouraged to keep asking suppliers for the specific assistance needed to be competitive.

“The WD has to be more aggressive today,” says Ralph McMurray, president of the Marketing Solutions Group, based in Kansas City, Mo. “They have to be more aggressive on their own turf, and they have to push” to pursue better buying, better products and better customer service.

It’s push or perish for a lot of these operations, McMurray warns, citing the success of O’Reilly Auto Parts as an example. “They’ve gone into markets and taken over stores that weren’t aggressive,” he reports. “Some of the smaller WDs have to look at what they are doing” and make critical adjustments in the business methods they employ.

“Clean your stores!” McMurray implores. For some operations, hiring processes and training efforts need to be seriously reviewed and enhanced to ensure that the proper service is rendered.

“He’s got to have a better mousetrap than O’Reilly, Advance or AutoZone,” McMurray says, although in some markets the big retailers are less of a challenge than the internal issues. “They are not in all the small towns that all of these WDs are in.” A focus on offering good, quality parts can increase your competitive edge, as can investing in niche products not covered by your competition.

Bill Lorenz, vice president at Siskel Sales Co., based in Northfield, Ill., says there essentially are two markets: one based on price, the other on quality. “The way to compete is not through price but through value,” says Lorenz.

The product mix can be of utmost importance. Lorenz says he frequently hears about price pressure being exerted by Sam’s Club, where some installers are apparently doing considerable levels of shopping for certain items. Forget about trying to beat the price of products along the lines of washer fluid, and turn your attention toward what you can do better. “Sam’s doesn’t have that starter,” he points out.

“You can offer all types of value-added services,” says Lorenz. “What you are trying to do is establish customer loyalty.” He suggests “hot-shot delivery” as a worthy business tool that can cool the competition.

“The factories tend to be a little more open in offering specific promotions; they’re willing to take it to the individual distributor,” Lorenz continues. Five years ago a manufacturer may have offered inducements such as a free cruise ship vacation for a business owner.

“The issue today is making yourself competitive in the marketplace,” he reports. “The whole point of a tailored system is knowing what works best for a distributor.”

For this type of program to be effective, the seller needs to know what the buyer wants — a situation that is relevant across the aftermarket. “The best distributors have very good communications with their customers,” Lorenz stresses. “Don’t operate in a vacuum.” You need to spell out what is best for your particular circumstances.

“You really have to be vocal and be heard; the jobber really needs to offer feedback where they are having difficulty,” he adds.

Although competition has become increasingly tough over the years as retailers encroach upon the installer customer base, there are steps that jobbers and WDs can take to improve their individual situations.

“Unless jobbers adjust to the changing marketplace, they will continue to lose ground,” according to James A. Lang, president of Lang Marketing Resources in Wyckoff, N.J.

Making strides forward

It is a general consensus that WDs and jobbers can achieve better deals, programs and service by pressing vendors to supply the best benefits available — especially in regard to the perks and pluses reportedly being obtained by the larger retailers. The member organizations of the Coalition for a Level Playing Field are particularly pleased in recent months, despite being denied an appeal hearing in their lawsuit against AutoZone and Advance Auto Parts.

“Our industry got a lesson from the Coalition on how to buy,” says Dick Healy, executive director of the Automotive Wholesalers Association of New England. “The Coalition brought the pricing situation to the forefront.”

Healy points out that “if the owner’s going to make it in this business he (or she) had better be doing the buying,” or at least closely supervising the designated buyer so that the intricacies of wheeling and dealing for the best competitive position can remain flexible.

“Who says every price is fixed all the time?” he asks. As an example, if a $15,000 order is deemed too low to obtain certain benefits, the ability to bump it up to $20,000 may bring more punch to the transaction, according to Healy.

Jim Quinten, president of the Automotive Wholesalers of Texas agrees. “It has loosened things up, that’s for sure,” says Quinten. “It’s made the WDs and jobbers more aware of what’s out there, and that they can go after it. Before they didn’t know what was available and what they can get.”

Dick Cottrill, executive vice president of the New Mexico Parts and Service Association says WDs and jobbers are telling him they’re getting better deals. A number of manufacturers are feeling the competitive heat themselves, and thus, are eager to obtain or retain business. The offerings are “not necessarily the perks and side deals, but the payment terms are easier in some cases,” says Cottrill.

WDs and jobbers, however, are still falling short of the arrangements being negotiated between manufacturers and larger retailers, Cottrill contends. “They say, ‘We can’t do it for you,’ but they beat around the bush and don’t give you a direct answer,” he laments.

Know your competitors

Some argue that the influences of Wal-Mart, AutoZone and the other big purveyors of auto parts are not as extreme as they might seem.

“You can bring your market back to where it belongs,” encourages William Garner of William Garner & Associates in Bellevue, Neb. He refers to the famous Thomas Jefferson quote noting that the harder you work, the more luck you have; he applies his own version to jobbers and WDs facing harsh business conditions. “Some will throw their hands up, and some will keep working,” Garner says.

Larger chains only stock the top numbers of fast-selling products, he argues, leaving room for WDs and jobbers who carry a wider range of quality parts.

“The (independents) listen too much to their customers when they say, ‘I can get this cheaper somewhere else.’ A lot of times that is not true,” Garner contends. “You need to know your own competition.”

Arm yourself with that knowledge, and then obtain the training needed to distinguish your operation from others, he advises. Garner adds that manufacturers representatives often facilitate a wide variety of user-friendly educational sessions. Ask for them.

“The training programs help everybody in the industry,” he says. Currently the Automotive Aftermarket Industry Association — which recently acquired the Automotive Warehouse Distributors Association — is preparing a database (to be completed later this year) listing the industry’s training offerings, reports Skip Potter, AAIA’s vice president of membership.

In addition to training, jobbers and WDs can gain by taking advantage of electronic commerce and Internet capabilities. “The more innovative entrepreneurs are using technology more to compete effectively,” Potter says. “We’re in an industry where entrepreneurs rule.”

He notes that the qualities of friendliness and politeness are also important. “At the wholesale level the business is very personal,” Potter says.

Hooking up with a program group is another strategy that remains critical, according to Potter. “There are still a lot of independents out there,” he says. “It’s easy to get lost with (attention focused toward) the big guys, but there are many people out there making their own localized buying decisions. You have your own marketplace and your own idea of what your customers want to buy from you.”

While observing that the term “independent” varies within the aftermarket, Potter points out that often an enterprise will belong to several program groups to obtain the maximum buying power.

“Get with a good program group and partner with a good supplier,” suggests George Patterson, president of Action Marketing, based in Salem, Ore. “The amount of jobbers who aren’t wrapped up in a program group are fewer and fewer. The ‘independent’ jobber has (traditionally) been a ma-and-pa operation — and those guys are gone.”

The clout of a program group can provide a sharp competitive edge, says Bill Maggs, president of the National Pronto Association. “Everyone in the market is concerned about being able to compete for that installer’s business,” he explains, adding that his membership gains by being able to provide technical training, a telephone hotline for their customers’ mechanical questions, a “boxtop” sales incentive plan and warranty coverage.

“We’ve been negotiating with the vendors to the point of having some success,” Maggs reports. “In today’s marketplace, the manufacturers are certainly taking a look at the programs. Everybody wants to see more results for their money. It’s less than what it was five years ago just because of the economics in the aftermarket today — but they are still marketing.”

Getting a handle on this year’s factory program offerings can be a challenge, and there are diverse views over whether this climate is hot or cold.

“Each manufacturer is going to be different,” explains Gary Ballard, owner of Ballard Allen Marketing, based in Costa Mesa, Calif. “It goes all over the board.” Look for aggressive marketing action with unique accessories — especially for trucks, electronics and similar equipment, plus wheels and tires.

“The factories don’t have room to come up with anything new, exciting or different,” says Patterson in Oregon. “They can’t afford to gamble. At this point, I haven’t seen much of anything out of them.”

Supposedly in the pipeline there are “whole new pricing/programs and a whole new marketing scheme, but they haven’t told us what it is,” says Patterson. On one hand he sees programs that are “the same as last year,” yet he allows that everyone will have “tricks up their sleeves.”

Lorenz counters that promotions have really “stepped up at the beginning of this year,” from manufacturers “willing to spend the money to get the most impact.” However, he expects some factories to be tight with their programs.

WDs and jobbers need to pay close attention to these factory programs in order to make use of them and improve their bottom lines in 2004.

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