The industry is abuzz with the news of yet another emerging player in the fitment trade. TYRES & MORE® opened its doors to the motoring public on 26 August in Woodmead, Johannesburg, with another two pilot stores in Edenvale and Bruma duly following on 9 and 16 September. And on 1 November, the fourth store opened in Sasolburg.
Just why and who is behind the birth of this new distribution group made for an interesting interview recently with Alex Taplin, Chief Operating Officer of the TiAuto Group and Fred Scheepers, newly appointed Managing Executive for TYRES & MORE®.
One-On-One with Alex Taplin and Fred Scheepers.
Alex, Fred, thank you for taking the time to chat with us. Please describe the rationale behind the formation of Tyres & More.
TiAuto has always had a disciplined and proactive approach to growth. Our current retail Business (Tyres & More®) is very successful courtesy of a very specific customer profile and market niche. So whilst we were not looking to change the product line up or business model of our existing retail business customer experience, we still wanted to create an opportunity for future growth. Plus, as our existing retail model does not lend itself to smaller satellite town expansion which requires a larger product range and diversification in order to be sustainable, we saw a niche in the market.
TYRES & MORE®, is especially designed to appeal to a burgeoning middle class clientele. South Africa`s car park is more than 10 years old. This, combined with market growth in this economic segment, will ensure growth opportunities for well-placed brands that add value to the consumer and business owner alike.
Was it of some concern that the market is said to be reaching saturation levels?
We do not subscribe to the notion that there is saturation or for that matter, that there are not significant growth opportunities within South Africa or even sub-Saharan Africa. The emerging middle class phenomenon is real, and it needs to be acknowledged responsibly. There is a great deal of business out there.
What do you believe that TYRES & MORE® will be able to provide that may currently be lacking in the marketplace?
This is a great question. As mentioned before, there is a strong argument for a more and more empowered South African consumer that is looking for a full service offering. With this in mind, TYRES & MORE® is a multi-brand approach that focuses on what the consumer value requirements are whilst also providing reliable back-up support, consistent pricing nationwide courtesy of a centralised debtors and creditors system and products that carry a certifiable warranty.
And what do you intend doing differently?
We believe that we offer a fun and funky alternative. We have all the best loved brands in tyres, wheels, brakes, batteries and shocks, as well as a string of other product lines aimed at offering a one-stop shop solution to customers looking for more value that they can trust. We also have some new service and product offerings for our customers which we are testing market response on.
That being said, like all things within the TiAuto Group, we are not aiming to reinvent the wheel, only to improve on what is currently out there at the moment. Motorists relate to brands that they can identify with, together with consistent service, knowledgeable product support, fair value and choice that is geared towards their needs. Fitment centres are often dark, depressing little workshops, and there is almost no consistency across the various options out there. We aim to provide a consistent customer experience, that is that little bit ‘Zaney` and not too serious.
What are your preferred tyre brands?
TiAuto has always recognised its suppliers as one of the vital pillars of our success, so we obviously want to ensure support for the most loyal of these suppliers. That being said, the ultimate decision will be made by the customer and we do not want to limit our opportunities by doggedly focusing on existing suppliers in isolation. We have received a very warm reception from a few historically atypical TiAuto suppliers and we intend continuing these conversations in a manner that ensures a ‘triple win` – supplier, customer and TYRES & MORE® alike.
Aside from the supply of local and international tyre brands, TYRES & MORE® will also be offering the consumer our new budget brands – the Unigrip and Gripmax ranges – are aimed at the passenger and 4×4 value conscious markets .
What will determine future expansion and the location of future stores? And do you foresee any cross-over between TYRES & MORE® and the Tyres & More® stores?
TiAuto has a Head Office support structure that has been cultivated for over 40 years in the business, which of course TYRES & MORE® will harness to ensure best of breed access to HR support, a MERSETA Accredited Training Academy, a full integrated IT system which links all stores to each other and provides world class data that is critical to running a sustainable business. To further ensure store success, a full marketing suite is available.
Future expansion will be determined by market requirements, geographic location as well as whether opening a new store or converting an existing one to the TYRES & MORE® structure is feasible and sustainable.
As for your question relating to Tyres & More®, some cross-over is inevitable of course, but the two brands are set up to operate separately and independently from one another. As I mentioned earlier, the Tyres & More® brand appeals to a different market and TYRES & MORE® is not actively looking to compete in this market segment.
So, TYRES & MORE® will not be competing directly against TWT?
In some cases, it will. In fact, we have specifically chosen our three pilot stores (all company-owned) in close proximity to a TWT store in order to prove the theory that the TYRES & MORE® stores have the wherewithal and customer appeal to compete directly. Those who know us will tell you that we never focus on what our opposition does, but rather on what our customers want.
Retailers have been copying us forever, and we see it as a compliment as we know that this has helped to lift the general quality of fitment centres in South Africa. TYRES & MORE® will set its own benchmark, and create its own customer base and brand identity. Of course it will compete with TWT, but then again this is no different to any other brand. TYRES & MORE® has its own management team which will need to create their own place in the sun, just as TWT has done before them. With TiAuto support, we expect that TYRES & MORE® will have a giant leapfrog advantage over market, as what has taken us 40 years to develop, will instantly be enjoyed by the TYRES & MORE® team in developing their business.
What would you like the ratio between tyre sales and affiliated services such as shocks, brakes etc. to be?
These ratios are traditionally defined by the market and geography of particular site, not by us. Typically, tyres command the ‘lions` share of total turnover, in any fitment centre, but we are guided by demand, and not by some pre-determined ratio. We abide by strong benchmark best of breed ideals and the focus will be on how to ensure the best mix and best profit outcome for every store. With 40 years of retail data at our fingertips we are quite confident that we will be well ahead of the demand curve.
How many stores do you hope to launch within the next 18 months?
We will be guided by demand as opposed to a ‘pins on maps` strategy. It is not about creating a distribution chain for a tyre manufacturer; it is about creating a sustainable and profitable business.
We have the entire country`s geography at our disposal and we will focus on each opportunity as it comes along. Our initial budgeting allows for 30% of the stores to be company-owned with the balance being franchised. However, this is not cast in stone and we will respond to opportunities as they present themselves. We should have five to six stores by year end, and we have a few more in the pipeline for 2014.
TiAuto also has a fully-fledged property department which will support the growth and expansion of the brand. We will also look to expand our acquisition strategy where it makes sense to do so. There are many well run fitment businesses out there where the owners are nearing retirement age, or where owners simply want to try something else. These are all opportunities.
What type of franchisees/owners would make ideal candidates?
To succeed in the fitment retail industry we believe you need to focus on three things – cash flow, staff and customers – no one element being more important than the other. So the ideal franchisee would be one who responds well in these key elements. They must have a passion for hard work (it isn`t easy out there).
Equally important to mention is that we are not looking for multi-fitment centre brand owners. We are always concerned about the ‘which hat do you wear to work today` syndrome that has been a landmark of the South African retail landscape for a long time. If you nail your colours to the mast and allow us to do the rest for you, then there is no need for a multi-brand/ multi-channel approach for fitment centre owners. This will be a limiting factor, but we know that the slow, steady and brand loyal approach wins out every time.
Are you looking to source suitable people from within the industry?
TiAuto employs nearly 2 000 people across our businesses, and as such, we have a wealth of experience that is unrivalled in the industry. Of course we always look for new talent, and would welcome any person to the team that can add value to our business and customers.
We also run extensive learnership programmes as it is almost a social responsibility to develop talent and give homes to the multitude of unemployed South Africans. We intend growing and expanding employment opportunities in all levels of our business, and the mandate for Tyres & More will be no different.
Why did you choose Woodmead to position your first store?
The opportunity arose to acquire the business which had been well run for many years. It was a good location, and its proximity to TWT was a vital ingredient that was required to prove the theory of whether TYRES & MORE® and TWT could co-exist. I am happy to report that they are – TWT customers are TWT customers but there are many other folk that shop elsewhere. We are focussed on them. The proximity of our Head Office was another important factor in the equation, so that we could implement the brand and tweak things on the run, so to speak. It has worked well and the outcome has been quite pleasing.
Who do you perceive to be your greatest competition?
There are approximately 1 300 tyre / fitment centres out there, each with its own identity. Everyone who operates under another brand is a potential competitor. There are some manufacturers trying their hand at retailing now too, which is always something interesting to watch.
Would you please outline your vision for this new auto fitment chain.
As mentioned before, the chain will consist of a combination of company – owned stores and franchise stores across South Africa. We don`t want to let too much out of the bag at this stage, but suffice to say that we envisage a national footprint supported by a dedicated team of business development managers, IT experts, marketing gurus and seasoned industry professionals working together to uplift the fitment centre standard, do better business and provide sustainable opportunities for all South Africans. We want our franchisees to know they belong to something important and valuable, and have fun building a new brand identity and to contribute to theirs as well as their children`s futures.
Look out for these new striking stores sporting a bright orange and purple.
**This article was written by Southern Africa Treads Vol19 December 2013. Click here to see the article
