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In an area where big-box retailers try to dominate their markets, one regional distribution firm has carved out a niche by emphasizing relationships and service. It's that type of thinking that allows Auto-Wares' own customers to maintain their margins and compete effectively against market giants.
Auto-Wares is a 30-year-old group of automotive aftermarket companies with about 100 retail stores across the Midwest. Headquartered in Grand Rapids, Mich., the company distributes more than 350,000 auto parts in 800 product lines to independent retail stores. They also market their own line of private-labeled products under the Parts Master brand.
The company prides itself on being a full-service, full-line, full-program supplier that operates on a commitment to honesty and integrity in all its business dealings.
Their primary business is supplying auto parts stores throughout Michigan, Ohio, Wisconsin and Indiana. The firm recently entered into an agreement to acquire Certified Automotive Warehouse and Lee Parts Stores in Chicago to gain a foothold in Illinois, too.
The third-generation company employs more than 1,200 people, including 23 warehouse and specialty salespeople.
"All of our key businesses are up because we take the time to address problems before they become real problems," said John Syring, vice president. "We can't afford to let things slip."
The company operates under the brand name Auto Value in Michigan and Bumper-to-Bumper in Wisconsin. Its nine distribution centers serve not only the company-owned stores, they supply products to nearly 800 independent retailers and six Heavy-Duty America stores.
Operating its own stores gives Auto-Wares an opportunity to test new ideas and marketing approaches they think will work in today's competitive sales arena. Once the bugs are worked out, the company shares the knowledge with its other stores to give them ammunition and marketing tools they need to compete effectively.
Auto-Wares' corporate stores are known for their bright, spacious buildings that allow for a good mix of retail traffic and delivery business to local auto service centers.
Paperless system drives efficiency
About 93 percent of the company's inventory is wireless bar-coded. Syring likes the company's paperless systems for its ability to help drive efficiency. "Customers can package, print and ship over the Internet," he explained. "In fact, if they order a product by 6 p.m., customers can expect to receive it the next day — usually before the shop even opens."
Auto-Wares employs a fleet of 55 trucks to shuttle products between its distribution centers and customer locations. Syring estimates the firm has more than $1 million of its average $40 million in inventory on the road at any time. He said the company prides itself on its ability to ship more than 93 percent of products the next day — a feat Auto-Wares has been able to accomplish since inception.
The Auto-Wares staff welcomes the opportunity to work with its 800 independent retailers to help them re-merchandise stale inventory and clean-up product displays to make them more effective so the products can be marketed to a wider customer base. The company frequently conducts business management seminars and employs specialized teams to help reset the stores.
"By paying attention to all these things, we help our customers maintain their margins and market shares if a big-box retailer moves in," said Syring.
The company takes training so seriously that they sponsor an annual Automotive Service Exposition in Milwaukee and Lansing, Mich., and include seminars developed for technicians, shop owners and paint-and-body equipment dealers, a "Top Gun" technician competition and a product expo.
A show 'n' sell strategy
The ability to present a large inventory gives Auto-Wares, and its customers, a competitive advantage.
"Parts stores are well-suited for immediate-impact situations," Syring said. "We call it 'show 'n' sell.' If we can help our stores select the right products, price them competitively and merchandise them effectively, then they'll sell more. We work hard to give our customers the competitive advantage they need to compete."
Auto-Wares uses regular sales flyers to pull buyers into stores. By adding more than 1,000 new SKUs to their inventory every week, the company ensures its business partners remain on the cutting edge in offering new products to the market.
"I see the industry trending toward lower cost, higher quality hand tools. We often take advantage of volume discounts and pass the savings onto our retailers so they can sell products at better prices," said Syring. "But new products are also important. They generally account for 30 percent of our annual business."
By focusing attention on training end-users to use the products and services sold in the stores, Auto-Wares helps their own retailers make more money. The company has found that its retail partners are often willing to reinvest their profits into broadening their inventory which draws even more customers and results in more sales.
"It's a slingshot effect. First we make sure our customers have the parts ready when end-users need them. Then we supply the tools and equipment they'll need to install those parts," said Syring. "Supplying parts is one thing, teaching people how to use them is entirely different — and that's what gives us a competitive advantage.
"To be successful, business owners have to stay up on what's new, especially when it comes to new technology," he said. "They've got to get off the old boat and get on the new one."
Loyalty counts
Due to their loyalty to existing retail customers, Auto-Wares opted against supplying mobile dealers. "For us it came down to competitive issues and integrity," said Syring. "We didn't want to wind up competing with our own customers."
It's tough enough for retailers to compete with a mobile dealer's payment plan, said Syring. The market is flooded with retailers selling similar products. As a result, many products are being treated like commodities and sold only on price, not on their features and benefits.
Auto-Wares faces its own challenges, too. Factor in that warehouse distributors are taking over the tool businesses and that just-in-time delivery — with up to two shipments arriving at retail locations every day — means that parts stores now tend to stock less product. But those challenges motivate Syring and his staff to work even harder to improve efficiency, maintain profitability and serve customers effectively.
The key to competing in such an environment rests in creating quality relationships. Auto-Wares maintains strong relationships with its suppliers and retail customers. The retail stores seek to build strong relationships with their customers. And everyone is united in support of serving the end users.
"It's not just a matter of selling them a part. Retailers must also sell them tools to match the parts, and explain how to use them," said Syring.
"Retailers who have good relationships with their end users don't have to be afraid of other non-independent parts stores down the street," he said. "Our stores already know their customers and their customers know they can rely on the staff for sound advice and quality products at competitive prices."
Maintaining those types of value-added relationships will help independent retailers maintain their margins even in highly competitive markets.
author: by Greg Gerber