Joined: 15 May 2007 Posts: 774 Location: Baton Rouge, LA
Posted: Thu Apr 24, 2008 7:56 pm Post subject: HEY! How Did This Happen?
Once there was an independent repair shop, that also sold tires. One day a large discount tire store came to town. At first there was little effect, but in a few months a second location opened and then a third. Soon there was another tire discounter that opened and then a wholesale club, that also sold tires.
Many independent shops decided they could not compete with this pricing and quit handling tires. The local tire stores were especially feeling the pinch. They cut their margins and then cut them more, hoping to make profit from add-on sales. They also began handling less and less expensive brands. But our original indy decided to take another approach.
This shop studied how the discounters operated. While they advertised name-brand, they normally switched clients to private label and off brand tires. They also tried to keep their cost low by employing low cost staff. This meant they were not equipped to solve problems, something this company was quite good at. By stripping expensive service from the equation, the discounters could sell tires cheaper. But what about folks that wanted/needed service?
The indy decided to promote their ability to solve tire and suspension problems. With the cheap tires being sold, there was little limit to the amount of work available. They advertised this service widely and soon had an abundance of clients. Vibrations from out of round and poorly balanced tires. Pulls to the right or left caused by ride disturbance in tires. Many folks would come in to have their problems solved. Often this involved having the problem documented and returning to the original place of purchase. Sometimes it involved purchasing new quality tires and returning the defective tires.
Soon many people began to see, it was actually less expensive to buy quality tires from a knowledgeable supplier. Not only that but service sales also continued to increase. People reasoned that since this shop could easily solve problems that gave the others so much trouble, they can surely handle other problems.
Now the discount chains are still alive and well, but so is the indy shop. In fact it has tripled its size in twelve years. Many of the tire stores, that tried to compete, are no longer in business. Many others wonder how this happened. What did this independent shop actually do?
Joined: 17 Aug 2007 Posts: 2 Location: Connecticut
Posted: Wed Apr 30, 2008 8:22 am Post subject:
The independant shop chose to solve the customer's problem rather than focusing on trying to compete dirrectly with the others.
This is no different than all the local lumber yards going out of business due to Lowes and The Home Depot. Others still thrive due to the customer service they provide.
We have a small toy store in the town I used to live, now Walmart is the largest toy store in the country, how can this small store still be in business 12 years later? The store decided to carry some "staples" Monopoly, Life, Etc. to sell along with all the items that Walmart does not carry. If you want something they don't carry, they will find it and order it for you.
Joined: 03 Mar 2008 Posts: 2 Location: Osage, IA, USA
Posted: Wed Apr 30, 2008 10:47 am Post subject: How did this happen
The shop owner focused on quality and providing its customers a solution to their problems. Quality far out-ways low price in the long run. We get alot of customers from the big box retailers as well as other dealers for this same reason. We pride ourselves on being able to diagnose and correct vibration and driveability problems that most can't or won't bother with. Offer quality product and the service to back it up and things usually fall into place.
_________________ Brain Bruesewitz
Manager
Bree's Tire Service
Osage, IA, USA
Joined: 15 May 2007 Posts: 774 Location: Baton Rouge, LA
Posted: Wed Apr 30, 2008 7:35 pm Post subject:
swootton wrote:
The independant shop chose to solve the customer's problem rather than focusing on trying to compete dirrectly with the others.
This is no different than all the local lumber yards going out of business due to Lowes and The Home Depot. Others still thrive due to the customer service they provide.
We have a small toy store in the town I used to live, now Walmart is the largest toy store in the country, how can this small store still be in business 12 years later? The store decided to carry some "staples" Monopoly, Life, Etc. to sell along with all the items that Walmart does not carry. If you want something they don't carry, they will find it and order it for you.
This shop used the same approach.
You are right on target! The shop spotted and capitalized on the niche in the market, created by the discounters. Rather than fight their battle, the shop played to its own strength, just as your example. Thanks, I appreciate the input.
Joined: 15 May 2007 Posts: 774 Location: Baton Rouge, LA
Posted: Wed Apr 30, 2008 7:39 pm Post subject: Re: How did this happen
Brianbree wrote:
The shop owner focused on quality and providing its customers a solution to their problems. Quality far out-ways low price in the long run. We get alot of customers from the big box retailers as well as other dealers for this same reason. We pride ourselves on being able to diagnose and correct vibration and driveability problems that most can't or won't bother with. Offer quality product and the service to back it up and things usually fall into place.
Hi Brian,
That is so true! There was once a book named "Quality is free." The author explained how quality will pay for itself over time. I only slightly disagree. Quality is not only free it pays huge dividends. The only reason I know to buy quality is because I can't afford not to.
Joined: 15 May 2007 Posts: 774 Location: Baton Rouge, LA
Posted: Thu May 01, 2008 6:19 pm Post subject:
Bud wrote:
So, is it true that you have lowered your prices over the years?
If so, has quality had anything to do with that?
Hi Bud,
We now charge for the amount of time we spend, rather than a time allotted by a flat-rate guide. In some cases this has caused a reduction in price and in other a rise. In either case, I feel our prices are now more fair and representative of the work content.
Our quality program has had several major impacts. Among other things, it allows me to bill a competitive rate, while making a lot more money than I would otherwise. It lowers our marketing cost considerably and it helps instill a sense of pride in those that work for the company. Thanks Bud, I appreciate your interest.
Of course I already knew about your pricing. I'm just trying to seed the thread, because most readers don't realize how different, even bizarre, your practices are compared to the typical repair shop or dealerhip.
Like your pricing. It really goes against all the current wisdom of matching low prices on oil changes and brake jobs, then trying to charge higher on other things to 'make up' for the losses.
Yet the shops doing that are feeling the recession, while you have a 1 to 3 week backlog of work. How long has the backlog been that way?
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