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The State Of The Super Stores 2014


4/28/2014

We speak to the leaders of Arnold Motor Supply, Hovis Auto & Truck Supply and Uni-Select to gauge their impressions of 2014.
 

Dave Kimbell
Arnold Motor Supply

What trends do you see emerging in the aftermarket?
Challenges and opportunities, especially as the market tends to flatten after a couple of good years. The survivors will have to be nimble, be proactive and better supply chain managers than they have been. Equally foreboding is data systems integration as more customers demand on-time inventory information, and profit degradation as competitive pressures put prices in a downward motion. There are some headwinds due to parts proliferation, government meddling and finding good team members as our experienced shop owners and associates retire. The challenges are always there — a moving target — but these are also incredible opportunities for the entities that can ride these changes and be better suppliers to “the person who throws away the box.”

What are your thoughts on your company’s need to enhance or grow the commercial side of the business?
What has amazed me over the years is how the cash side of the business has maintained in dollars as the vehicles have become increasingly more complicated. With that said, the trend line bet is on the commercial segment. This business model (commercial) has the legs in the business, and that is why the retailers are so focused on growing their share of that market. It is the heart of what we do and if we don’t grow it we will not be able to take advantage of opportunities that present themselves. As the aftermarket experiences a metamorphosis as the installers exit the industry due to age and with no exit strategy, as the “data” becomes more prevalent in a buying decision, and as information from the Internet plays havoc with the business relationship, we will have to do business outside of the traditional market seeking those opportunities that have synergies with our core business.

How do you accommodate the commercial side of the business?
We have a number of sales people who call on these accounts weekly and bi-monthly establishing or enhancing their relationship with the customer. No matter what, this business still hinges on belly-to-belly selling at all levels.

Does the company plan store acquisitions or expansions in 2014?
Yes if the right opportunity comes along.

If you could change one thing about the automotive aftermarket, what would it be? Why?
Nothing. It has been an incredible ride creating opportunity for growth and profits; and most of all change. This is a fast-paced business and one had better not sit very long on their successes before someone runs over them. Hang on! Wait until you see what next week brings!

***

Cliff Hovis
President
Hovis Auto & Truck Supply

What is your outlook for 2014 regarding the aftermarket? 
2014 is starting off with a bang! Business picked up on the East Coast part way through 2013 and I expect it to continue with a few reservations. The car parc is larger and older than any time in history. Many of the shops we deal with are looking to expand and reinvest. Customers are embracing investment in technology and training. It appears the strong, well-run businesses are positioning themselves for the future while the weaker shops are trying to maintain their current positions which, in my opinion, means they will decline.
My reservations revolve around the unknown effects of government regulations, such as Obamacare. We deal with many shops who have had their health care policies canceled and others which have had their rates doubled. Many of these shops were unprepared and assumed they would not be affected due to their size. They were wrong. In particular, many automotive retailers appear to be cutting back to part-time employees with exception of their managers and maybe a parts professional. The consequences of these actions remain to be seen, but this could be a gamechanger as we get into 2014 and more companies feel the effects of increased overhead.  

What trends do you see emerging in the aftermarket? 
I see tremendous consolidation among automotive manufacturers and chain stores. Already this year we have seen Advance acquire CARQUEST, LKQ acquire Keystone Automotive and Remy acquire USA Industries. There is so much money pouring into our country from venture capitalists around the world looking for good investments.

In addition, I see a need for training like never before. With fuel standard requirements being ratcheted up, car manufacturers are scrambling to come up with new technology to gain mileage. Safety is another area in which technology is advancing and there is a need for training. For example, many technicians don’t realize that after doing an alignment, it is necessary to use a diagnostic tool like Delphi to reprogram factory settings for the “window pinch” sensors in some vehicles. Lawsuits can ensue when little fingers get shut in the car windows of a vehicle whose factory settings were wiped out during an alignment and not reprogrammed.

What are your thoughts on your company’s need to enhance or grow the commercial side of the business? 
My brother Curt and I spend a great deal of time focusing on the commercial side of our business. The industry has become highly technical and over time, the DIY side of this business has declined. As a result, it has become critical we focus on the commercial side. In this highly competitively market, we must continually bring value to our customers to retain their loyalty and gain new business.
How do you accommodate the commercial side of the business?

“Service, service, service,” is what we tell our employees. If we can’t provide the service, someone else will. To us, service is not only having the right part, it is also having a system in place that allows us to know we have it and to deliver it in a timely manner. It sounds easy, but it’s not. Service separates the men from the boys. We feel very fortunate to have good-quality, long-term employees who care about serving the customer, because without them we couldn’t do it.

For the past two years, we have also felt that any serious discussion of service must include a discussion on training. The trend we see for the need for training has prompted us to take serious steps to add this component to our business in a “hands on” fashion with our Technical Training Center. We believe, to be as productive as they can be, our customers must know how to install a part in a safe and efficient manner. Tremendous parts proliferation has also made it important for salespeople to be trained on features, benefits and general product knowledge.

To accomplish this, for example, last year we had several “hands on” classes on hybrids where we taught customers about hybrid safety and maintenance. Delphi partnered with us on that project. In fact, over the course of the past year, we trained more than 1,400 technicians with partnership from manufacturers like Delphi, Federal-Mogul, Remy, Tenneco, Meritor, Four Seasons and others. Federated Auto Parts has also teamed up with us to train hundreds of our shop owners in profitability and selling. This year, we are expanding hybrid training to include first responders. In short, we have found that training benefits everyone.

Partnerships like those mentioned are critical when it comes to service, but they benefit us in so many other ways. Our partnership with Federated Auto Parts provides us with resources like the Federated CoMan warehouse, extensive national marketing programs like the sponsorship of Toys for Tots and the Federated 400 at Richmond, and technological advantages such as our Federated electronic catalog, Federated ecommerce system and the Federated business intelligence systems and inventory modeling tool. Our membership in AWDA allows us to network with other distributors, warehouses and manufacturers.

Does the company plan store acquisitions or expansions in 2014? 
Our salesmen have been on the road prospecting customers in new markets for some time now. This is something we consider ongoing. We do plan to add new start-up locations in 2014, but just as important to us is the prospect of expanding our current market by adding new profit centers. Currently, we distribute automotive, PB&E, crash parts, industrial, medium-duty truck, heavy-duty truck and packaged oil and commodity products, but any opportunity to become more diverse within our existing locations is desirable.

If you could change one thing about the automotive aftermarket, what would it be? Why? 
I would change the general perception the public has of our industry. For instance, at AAIA, we are changing our name to the “Auto Care Association.” People don’t know who or what we are and consequently, young people are not joining our industry. I am excited to be part of the AAIA Education Committee and to be working on a project to connect college students and other potential employees such as veterans with our industry. We have to take the time to sell who and what we are to the next generation.

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Richard G. Roy
President, CEO Uni-Select

What is your outlook for 2014 regarding the aftermarket?
We have a very positive outlook on the aftermarket for 2014. The industry trends continue to be positive; the overall size of the aftermarket is growing, average vehicle age is increasing and the length of time consumers are holding their vehicles is growing, all of which are positive for the
aftermarket.

What trends do you see emerging in the aftermarket?
The primary trend we see is the growing importance of technology in the aftermarket. We recently introduced our Aftermarket Telematics solution SmartLink for our bannered installer customers across North America. This solution will connect the consumer to our shop owners in an innovative way which will drive sales and loyalty for our shops and stores. Within the wholesale channel, we have developed two technologically advanced tools — Automated eModeling will make it easier for our customers to manage their inventory on a weekly basis, and our enhanced ePricing solution will offer real-time pricing guidance to help our independent customers price for the commercial market. Both these advances will allow our Auto Plus stores to better manage their businesses. We strive to stay ahead of the curve with the evolving technology trends in the aftermarket.

What are your thoughts on your company’s need to enhance or grow the commercial side of the business?  How do you accommodate the commercial side of the business?
Uni-Select’s focus continues to be, as it always has been, the commercial business. Our commercial/retail mix is 90 percent commercial and our programs and solutions are focused primarily on the professional service dealer. We are the preferred partner of independent store and shop owners and our tools make it easier for them to run their businesses.

Does the company plan store acquisitions or expansions in 2014?
We never specifically comment regarding our acquisition plans, however we have recently completed two acquisitions since the beginning of the year and we intend to pursue additional acquisitions in the future.  CM

 















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