If you are like most auto parts store owners, you're constantly looking for new ways to grow sales and earn more money. In today's automotive industry however, it isn't easy. Competition is both fierce and plentiful. Take a look up the street from your store. Isn't the automotive "retailer" delivering parts to your largest installer customer? Maybe it's time to take a drive around the corner and see what your "wholesale" competition is up to. Hey, they've really dressed the place up! Notice they've painted their building, installed eye-catching signs and added more products to their sales area. Are they going after the retail customer?
The automotive aftermarket is rapidly changing. Competitors that once focused exclusively on the retail market now recognize the opportunities with installer customers. Likewise, savvy store owners who once focused exclusively on installer business are beginning to change their store appearance and product mix in order to attract the retail consumer. Everyone has recognized that continued growth and survival is going to come from their total market, thus the term Total Market Strategy.
Whatever is going on in your market, it may be time to step back and take a look at where your business is now and what direction it's going. Like it or not, the market opportunities and business conditions you operate in are changing. Identifying these conditions and developing a strategy of your own is the first step to not only in increasing sales and earnings, but also in long-term survival.
Developing a Total Market Strategy starts with sitting down and asking yourself three questions:
Where is my business at now?
Where do I want it to go?
How am I going to get it there?
Where Is Your Business Now?
Your business is a lot like your body. You wouldn't run a marathon or climb a mountain without first getting a good physical check up. Your store is no different. If you are going to ask it to perform better, you must first determine that it is capable of performing better. This means taking a good look at the internal conditions of your business.
What are internal conditions? These are the strengths and weaknesses of your business. Every business -including that mega automotive chain store down the street - has things they do well (strengths) and areas where they don't (weaknesses). Identifying yours is critical. A good place to start is your location. Is it convenient and accessible? How inviting does it appear? Would a new customer drive by your store and want to do business with you? Can you effectively deliver from it?
Secondly, take a look at employees. People are the lifeblood of any organization and if your employees aren't at the top of your list of strengths, there is work to be done. Execution of any business strategy requires the right people working toward a common set of goals. Do your employees have goals, and are they capable of executing the steps needed to achieve them? Do they have both the product knowledge and customer skills that add value to each business transaction? Do they know your expectations of their performance? Do you have a plan in place to develop their skills and review progress? Are you committed to their success and they to yours?
Don't forget the rest of your team. Your banker, insurance agent, accountant and WD supplier are as much a part of your store's success as your employees. Is each providing you with the resources and support you need to grow your business? Is each capable of executing their part of your Total Market Strategy?
You have another member of your team to consider; inventory. Your store will never become the success you envision unless you have the right products on hand. Market-focused inventory drives sales in an auto parts store like nothing else. Is your inventory in shape to execute your total market strategy? Is it big, strong, clean, current and focused on the business segments that are your customers? Don't expect to grow retail business without an inventory that caters to walk-in retail customers. Likewise, don't expect garages and fleets to buy from you unless you offer a full line of the products they want and need. Inventory is a core competency of your business. It must be tailored to both the market you are in and the customers that you service. It must fit within the business plan that you develop or you will never execute it well.
When looking at your internal conditions, don't forget to assess your financial performance. Your WD supplier and organizations like AWDA have available consolidated financial statements. Use these to compare your stores operating performance with other similarly size stores from across the country. Although every store's circumstance is different, comparison often points out areas where even a small amount of attention can yield better results to your bottom line. Find ways to maximize your return on investment and earnings. Get your accountant and other advisors involved. Financial weakness will eventually kill your business.
The second step involves taking a look at the market conditions in which your store competes.
Take a look at your customers. Have you ever asked yourself why they buy from you and not your competition? Have you ever asked them? Have you asked non-customers why they don't buy from you? Answering these questions may give you insight to opportunities that exist in your market. Check out the competition. Shop the competition regularly. You'll learn a lot about what they do well and not so well. Sam Walton did it and it worked pretty well for him.
Threats are equally important to identify and analyze. What is your competitor's strategy? Is it effective? Is competition taking away business from you? How? Are there threats in the economy that may affect your business in the future? How will your plan take these conditions into consideration?
Hopefully, there are plenty of opportunities in your market. Your job however, is not to perform the impossible task of capitalizing on them all. Store owners can fail when they try to be everything to everybody. A better approach is to hone in on those opportunities that fit the strengths of your organization. Capitalize on your strengths and the weaknesses of your competition. Look for ways to minimize or eliminate your weaknesses.
Where Do I Want To Go?
An honest evaluation of your business should help in forming your goals for the future. Analyzing each area of your business is critical, because they form the framework that determines the direction and nature of your future. Keep in mind that your goals must fit your market. A store that focuses on retail consumers needs to be in a location and market that supplies them. It won't do well in a farming or industrial area.
Keep in mind that sales increases typically require more inventory investment and may require carrying more accounts receivables. This may mean a strain on cash flow. Make sure that your total growth strategy includes taking a look at future earnings and cash flow based on reasonable financial forecasts. Conservative sales forecasts are best. Does your business have a mission statement? Now is a great time to write one or revise your old one. A mission statement is the guiding light of a business. It clarifies, directs and leads. Keep in mind that the best mission statements are developed with the help of everyone, especially your employees. A recent study showed that less than 40 percent of U.S. workers knew the goals and objectives of their employer. This means unfocused, under-productive employees. A mission statement will help everyone focus on the right details at the right times.
How Will You Get There?
So far, I've discussed analyzing your store, the market and identifying opportunities. The next step in the process is strategic planning, which is the bridge between goals and accomplishments. It is the "figuring out" of where the rubber will meet the road.
Your Total Market Strategy should have a sharp focus on specific customers, markets and areas of business. This is extremely important because your stores product mix, sales efforts, marketing and advertising need to speak the same message. This message then becomes the purpose of your business. It is the driving force that directs the efforts of your entire team toward the goals you set.
Questions To Ask When Developing Your Total Market Strategy:
Remember, developing a Total Market Strategy requires a conversation with yourself. Ask yourself the following: Do I believe that my plan will work? Do I have the right inventory for the plan? Will sales support the additional investment that this plan requires? Are there additional skills or help I will need? Are my people ready and can they execute this plan?
What fundamental values guide how we do business?
What products and services will we offer/not offer?
What customers will we service/not service?
Which geographic markets will we service/not service?
Which products lines and customers types represent the greatest potential for growth? Which requires the most significant investment?
Leaders in any industry get there by understanding their capabilities, setting goals for themselves and their team, then implementing a strategy to achieve those goals. They not only do things right, but do the right things. When planning for your businesses future, don't limit yourself to one business segment. Look at your total market, plan your work and then work your plan.
Greg Foss is assistant vice president - warehouses for Parts Depot, an Aftermarket Auto Parts Alliance member WD based in Roanoke, VA.
For Parts Depot, Foss develops and implements programs for independent store owners. These programs allow stores to leverage the resources of Parts Depot, helping them manage inventory, monitor results, establish best practices within their stores using the same loss prevention and safety training provided to company stores and build business plans and strategies.