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A Distribution Rebirth


2/1/2004
By Jon S. Owens

The rebirth of the Authorized Jobber has forever changed the dynamics of the distributors role in the aftermarket.
 

This month, Counterman editor Brian Cruickshank offers a thorough review of this industrys 20 biggest store groups. Not too long ago, this benchmark would have meant little to our distribution landscape. Today, it means everything.

Its funny how things come full circle. Before the advent of program groups and the days of established WDs, manufacturers sold their products directly to the stores via a contract known as the Authorized Jobber agreement. Factory-direct sales reps scoured the countryside, calling on individual stores to review inventories, update catalogs and price sheets, and sell new products. It wasnt until the late 1940s that WDs started to become a more formidable lot. WDs proved to be a more efficient way for manufacturers to gain the store penetration they desired. As WDs grew in number and importance, the Authorized Jobber became a thing of the past.

So much for the trip down memory lane. The Authorized Jobber is back in big way, and its here to stay. Okay, so its now a mutated version of the independent, single-store jobber, but its a jobber nonetheless, and it has changed our market dynamics for good. I argue that this metamorphosis started 25 years ago in Forrest City, MO, when Auto Shack opened its first store. Shunning the traditional three-step distribution model, Auto Shack decided to deal directly with suppliers. Whether suppliers were the traditional, high-quality, dominating brands of the day, or lesser-known, no-name suppliers looking for market share, Auto Shack stores had a home for them. Whether they knew it or not, Auto Shack was changing the industry forever. By creating new brands, or resurrecting old names that had faded away and delivering a price option to the DIYer that had not been available before, the Shack became the Zone - the single biggest Authorized Jobber this market has ever seen.

Today, AutoZone is the dominant store owner in our market and a continuing force on Wall Street. In less than a quarter of a century theyve become a $5 billion behemoth, easily surpassing in both revenue and performance many of the manufacturers that would not sell to them back in the 80s. AutoZones emphasis on store performance and efficient distribution of the top-selling part numbers is a case study in effective differentiating. Now, others follow to varying degrees of success.

 

The lesson here is not, what goes around comes around. Clearly, the lesson here is that in order to win, you must have a strategy, you must differentiate and you must be diligent in applying both. In the world of the big-box retailers, Wal-Mart easily leads, K-Mart unsuccessfully follows and Target differentiates in a way that enables them to succeed.

As you review the Super Stores list, try to predict how it will evolve in the coming years. Who is differentiating, and how successfully are they doing it? Determining who succeeds and who fails will ultimately boil down to how individual companies answer those all-important questions.













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