Battlground: Miami

Jan. 1, 2020
This Southern Florida epicenter reveals an expanding aftermarket heavy on DIFM accounts.

It used to be that “buying swampland in Florida” was a catchphrase for a swindle. Nowadays, though, vast parcels of former wetlands, farm fields and citrus groves are bringing top dollar as the metropolitan Miami/Fort Lauderdale region — from Lake Okeechobee southward to the Everglades — experiences expanding development and promising business prospects.

There is enough economic opportunity here to make aftermarket executives swoon over Miami and what it has to offer. National discount chains and franchises are stepping up the pace of new openings for parts stores and service centers in a region heavily driven by do-it-for-me (DIFM) customers.

According to research from R.L. Polk & Co., looking at Miami-Dade and Broward counties, the area’s DIFM rate is a dizzying 55 percent, compared to the national average of 36 percent. Do-it-yourselfers here account for just 9 percent of the aftermarket; the nationwide DIY figure stands at 20 percent.

The DIFM count for the high-rise residences of Miami Beach tops 82 percent. Motorists in a Fort Lauderdale neighborhood post a DIFM rate exceeding 75 percent.

Homestead, in southern Miami-Dade, posts the area’s highest DIY number — just under 40 percent.

They call it the Gold Coast for good reason. People are flocking to southern Florida from all over, drawn by a warm climate and an overall vibrant atmosphere of Art Deco buildings painted in bright pastels, quaint communities, comfortable living and a thriving marketplace.

Urban communities hugging the coastline are embarking on aggressive neighborhood rebuilding programs, while previously isolated agricultural hubs and retirement villages are joined together by stretches of new construction, traffic and trade.

Those who retire here find a sweeping array of amenities to suit every budget. According to census figures, Miami ranks No. 7 among major American cities in the number of residents age 65 or older. More than 65 percent of the population is Hispanic, giving the region a decidedly international ambiance and a need for bilingual aftermarket employees.

All manner of meandering canals, bays, inlets and waterways have long floated the area’s sparkling reputation as a paradise for boaters and beach lovers.

(The official municipal boundaries and zip code sectors are equally meandering, and economic development officials advise newcomers to be absolutely certain of the exact jurisdictional location before setting up stakes.)

How sweet it is

The late, great Jackie Gleason portrayed a piece of Miami’s panache with his brash nightclub-like variety show produced here from 1966 to 1970. In later years came “Miami Vice,” “CSI: Miami” and a host of other programs highlighting the region’s flash and grit.

Like any large metro area, poverty and high crime do exist, but an influx of new residents — especially immigrants of Hispanic background and snowbirds fleeing cold weather — has made the region a prime spot for the aftermarket.

Florida is the third fastest-growing state in the nation, behind Nevada and Arizona, with Miami-Dade, Broward and Palm Beach counties accounting for 27 percent of that growth. Palm Beach County has recently been added to the Broward/Miami-Dade Metropolitan Statistical Area, creating an entity of 5.2 million people.

Expansion is especially escalating in southern portions of Miami-Dade. Others are moving up the coastline to Palm Beach County, seeking real estate more affordable than the higher price points found in Broward and Miami-Dade.

The average single-family home in Miami-Dade sold for 25 percent more in 2004 than it did in 2003, according to the Florida Association of Realtors. The median cost stands at $290,800, contrasting with $233,500 from a year earlier. Pricing is also up in Broward and Palm Beach counties.

A clear majority of jobbers, warehouse distributors, retailers and installers report expanding sales as new residents and businesses keep moving in. A strong tourist trade and a healthy business and technology sector provide lucrative fleet accounts for rentals and work vehicles. Not surprisingly, new car dealers abound to serve an affluent customer base.

Frontline solution

It appears that the great shakeout of consolidations and closings is yet to occur. Businesses have come and gone over the years, as in any aftermarket, and disconnected telephone numbers tell the sad tale of companies no longer on the scene. But the bevy of “independent” stores and service centers here seem to be surviving the influx of chain operations, due mostly to the sheer number of available customers.

Numerous aftermarket enterprises are eagerly riding the wave, while others appear destined for a soaking — seemingly intent on driving business over to the competition through lackadaisical customer service.

If your operation here suffers from a sagging bottom line, first take a look at the frontline. More so than in other Battlegrounds studied, counterpeople and others assigned to answer the phones and assist potential customers are frequently less than helpful.

This region could benefit greatly from employee training programs along with “mystery” shoppers or callers geared toward spotting lapses in customer relations programs. Or, simply have friends anonymously contact your business to see what transpires.

Out of some 40 calls placed over a three-week period, almost half never got past frontline staffers, even to the point of people flat-out refusing to take messages. Instead of “may I help you?” we heard “call back later.” When a management person is asked for by name via a referral, access is still all-too-often denied with no offer to assist. Nor do they give the impression that they are carefully screening calls to protect the boss from pesky interruptions.

Trying to reach managers or ownership had the feel of a Jackie Gleason/Ralph Kramden comedy routine: the people answering the phones don’t sound particularly angry or irate — it’s more like total indifference, as if they believe their mission is accomplished by simply turning callers away no matter what the circumstance.

(Of course, nobody is obligated to answer our questions, but in these situations the person picking up the phone doesn’t initially know whether a caller is pitching a new long distance service, wanting to drop off a towed vehicle or seeking to place a hefty fleet account. A manager or owner is usually best equipped to render a decision about an interview request.)

Regrettably, a true lack of assistance was experienced with local businesses large and small in Miami, including those with multiple locations and national program group affiliations. This characteristic was found among each aftermarket segment — WDs, jobbers, retailers and service centers.

With the national chains, however, the more common response was to either helpfully offer assistance or patch the call through to the requested individual.

More than a few aftermarket businesses here lack voicemail systems, and some don’t even have an answering machine.

Attracting traffic

For a region dubbed the “Internet Coast” based on its high-tech industry, aftermarket websites are in short supply throughout this Battleground — even though Miami ranks No. 25 in the nation for online access by its citizenry at 42 percent (San Francisco’s metro area is No. 1 at 56 percent). West Palm Beach comes in at No. 38 with 36 percent of its residents connected to cyberspace, according to research by the Progressive Policy Institute.

The family-owned and operated Manny’s Auto Service, Inc. has an attractive Internet site that frequently brings traffic into the bays. “There are times that the customers tell you that they saw us on the website,” reports Manny Lemus, vice president.

The fleet market throughout the region is large and growing, he confirms, noting that the company services several fleet accounts consisting mostly of trucks, vans and other work vehicles.

A prime supplier of parts to Manny’s is Tropical International Corp., a WD with 55 locations throughout the Sunshine State. It is ranked No. 21 among the Aftermarket Business Top 50 distributors in the country. 

The densely populated neighborhood around Manny’s has a median household income of $32,258, compared to a metro average of $45,442 and a national annual pay rate of $41,994. The median home value is $236,800 — considerably higher than the metro’s average of $221,100 and the statewide figure of $121,800, according to Sperling’s Best Places, an Oregon-based firm that analyzes economic and lifestyle trends.

The median age is slightly more than 44 years old in Manny’s neighborhood, reflecting a strong presence of older residents. The national median age is just shy of 37. Florida’s statewide level stands at about 40, with a metro median age of 36. The most prevalent ages in Miami-Dade County fall between 25 and 44.

“We have a good amount of elderly clients,” says Lemus, adding that the busy service center on South West 57th Street strives to make senior citizens feel confidence in the company. The setting is comfortable and rides are offered as part of an overall emphasis on maintaining good customer relations. “We do good work here, so we get a lot of word-of-mouth” referrals, he points out.

Price and service

It’s a tough sell convincing business owners that additional training brings value to their operations, according to Skip Moore, president of Papco Auto Parts South, Inc. of Homestead, a National Pronto Group member with six stores in Miami-Dade and proprietary plans to expand its holdings here.

“The key word for those guys is training,” Moore says. “That’s our biggest challenge — getting people to recognize that.”

About 15 percent of Papco’s sales are retail; the rest are commercial accounts. The company is able to effectively compete among three Advance stores and an AutoZone in Homestead by making use of various Pronto incentives, marketing programs and effective buying strategies. He pursues excellence in satisfying his customers’ needs. “Day after day, it comes down to price and service,” Moore explains. And Papco provides just that: “We have a loyal customer following.”

Chain discounters are actively pursuing business within the wholesale realm, but in Moore’s view, their frenzied competition with each other has them eating into their own sales. “There is a certain amount of cannibalization among them, but they seem to be doing alright.”

The market is a large one, and some of the prevalent service center chains include Firestone, Goodyear, Sears and, of course, Wal-Mart.

AutoZone is entrenched throughout the region with close to 40 stores, according to the Yellow Pages. Pep Boys has more than 15 outlets within 50 miles of Miami, while more than 50 locations carry the Advance or Discount Auto Parts banner. Also present are NAPA, Bennett Auto Supply, Inc., Congress Auto Parts, Inc. and National Oak Distributors, previously known as National P.B.E.

Bennett, which belongs to the Auto Parts Alliance program group, is No. 35 on the Aftermarket Business Top 50 distributors rankings with 24 locations and annual sales exceeding $55 million.

National Oak has a stand-alone store in Miami and a distribution center in West Palm Beach, with a total of 15 nationwide locations, according to Larry Ryan, general manager. “Things have been kind of flat, but the hurricane helped things a bit,” he reports. The company, selling wholesale only, does not have an Internet site.

NAPA airs strong radio and television ad campaigns, says an appreciative James Scalia, area manager. The DIY-DIFM mix varies month-to-month, he points out, noting that his stores “are all top notch” when it comes to sales performance.

NAPA keeps a close eye on the changing demographics throughout the region, adjusting to meet the market’s requirements, Scalia says. Certain sectors have a strong DIFM or DIY base while others are on fertile ground by serving agricultural needs. “If you go up to West Palm there are a lot of farms around there.” But as development encroaches in thriving Palm Beach County, the company is prepared to meet any commercial or residential vehicle requirements. “We have a wide variety of parts and services,” he explains. “We serve the customer.”

Flooding the market

Hurricanes are a fact of life in the Sunshine State. The storms wreak havoc, but afterwards people have always pitched in to start rebuilding. And when aftermarket customers say their engine is flooded, they’re not talking about over-pumping the accelerator.

In addition to repairs needed in the aftermath, residents or tourists during evacuation and batten-down-the-hatches modes will purchase all types of retail auto supplies, including gas cans, batteries and other emergency items.

The NAPA staff rallies to the challenge when monster storms approach, Scalia says. “The first thing we do is make sure our people are taken care of, then we secure our buildings. We don’t base anything on ‘business.’”

As a hurricane roared through West Palm last year, “We never shut our doors,” Scalia recounts. NAPA gave away drinking water and had portable generators to sell. “We’re always available,” he asserts. “We’re a great asset to the community.”

Bennett Auto Supply has a similar plan in place, according to Mario Correal, manager of the Royal Palm Beach location. “We do what’s right for our team members,” he reports. “We do whatever we need to do” in coping with the disasters.

Miami-Dade County

Population: 2,253,362

Median household income: $35,966

Covering 2,139 sq. miles, Miami-Dade spans 84 miles of Atlantic coastline, including 22 miles of beaches, 67 sq. miles of inland waterways and 9,000 acres of preserved parkland.

It is still the nation’s No. 1 county for production of snap beans. As the eighth largest American county by population (and Florida’s most populous), agricultural output appears to be taking a back seat in the public’s mind as ongoing development seeds new neighborhoods and the accompanying businesses.

Some 25,000 condominium units are under construction or on the drawing board, along with numerous other building projects.

Miami-Dade has been on the grow ever since 1896, when oil tycoon and railroad baron Henry Flagler, a partner of John D. Rockefeller with Standard Oil, laid the first tracks.

Where crops once rode the rails to market, southern Miami-Dade is slated to see its population increase 250 percent by 2025.

Officials have moved the Everglades’ ecological buffer-border four times since 1988 to accommodate development proposals, according to a local newspaper columnist who calls the community of Kendall “a poster child for sprawl,” citing a stream of subdivisions flowing from U.S. Route 1 westward to the Everglades.

The Dadeland Mall complex is hailed as one of the most successful shopping centers in the nation.

“There’s a lot of construction going on,” reports the manager of Dadeland Firestone, declining to be identified. “There are a lot of empty buildings,” he observes. “They’re going up, but they’re not filled — yet.”

The DIFM rate around Kendall and Dadeland is close to 60 percent, according to Polk. DIYers account for about 5 percent of the market.

The Firestone manager contends the area is adequately covered by installers and parts stores for the time being. “It’s pretty tight here right now,” he explains, adding that he’s cost-conscious when purchasing parts. “We use all different warehouses — whoever has the best price.”

Fighting for customers

In Homestead, home to the new NASCAR Motorsports Complex, “So much of the farmland is being turned into houses and shopping centers,” says Steve Pelt, president of Carl Pelt & Son, Inc. The Goodyear-branded service center, founded by Steve’s late father, offers a full array of repairs and it belongs to the local chamber of commerce.

“You have to fight for customers,” Pelt points out, noting that a focus on top customer relations coupled with radio advertising campaigns keep the car counts coming along.

“We give good service. My clientele is people who care for good service more than price,” he says.

 The immediate area, which includes Florida City, posts varying ratios in the DIFM vs. DIY equation. One section has a DIY rate approaching 40 percent, the highest in the Miami region, while another has DIFM desire exceeding 60 percent.

“It’s been a gradual rise” in business over the past few years, says Pelt, as increased development takes root — including the addition of national retailers competing with local independents.

“Some are being pushed out and some are coming in,” Pelt reports. “Right now I’d say the area is saturated with auto parts stores. All the majors have come in and built on Highway 1.”

Pelt now has added options when contemplating who to call for a given part. “I spread it around a little bit,” he explains. “It allows me more places to buy parts. We have Papco, NAPA and Bumper to Bumper (of the Alliance) all within a half-mile.”

More than 20 other installers are on the scene, including the Homestead Tire & Auto Service Center, Tire Kingdom and the service department for Autocity Pontiac-Buick-GMC.

Papco’s Moore observes that farming still remains a viable commodity around Homestead. “We do a good bit of business with the agricultural community.”

Broward County

Population: 1,623,018

Median household income: $41,691

During the 1990s, Broward was the seventh fastest growing county in the U.S.

The Fort Lauderdale-Hollywood-Pompano Beach area ranks No. 7 on Inc. magazine’s list of the top cities in America for doing business. The publication cites an affordable cost of living, relatively low business start-up costs and reasonable housing options, particularly when compared to more expensive regions such as New York, Boston and San Francisco.

Other positives include a business-friendly government, growth in the business and professional service industries, a well-educated workforce and a talent pool that features both young, upwardly mobile professionals and a growing number of “early retirees” — people in their 50s who have retired to South Florida but are re-entering the workforce or starting new businesses.

The county can expect a future job growth rate of more than 13 percent over the next 10 years, according to a Sperling’s analysis. The company pegs the statewide figure for projected new employment at 2.8 percent; the Miami metrowide rate is 3.2 percent.

Getting respect

Once the site of cattle ranches, communities such as Pompano Beach, Parkland (Broward’s fastest-growing city) and Coral Springs are now making hay with a median household income of $102,624 and a 58-percent DIFM rating — the highest in the county.

New residents, many of them transplants from Miami-Dade, are stampeding into the area with aftermarket-friendly disposable incomes.

“I make a lot of money here,” says Rafael Hidigaldo, co-owner of Auto Dreams on Wiles Road in Coral Springs. At this custom shop, “I do a little bit of everything. I build fast motors and I sell bright lights,” he explains.

“I sell a lot of stuff that attracts police officers,” he quips, “but everything we sell is for off-road use only.”

Auto Dreams runs radio ads on two youth-oriented stations, which picks up “a pretty good response,” Hidigaldo reports.

Another custom-house, Unique Motorsport Expressions, moved to booming Pompano Beach from Gainesville a couple of months ago after the partners were captivated by an available facility. “You can see the front of our store from Interstate 75, and that’s how we compete,” says co-owner Guy Evans. “We liked the location and we liked the building we’re in.”

Broward’s highest DIY rating, 23 percent, belongs to Hollywood and Davie, where the movie “Caddyshack” was filmed. The aftermarket gets plenty of respect there as the local NAPA outlet reports strong sales in the retail realm.

Pep Boys has supercenters in both Davie and Hollywood along with sites in Coral Springs, Pompano Beach and elsewhere throughout the county. AutoZone and Advance/Discount Auto Parts also have a number of locations in Broward.

In 2002, Ideal Automotive & Truck Accessories doubled the size of its now 64,000-sq.-foot warehouse on North West 9th Avenue in Fort Lauderdale. The company, which markets its product mix nationally, says it is “poised for further growth and aggressive expansion.”

Of the fastest-growing American cities with more than 50,000 people, Miramar is No. 3 in the nation and still expanding. Miramar, Spanish for “look at the sea,” takes its name from a formerly exclusive Havana suburb in pre-Castro Cuba. It has a DIFM rate of more than 60 percent. Tropical International and Bennett both have Miramar locations.

Bennett is based in Oakland Park. Founded in 1946 by the late Allen “A.B.” Bennett as a Sinclair service station and grocery store, the operation has grown to 23 stores sited from Hollywood to Titusville with a state-of-the-art, 92,000-sq.-foot distribution center in Pompano Beach. It employs more than 400 people, presents an attractive Internet site and airs an effective television advertising schedule.

Palm Beach County

Population: 1,131,184

Median household income: $45,062

Between 2000 and 2003, more than 80,000 people moved here, and several communities continue to net double-digit population growth. Mangonia Park is up 45 percent, Royal Palm Beach is branching out at a 21-percent clip and Wellington marches on with 17-percent growth.

From 1990 to 2000, the population increased 35 percent. By 2010, the county expects to have 1.4 million people within its 2,000 sq. miles.

Ranked No. 10 in the nation for grapefruit production in 1997, the groves are being squeezed by droves of new housing and businesses.

And while real estate prices rose 36 percent last year, the land is affordable enough by comparison to attract newcomers relocating from Broward and Miami-Dade.

An age-average of about 42 years suggests healthy DIFM accounts in a market showing no signs of slowing down. DIYer sales are moving forward as well, according to Johnny Espinosa, president of Congress Auto Parts.

With six retail locations in the county, “business is most definitely up,” he reports.

The company conducts limited media advertising, but a mailer program is delivering patrons through the doors and sealing sales.

Ground zero

Greenacres is the place to be, according to a Discount Auto Parts manager who requests anonymity. This is no Hooterville — rather the land stretching out so far and wide is filling up with people eager to buy auto parts. Sales at the Discount location in Greenacres rose 40 percent in a year’s time, he says.

“We’re pretty much ground zero for the northern edge of the expansion,” the manager explains. “There are a lot of upper-scale homes coming into the area.” (Greenacres’ median household income is $50,651.)

The growth is so great that even census takers can’t keep up. “Most of these (new residents) have relocated to the area in the past six to eight months,” the manager notes.

AutoZone and Pep Boys are key competitors, but “as long as the growth continues, there’s a big enough pie for everyone to be successful,” he observes, musing that developmentwise there is room to grow, but trafficwise the roads are jammed with commuters, residents and tourists needing automotive parts and services.

Sales are evenly split between DIFM and DIY at the Bennett branch in Royal Palm Beach.

“Royal Palm is a good location; business has been good in this whole area,” says Bennett Manager Mario Correal, adding that his clientele consists mostly of local residents and shops seeking good service. (The community’s median household income is $54,951.)

“We’re in the Wal-Mart shopping plaza, and I was talking to the manager and he says this store is the third-busiest Wal-Mart in the nation,” Correal recounts. “So, you get some kind of idea about the growth here.”

West Palm Beach is the county seat. Located along the Atlantic Intercoastal Waterway, the community was founded in 1894 by railroad baron Henry Flagler and developed as a middle-class alternative to the ritzy Palm Beach resort. (Boca Raton is another seaside old-money enclave that continues to pump up the local economy.)

West Palm, hometown to Dickey Betts of The Allman Brothers fame, now has a life of its own and a well-funded future.

Dr. Richard Florida, a Carnegie Mellon business professor who in 2002 wrote the book, “The Rise of the Creative Class,” counts West Palm as among the nation’s top job creators — joining the ranks of Atlanta, Riverside-San Bernardino, Calif., Las Vegas and San Antonio.

According to Sperling’s, over the next 10 years the community can expect a 17-percent job growth rate.

West Palm is No. 4 on the Milken Institute Best Performing Cities index, which measures “where jobs are being created, economies are growing and businesses are thriving.” In 2003, Entrepreneur magazine named the West Palm Beach-Boca Raton area as the No. 6 best city for entrepreneurs nationwide, citing an “excellent climate of innovation, high levels of disposable income, diversified economy and skilled workforce.”