Lower pricing forces a change in strategy

Jan. 1, 2020
Wholesale: Improve inventory practices; Retail: Employees make the difference

Wholesale: Improve inventory practices

With products devaluing nearly across the board and fuel costs still relatively high, jobbers like Tom Reynolds, president of Berne Auto Supply in Berne, Ind., says it's "not like it used to be." In fact, Reynolds, who maintains the same store his father founded 47 years ago, says if he was just starting out today he likely wouldn't be in the industry.

"Luckily, we have an understanding, established customer base," he says, noting the majority of his business is to dealerships. "We keep trying to update, but it's not like it used to be."

Charlie Doerfler, president of Northwest Distributors in Hays, Kan., concurs that an understanding client base is essential to survival, especially when forced to take measures like adding fuel surcharges to deliveries. "We were met with a little hostility at first," he admits. "But most knew where we were coming from."

Northwest is taking a multi-faceted approach. In addition to the surcharge, Doerfler changed the store's inventory volume to become efficient. "We used to use half truckloads; now we order full truckloads for an extra point or two."

He's also condensing similar lines. For example, Northwest had nearly a half-dozen glass cleaner lines; Doerfler studied what was selling well and deep-sixed the rest.

Patrick Mooney, co-owner and manager of Piston Service of Anacortes, Wash., notes that being a chain affiliate is a big benefit in light of the reduced pricing issue.

"If I didn't have the Parts Plus affiliation, I wouldn't be surviving," he maintains. "They bring things like pricing issues to my attention before I would otherwise find out about them."

Mooney stresses that communication and partnerships are important, not just with the affiliate but also with vendors.

"I strongly support giving the bulk of business to one company," he says, pointing out that does not mean 100 percent with one entity, but rather the majority with one and the rest of his spending dollars spread out with smaller vendors. "I believe it gets us better service — with warranty issues, for example — and in turn, allows us to give better service."

Freight costs have a big impact, Mooney believes, not only for his store but for competitors. To combat the profit margin squeeze, he continually keeps an eye on the market to make a bump when necessary.

Mooney notes that certain aftermarket segment prices, such as brakes, rotors and CV shafts, have been adjusted up as much as 6 percent, even twice a year.

"The industry has been through so much change in recent years that you can't be fast and efficient," he laments. "I mean, we changed (lines) eight times in the last five years for axles alone."

Retail: Employees make the difference

In August, Rick and Linda Wilson, co-owners of the Brentwood (Calif.) NAPA Auto Parts store, celebrated their business' 50th anniversary. But Rick Wilson notes that it's a different playing field than when his parents opened the store in 1957 — not the least of which is the global market.

"There's a lot of outsourcing going on, making components for other industries," he says, adding that has certainly affected pricing. But to Wilson, the store's success — and survival — hinges on customer service.

"We have great employees, smart people who love working here," he says. "We treat them like we want to be treated."

In turn, Wilson says, they become problem-solvers for customers. "It's sort of like going to the doctor," he explains. "We need to take care of the customer's problem."

Carl Haberfield, president of Sperry Automotive in New Haven, Conn., agrees that the customer is king. He balances three locations within a 10-mile radius and notes that the markets are markedly different.

"Last year, we began focusing on inventory management pretty heavily," he says. "We're looking at more and more numbers."

With his own software program, Haberfield collects as much information as he can on what's selling and what's not.

"We try to be wise in our inventory management," he says. "If I'm investing in a line, I need to know where it's going to have the most interest. Our program makes it fairly easy for our people to enter lost sales."

Haberfield compares the weekly sales of each store and tweaks the stock as necessary. On the wholesale side, he has just begun to use an Activant software system so customers can log in and make their purchases online.

"I know we're late to this party," he teases about finally getting Sperry's inventory on the Internet, "but I'm glad to finally be part of the 21st century."

In Asheville, N.C., City Foreign Auto Supply also finds that inventory management is a crucial component of maintaining healthy profit margins. Vice President Steve Hall looks at every part number sold the previous day and compares it to the dealer list to ensure his pricing is competitive. If something was undersold the previous day, Hall raises the price to ensure it doesn't happen again.

"It probably happens to about 15 numbers a day, just a dollar here and a dollar there," he says, noting that he focuses on big-ticket parts, not the mundane items like motor oil.

Although his store stocks purely import parts, Hall doesn't have to be concerned with currency exchange rates — he goes through U.S. distributors such as Beck/Arnley and Interamerican Motor Corp. (IMC). Some lines he buys direct, such as with KYB. While City Foreign is not part of a buying group, Hall says it holds its own.

"When gas was going up, we added $1 to every single part number," he says, noting that with an average of 80 parts sold daily, the extra $80 goes toward costs. "It helps, and we hope it's just a one-time thing."

Hall explains it was just a matter of psychology, especially to his wholesale clients who rely on deliveries. "If we added a $3 delivery surcharge, people would freak out, but $1 to each item was no big deal."