Dealers are looking at tire storage as an opportunity to boost sales and offer a better customer experience, but not everyone is going about it the same way.
The need for Canadian consumers to store their summer, winter and all season-tires is growing. Dealers entering the game are taking advantage of this opportunity to boost sales in their service department — some turning to third-party providers to do so, while others are going at it alone.
Ontario-based Tire Storage Solutions (TSS) is one example of a third-party provider helping dealers manage the situation. CEO Domenic Ismaele said dealers and other industry members see this as an opportunity to ensure their customers return on a regular basis.
“In addition to dealers, service centres and stand-alone repair shops are now realizing the seasonal tire storage business is not only a mandatory offering to their clients, but a valuable retention tool, as well as a revenue stream,” said Ismaele in an interview with Canadian auto dealer.
It’s no secret that a dip in maintenance visits is being felt in the service and repair industry, but the one thing that remains constant is the need for tires. And that includes the need to provide this service for electric and hybrid vehicles. (A 2020 Autoblog article notes that “EVs consume tires at a much higher rate than internal combustion vehicles,” which means they may need more frequent, regular visits.)
Dealers are looking at tire storage as an opportunity to boost sales, but not everyone is going about it the same way.
— Domenic Ismaele, CEO, TSS
But dealers also need to think beyond simply regular service visits. According to Ismaele, the dealer needs to become the main choice for consumers for all things tire-related. This means selling, changing and storing tires.
It’s why TSS has been growing, and why services are offered in Canada, the United States and Germany. The company grew from a tire and wheel storage business to a logistics software company, to adding complimentary CRM modules that help boost dealer opportunities for sales and profits. Examples of TSS features include a web portal, mobile app, and barcode labels.
“We have recently completed additional research and testing of tire label materials and adhesive mixtures to ensure that the labels we provide are of the best quality and work in all the difficult environments they are subjected to,” said Ismaele. “This will continue as we are always looking to improve our products and services.”
Another third-party provider is Distribution Stox, based in Quebec, where Dominic Lafrenière, Regional Sales Director, said the need for tire storage is ever growing.
That’s not a complete surprise, since Quebec requires by law that drivers equip their vehicles with winter tires. Other provinces like British Columbia also include some form of law around winter tires or chains, and other provinces offer discounts and low-interest financing, or simply a recommendation to use winter tires.
Distribution Stox specializes in the distribution of tires and accessories for cars and pickup trucks, and offers products and services to auto repair shops, tire centres and car dealerships throughout Quebec.
“We can take care of their storage needs — the storage of their customers’ tires in our warehouses,” said Lafrenière. “Obviously we will look for them, we will store them, we will insure them, we will even make sure to keep the file up-to-date on our transaction site on which the tires are measured by wear — so if the tires are too worn, that’s a sales opportunity.”
Dealers can manage their entire clientele through the company’s platform. Distribution Stox also works with colour codes to ensure they can quickly identify the wear of the tires, which can help dealers, through their CRM or client database, do the work needed to sell tires before peak season.
They may offer their services in Ontario as well, since the company acquired Provincial Tire Distributors last year as part of its growth strategy. The administrative unit is based in Barrie, while daily operations are made through the facilities in Barrie and Sudbury. Lafrenière said it’s still too soon to bring the tire storage concept over there, as they are currently managing the transition. For now, the company’s “turnkey service” remains available to all car dealerships in Quebec.
When it does make that transition, it will be entering (another) competitive market where everyone seems to be fighting for the same business. Tire Hotel, for example, is one of the Ontario-based third-party providers in the market. The company offers a simple, convenient and cost-effective business-to-business service that helps dealers and service shops manage their clients’ tire needs.
Tire Hotel has a fully operational warehouse management system that allows them to track and monitor on-demand requests, according to Paul Taylor, Vice President, Container and Tire operations at Make Space Inc., which owns Tire Hotel and Coast Tire Storage. Both are managed by Taylor.
“Being a dealership manager and our partner, you schedule tire pick ups on-line through your private account,” said Taylor. “Prior to pick up, you print labels and affix them to tires. A Tire Hotel representative arrives at your location and inspects the tires to make sure they will be returned to you in the same condition.”
The tires are then delivered to the Hotel where they are slotted for vertical storage in a climate-controlled warehouse with security, employee safety, and fire protection. Taylor said the climate-controlled aspect helps minimize damage to the wheels and rims, and reduces stress and distortion. Dealers can recall their client’s tires anytime by scheduling a return online.
Like most tire storage providers, Tire Hotel is, at the base, about offering practicality and efficiency to dealers. “Space is one of the valuable resources that we can help dealers with so that they don’t have to waste it on the inventory that only turns twice a year,” said Taylor. He adds that these services also help dealership employees save time spent on searching for tires requested by clients.
Other dealers prefer to go at it alone and purchase equipment for their dealership rather than have someone take care of it for them. Companies like Quebec-based Martins Industries specializes in providing equipment for tire and storage management — which is also great for third-party providers.
Jean-Francois Bourassa, the company’s tire storage specialist, said they cater to three types of tire storage needs: customer tire storage, tires for distribution, and sales booking (tires for sale on location). They also offer a free consultation service to help their customers maximize space, and tire handling methods to make the process as simple and effective as possible.
“People want to have a solution that’s quick, affordable and efficient,” said Bourassa. “They are realizing that leaving the tires on the floor, stacked up, takes a lot of space — it doesn’t take advantage of the height of the room available to them and the problem they have is with handling the tires.”
In handling the tires, Bourassa said the need to touch it over and over is both time-consuming and energy-burning. He also said that tires are getting bigger, heavier, and there is a wider range of models to choose from, which means more inventory and more work for dealers. Martins Industries manufacturers tire equipment products like racks, carts, and other things that can help dealers manipulate and move tires around to make their life easier.
People want to have a solution that’s quick, affordable and efficient.
— Jean-Francois Bourassa, tire storage specialist, Martins Industries
For example, in 2019 the company released a new product called the Tire Fox: a small dolly on wheels that allows you to move your tires almost anywhere in your work environment. Martins Industries typically launches four to six products a year, with the next launch expected in the fall of 2020.
As for dealers going at it alone, a good example of this is Guelph Toyota. They have been paying attention to the maintenance intervals at its dealership, and like the majority of the auto retail sector, they discovered that consumer visits are fewer and farther apart.
“How do we manage the situation? How do we improve retention with our customers?” said Michael Tavares, General Manager at Guelph Toyota. “We thought — tire storage. But before we thought of tire storage, we were getting into the tire business. And six years ago, our tire business just took off.”
He said the dealership went from selling a few hundred tires a year to almost 4,000 tires a year. This led them to store the tires in 47-foot tractor trailers in the back of the dealership.
Tavares said they started with one or two tractor trailers, and up until three years ago, signed 18 trailers. That’s when the discussion of building a tire storage facility came up. And after much study and a business plan they built an 8,000 square-foot building, which is now only about a year and a half old. It took the team 16 months to work with the city and build a tire storage facility that now has close to 1,300 sets of tires as of January 2020 — with an estimated 900 sets left to fill.
“It’s been nothing but success for us. Customers like it because our average customer is 52 years old, and there is a percentage that is much older,” said Tavares. “Our motto here is ‘Save your back, let us do the heavy lifting.’ And customers like that.”
Tavares said they hired a fire consultant company to help with the building designs. The facility also includes eye protection stations, eye cleaning stations, state-of-the-art rack systems, and a Toyota forklift with a basket that includes a tie-on for staff. They now have two full-time staff members managing the tire business. They also have a barcode system for inventory control, motion sensors inside the warehouse, and internal and external cameras.
Asked what advice he has to offer to other dealers, Tavares signalled the importance of customer retention. “We want to be that one-stop culture for our customers. We want to sell them the tires, we want to service the car, we want to be able to pay for good trades and maintain that relationship,” said Tavares.
But to him, that all starts with selling the car — and if you don’t do a good job servicing it, the customer will go somewhere else.