Performing With Private Brands
National wholesaler Southam Tyres, a trading division of Micheldever Tyres Services Plc, has an established position when it comes to private brands. And as the home of the UK’s first exclusive own-brand tyre, the company is in a good position to comment on the future of the private brand concept. Similarly Stapletons Tyres Services is another of the UK’s most influential tyre wholesale businesses and sells significant quantities of private brand products. When Tyres & Accessories spoke to the company’s two marketing managers (Stuart Amos representing Southam Tyres and Stephen Marsh, Stapletons), they explained that there is an art to selecting the right brand and sizes and that private brands are moving away from being synonymous with yesterday’s technology, towards the forefront of consumers’ high performance demands.
“I can’t think of any disadvantages of having a private tyre brand,” says Southam Tyres’ Stuart Amos. From his company’s perspective “private brands enable businesses to offer dealers a tyre that gives them exclusivity so that they can sell on merit instead of just price.” In a market where roughly half the consumers buying tyres today are solely interested in price, a comment like this is bound to be music to the ears of tyre retailers. But it is not just a better deal at the point of sale. “Private brands allow us to market products the way we want to and offer dealers the added value and support they need.”
“Private brands also provide continuity for our dealers selling on to their customers,” adds Stephen Marsh. “If a customer buys one tyre at a time, they can still have the same tyre brand fitted all round. This is important for motorists who care about their vehicles, and for dealers who aim to provide stability and reliability to their customers.”
Stapletons’ chief operating officer, Alan Denton, predicts that high performance tyres in general will represent an increasing opportunity for growth and profit in the retail sector. “The tyre market as a whole is currently seeing a modest expansion of two or three per cent a year,” he says. “But the real growth will be in high performance and ultra-high performance tyres, which could grow by over 30 per cent in the next 3 years,” he adds. “Mid range family cars such as VW Golf and Ford Focus are now being fitted with 15, 16 and 17 inch performance tyres and we will see this trend continuing.”
In keeping with this Stapletons’ Stephen Marsh sees private brands as a real business opportunity for the tyre dealer. The company offers a range of products under the Kleber, Fate, Marangoni and Jupiter/Nexen brands, which form a substantial percentage of sales. “The key benefit to the dealer is having a price that isn’t undermined by the parallel market,” he says. “The dealer can sell with confidence knowing that he shouldn’t be undersold anywhere else for that product.”
Mr Marsh also points out that selling exclusive brands also encourages customer loyalty. “If the customer wants the same brand again, he will in all likelihood return to the same local dealer,” he says. “Our private brands are chosen for quality first and, in the main, fit into the upper end of each niche into which they are sold. We make every effort to inform customers of each product’s features and benefits.”
According to the companies T&A spoke to there is quite a knack to selecting the right sizes for the private brand range. Obviously choosing the sizes that move quickly is a good idea, but it is also recommended that anyone interested in adopting a private brand chooses one that does not have too many gaps. Otherwise a dealer will simply fill them with another product.
Dealers also seem to think that knowing the origin of a private tyre brand and slipping it into conversation makes a good sales proposition. However most companies do not encourage this and prefer to give a brand its own identity. “Obviously, telling people a product is made in Europe at the same factories as premium tyre brands such as X and Y is an ethical compromise,” explains Mr Amos.
Anyone who sells private brand tyres should steer clear of putting to much emphasis on price, warns Mr Amos. “As in all industries, some dealers will make [price] their one and only modus operandi, whereas others will chose the right private brand for them and take ownership of it in their local area. The latter produces the most profit over a longer term, as is true in all business!”
Private brands versus exclusive brands
Although private and exclusive brands are very similar concepts, exclusive brands tend to be more geared towards volume sales and usually have their UK sales strategy set by the manufacturer. However according to Stuart Amos, “private brands fulfil more strategic objectives at the dealer level because the distributor controls the entire marketing plan.” Having said that Mr Amos concedes that both routes can be used to a similar effect: “To be honest, the difference between the two is becoming less and less significant. A manufacturer like Kumho who has offered us [Southam/Micheldever] virtual exclusivity in the UK, works closely with us on marketing in a way that a private brand would have been marketed years ago. There is a big emphasis by Kumho on marketing and they are now one of the fastest growing brands in the UK, if not the fastest.
“Exclusive and private brands provide a stable and well-rounded means to offer a full business proposition. It’s about long-term business and mutually fulfilling partnerships with suppliers.”
Seeing as the company pioneered the private brand concept in the UK (see box), Southam/Micheldever could perhaps be forgiven if they took a back seat on the future development of the private brand concept. However this is not an approach the company would like to take. Refusing to rest on its laurels, the people at Southam/Micheldever have obtained the rights to the General, Enduro, Merit, Falken and Sportiva brands. Although some of these brands are exclusive and other private, they each have their place in “the whole business proposition,” alongside mainstream brands, the company says. These brands are said to represent only a fraction of the wholesaler’s total volume of sales, while also providing healthy margins. Kumho remains Southam’s largest exclusive brand.
Stapletons’ Marangoni, Kleber and Jupiter/Nexen exclusive brands are available in sizes up to 18 inches in an “exciting” range of high performance patterns. Rumours abound that the wholesaler is about to unveil a new private brand produced by a well known manufacturer of high performance tyres.