What the HiQ “Revolution” Looks Like
On the same day that Which? Magazine published details of disappointing car franchise dealer inspections, HiQ has started what it calls a “revolution” in fast-fit retail. According to the company, the launch represents much more than simply a new look, and is rather a completely new concept in tyre retail, designed to counter negative consumer perceptions of the industry. Currently HiQ sells in the region of 700,000 tyres, but the plan is increase this to 1.4 million during the next three years. This is mainly expected to be achieved through the expansion of its brand-new franchise network from 150 branches at the moment to 250 in three years time. Overall, Goodyear Dunlop is said to have invested a figure in the high single-digit millions of pounds into the HiQ overhaul.
The Which? report found that “slack practices are rife in the garage servicing industry.” The consumer organisation took 50 cars, all less than three years old, to garages throughout the country for servicing. Before they went in, five adjustments were made – four simple faults were introduced and the screenwash bottle was topped up. 46 garages (92 per cent) missed at least one fault, and two – Central Garage (Raunds) Ltd, Northants and Motormaster in Leatherhead – missed all five. More than three in four (38) garages failed to adjust the very low spare tyre pressure, and nine garages failed to adjust the other tyre pressures properly. Twenty also charged for windscreen-washer fluid, even though it had been topped up just before taking the cars in.
Which?’s story is just the latest in a long list of journalistic reports and research surveys that support negative consumer perceptions relating to the whole spectrum of garages and fast-fits. And HiQ is probably the largest company in the tyre business to publicly take responsibility for improving consumer perceptions in this respect. While there is no suggestion of any dishonesty such as that in Which?’s article, HiQ’s own research into the state of its network in recent years apparently made painful reading. The main conclusions were that (both male and female) consumers are “fraught with anxiety and emotion” when they attend fast-fits; there is currently little in the way of a retail experience for what is commonly described as a distress purchase; and there is a real opportunity to further integrate the Internet into tyre sales.
Viewing the brand new HiQ it is clear that great attention has been paid to developing a retail experience that is at odds with the perception of tyre buying being a distress purchase. For a start the design is light and bright. Then there are entertainment features such as a plasma screen TV, a Playstation and broadband Internet access. But dig a little deeper and you see that the HiQ concept is also driven towards demonstrating that consumers are getting value for money – next to the plasma screen is a smaller flat screen monitor displaying the results of a Pro-Align fitted Hunter DSP600 wheel alignment process in real-time. Gone are the days of “oh yeah, we did the tracking mate.” Also things like the broadband connectivity are about more than keeping customers occupied. They also mean fleet users, that characteristically want a convenient in and out service, can plug in their laptops and keep productive in the meantime.
The revitalised concept also features a greater emphasis on using Internet technology, offering HiQ franchisees a share of the margin generated from each tyre sold online and then fitted in store. Basically, from a management perspective, the online sales are treated like a virtual fleet, meaning sales generated online bring in more than just a fitting fee for the centres that actually process the sale. This alone represents a significant difference to even the most successful existing online businesses that generally only offer a nominal fitting fee for dealer partners.
“There are currently 24 million online shoppers in the UK, and by 2011 there will be 32 million online shoppers spending £52 billion. HiQ’s new online service will meet the needs of this growing group of consumers by providing a customer focused approach to buying tyres online,” e-business and digital manager, Geraldine McGovern, told Tyres & Accessories. “With easy to follow prompts based on the make or model of car/vehicle registration number or tyre size, www.hiqonline.co.uk guides a consumer through the buying process…”
The online market, and particularly the extent to which it is likely to grow, remains a mystery to many. However, HiQ is keen to take its territory early while the e-market remains approximately 1 per cent of the total replacement market (between 150,000-250,000 units). The company also recognises the Internet as a having two key uses: sales, as we have already said, and also marketing. Either, way the company has plenty more innovations up its sleeve – with affiliate marketing and online marketing programmes taking the lead in this respect. Other more niche orientated areas, such as Motorbikes are “not being ruled out,” with company executives explaining that the above concepts are likely to be trialled in the weeks and months to come.
Goodyear Dunlop UK announced its plans to separate its consumer and commercial tyre retail businesses into two distinct HiQ and TruckForce networks, at the end of 2005. This radical shake-up is centred on the introduction of a “hard-franchising” policy, designed to keep standards and brand image consistent throughout the network. Basically an equity (Goodyear-owned) outlet should be fundamentally indistinguishable from a franchisee centre to consumers. Managing director, Neil Burrows, expects 100 more of these to join the network in the next three years. Speaking to Tyres & Accessories he explained that he expects these to be mainly situated in the North West and inside the M25, as they are the areas that HiQ has identified as having the most growth potential. However, the company is actively recruiting in other UK areas and the Republic of Ireland.
So what can a HiQ Franchisee expect to pay? First if there is an initial fee of £10,000, plus an annual fee that is capped at £10,000. This buys franchisees what is basically a turnkey store. Total start up investment is expected to range from £50,000 to £100,000, with a typical franchisee able to expect a 10 per cent pre-tax return on investment.
One part of the HiQ improvement plan that is likely to make the franchise more attractive to potential franchisees is the development of a HiQ Academy, designed to improve staff training and improvement employee retention. HiQ has invested heavily in developing a bespoke training programme for employees as part of its new concept for fast fit in the UK. The HiQ academy is said to be unique in the fast fit industry as it utilises Personal Develop Consultants (PDCs) to devise and deliver individual programmes of learning.
“The academy truly is unique in the fast fit sector as it provides a personal development plan for each employee, supporting them to develop their skills in technical competencies and customer facing skills,” commented Farrell Doan, HiQ commercial manager.
The programme is based on the development of Personal Development Plans (PDPs). In other words the training, split into two sectors (people focused and task focused) is designed to build on what each staff member needs to work on, rather than simply shunt everyone through an identical process regardless.
Each competency is split into three levels of learning: Level 1 – a base level all employees are expected to work at; Level 2 – an intermediate for employees who work in more responsible, but non-managerial roles; and Level 3 – the highest level which every manager is expected to work at.