Point S – a ‘massive opportunity’ for independents
Last year a new name appeared in the UK tyre retail scene. At the start of June 2010 point S Development, together with UK Tyre Group, announced the establishment of a local point S network. At the time the UK based point S operation was the 19th national network to be set up in Europe (this number has since grown to 20), with the 50 or so outlets operated by the independent members of UK Tyre Group forming the new network’s initial core. At the time, UK Tyre Group directors shared with Tyres & Accessories that the plan was to increase this network to 100 outlets within two years. This has been achieved in half the anticipated time; after almost a year in the local market, Point S UK reports its plans are progressing very well.
“In January we had 52 outlets, now (late April 2011) we’ve just passed 90,” reports Peter Burgess, point S UK chairman and managing director of member company Treble B Tyre and Exhaust Centres. “We anticipate 100 depots – our 2011 target – by the time this article goes to press.” Much of this growth, Burgess shares, has occurred through the efforts of point S UK’s new network development manager, John Cowderoy, who began with the British operation in early February. “Through his efforts our network doubled within three months. We intend to forge on with this growth. People are beating a path to our door.”
Cowderoy is helping build up point S region by region. Initial efforts have extended the network into Scotland, and Peter Burgess says that point S now has “good coverage in the Edinburgh-Glasgow belt.” These new additions include Fife Auto Centres, who has four retail depots and a wholesale operation known as Easy Tyre, Performance Tyres in Glasgow, also with four depots, and Tawes Tyres. Other new point S members include Iverson Tyres in West London and Steve Andrews Tyres in Cornwall. According to Burgess, the new network development manager intends to work around the entire country, including Northern Ireland. Plans are also in place to enter the Republic of Ireland, however the structural differences between this market and Northern Ireland – tyres are typically supplied by an agent or main dealer in the south – means point S will not enter the Republic of Ireland until 2012 at the earliest.
The aim is, says Burgess, to “develop a retail network with true national coverage.” This is one of the key goals of point S and one that the future competitiveness of its independent members depends upon. “Itochu’s acquisition of Kwik-Fit is another challenge the independents face,” the point S UK chairman elaborates. “What exists now is a massive network backed up by the UK’s biggest wholesaler. We see the market is changing dramatically; in the last six months I’ve seen the biggest changes in structure that I’ve ever seen during my whole career within the industry.”
This development is worrying news for independent, regional operators and Burgess confirms that independent tyre dealers have lost a fair bit of ground in the last decade. “In the early days we had the FTM, which was totally independent. We used to do a lot of fleet business. What we do these days is miniscule in comparison. Currently 22 per cent of registrations are for lease vehicles; if 80 per cent of these go to Kwik-Fit, the remaining client base is massively reduced. This is one of the big challenges we face as independents and a key role of Point S is to re-establish independents in areas that they’ve been left out of.” He adds that another area of eroded market share that point S will address is agreements with vehicle franchise dealers; only operators that can offer national coverage are sought these days.
“A key point S ethos is that by having a pukka national network, we can compete on all levels,” Burgess continues. All 11 original members of UK Tyre Group are part of the network (point S is the trading name for UK Tyres Ltd) and, as already mentioned these England and Wales based dealers are now being joined by others in various parts of the country. The competitive edge point S offers independent dealers is understandably attractive and Peter Burgess notes that to date the network has not needed to actively seek new members; all new sign-ups have occurred through dealers approaching point S themselves.
An immediate advantage point S membership brings is access to more competitive product purchasing terms. The flagship brands point S offers in the UK are Michelin, Continental and Pirelli, along with Cooper-Avon, Yokohama and Hankook. The range offered through point S UK is very similar to that available through other point S networks in Europe, although the higher profile Avon enjoys here reflects the strong links the brand had with UK Tyres in past years: “In our negotiations with point S Development we said that Avon is an important brand for us,” Burgess comments. Complementing these brands are the Summerstar and Winterstar private brands for passenger car, van and 4×4. This range, which continues to be extended, is owned by Point S Development and manufactured in Europe under license.
The whole essence of point S policy is to buy direct from manufacturers, and ordering product will soon become significantly easier for point S UK members. At the moment point S Development’s ‘EIOS’ (European Internet Ordering Solution) internet based B2B purchasing platform, already in use in France and Germany, is undergoing trials in the UK and its implementation here is imminent. EIOS offers EDI connection with point S preferred suppliers and Peter Burgess reports the time it saves in sourcing product is “absolutely phenomenal.” He adds that use of this system is yet another benefit of belonging to an established, Europe-wide network: “None of us as individual countries could have afforded to develop this – but with 2,000 plus centres over 22 countries, the cost per centre is minimal.”
Yet purchasing benefits are just one aspect of what point S can offer independent operators, the network chairman points out. “Our main aim with point S is to increase footfall in branches. In terms of retail, our goal is to establish point S as a main player in the UK.” Achieving this naturally involves building up a recognisable brand and Burgess reports that the important step of installing visible point S signage at every centre in the network will take place over the next few months. “My own business, Treble B, has built up a reputation over the years but people new to the area don’t know this,” he comments. “But point S provides a name that will be instantly recognisable. Everybody knows the Kwik-Fit name through the power of advertising; we wish to do the same for the independents through point S. People will also know they can rely upon a particular level of service from any depot bearing the point S name.” The point S branding will, incidentally, be developed alongside each depot’s existing identity and will not replace it.
The key issue for point S this year, says Peter Burgess, is establishing a national network: “We hope to achieve this in 2011, and therefore next year we can start marching forward with other projects, such as fleet business, national accounts and centralised billing.” Another project for 2012 is establishing local representation for the point S European breakdown scheme. Burgess explains that some of the members already on board with point S have strengths in the truck business and this will be built upon. In Europe point S operates agreements with large fleets, therefore this aspect of the business holds much potential. A third focus planned for next year is the addition of new staff in the areas of sales, group development and group management.
Peter Burgess comments that the dream he and others at UK Tyre have held for the last 20 years is now happening and point S has given its members the additional muscle needed to carry out their plans. Yet bringing these plans to full fruition will take a number of years, he points out. “We don’t want to compromise standards just to reach a particular number of depots.” Yet for Burgess and his co-members, there is no question that point S represents the way forward for independent tyre dealers in the UK: “It’s a massive opportunity for the independents and it has come at a time when it’s never been more needed. Independents need every business advantage they can get. point S offers a business framework that’s been proven in Europe. The support we get from point S Development is phenomenal. We can draw on their European experience and our work with them is very much a partnership.”