In tough times it’s natural for people to lean on each other. This is also true in business, as the struggling economy is bringing manufacturers and retailers together in hopes of weathering the storm.
Heading into the fall show season, local speed shops are finding a silver lining in this recession in the form of relationship-building and cooperative efforts that are allowing them to survive and thrive and setting them up for future success once things turn around.
Parts manufacturers and suppliers are doing their part by offering various means of support for performance retailers, ranging from new products and innovative showrooms displays to simply lending an ear to shop owners that are having a rough go.
The following examples show how successful, proactive suppliers are doing everything they can to help the industry and your business keep moving forward.
How Bad Is It?
Before a fix can be implemented, it’s important to know just how badly things are broken. And while the recession stretches nationwide and beyond, your local situation, of course, may vary.
“This is a tough time for our industry,” notes Bob Scheid, vice president of Fidanza Engineering Corp., a maker of flywheels, clutches, cam gears and related products in Perry, Ohio. “In 2008 the industry saw an overall drop of 22 percent. That was the first drop in 12 years. Companies like ours that have bucked this trend have had to stay aggressive. We have added new parts, worked closer with our customers, brought more manufacturing in-house and not just sat here with our tail between our legs.”
He says some of his customers are struggling, while others are OK.
“We do see that business for the market right now is a little up and down. We are seeing more ups than downs, and I think the whole industry is poised for resurgence as the economy strengthens.”
Shahriar “Nick” Niakan, president and CEO of high-performance filter and intake system company advanced FLOW engineering in Corona, Calif., has seen much of the same.
“2009 has been a difficult year so far for aFe and our jobber/dealers. We have seen many macro-economic issues, but within the automotive industry we have seen some dramatic reductions in inventory levels both at the wholesale distributor level and at the jobber/dealer level as well,” he says.
But with those reductions have come chances to increase business.
“This lack of inventory has provided opportunities for strong companies to gain market share and grow sales,” he adds.
Scott Poncher, president of suspension company ReadyLift Suspension Inc. in Santa Ana, Calif., says many of his dealers are among those that are using the slow economy to their advantage.
“Business is growing for us, and I think we have taken over more market share. The dealers and WDs that sell ReadyLift also have seen sales improve as well,” he says. “As a matter of fact, it’s safe for me to say that ReadyLift is one of the few lines that sell well on an everyday basis.”
Ron Duncan, sales and marketing for steering, brake and suspension component company Classic Performance Products in Anaheim, Calif., may best sum up the current state of the industry: “I hear it again and again from pretty much all dealers: Business is unpredictable,” he says. “These unstable times seem to be bringing unprecedented highs along with unprecedented lows. In the end, most dealers are pretty flat as far as business is concerned.”
Like many in the performance aftermarket, however, these companies are not just sitting idly by, watching their customers squirm. Each was asked to list three things their dealers want now more than ever from their suppliers.
“I think that first and foremost, people are trying to watch their expenditures. They are asking to ship complete, no back orders or to use their shipper numbers,” Duncan says. “Also, they are asking for alternative products that may have higher profit margins to help put some extra money in their pockets.In most cases, we are able to come up with ways for them toaddvalue or margins to our line of parts, and this seems to work well for everyone, including the end-consumer when they pass it on.”
Scheid says inventory control is important to his shops as well.
“Many dealers are asking for longer terms. We work with them as much as we can,” he notes. “Many are also looking to keep less on their shelves and for us to have more inventory. They are most of all looking for quality parts delivered on time, backed by great service. It’s harder to make a sale for them now, and they don’t want that sale coming back because one of those items wasn’t followed through on.”
ReadyLift and aFe say that shops are also looking for ways to increase walk-in sales.
“They are asking for support material like the free ReadyLift P.O.P., sales flyers and marketing support like advertising materials, etc.,” Poncher says.
“No. 1 would be more P.O.P. materials such as banners, signage, literature, etc. No. 2 is digital materials including images, price files and e-catalog data. No. 3 is more new products,” Niakan adds. “In a down economy, many jobber/dealers are taking the slow period as an opportunity to improve their business presentation at the store level and online. With new product launches, the jobber/dealer can diversify his or her business to capture incremental sales and market share from their competitors.”
Along with giving customers what they are asking for, these suppliers have also been working to improve their own businesses. So, what steps have they taken to ensure the health of their dealers?
“We have worked hard to cut our in-house costs and pass that saving on to our dealers,” says Scheid. “It gives them the chance to offer deals to their customers, because, let’s face it, there’s less expendable income out there.”
New parts and marketing materials top Niakan’s list.
“First of all, aFe is an engineering company, so our number one goal is always to provide high-end performance products to our consumers through our distribution channel. So far this year, we have launched over 100 part numbers to our customers to give them something new to sell,” he says. “Secondly we have launched a complete lineup of aFe Power P.O.P. materials including banners, signs, displays and door decals to help dealers refresh their stores to become an aFe destination. Thirdly, we have continued to improve our digital program by offering all of our image archive and product data in an online dealer toolbox called Area 62 on our website. This toolbox allows the jobber/dealer to pull down pricing, data, instruction sheets and images to help in marketing and sales efforts.”
Poncher says it’s all about relationships.
“We work to offer the best customer service in the business personal service. Our attitude is to always take care of the customers. We have a 99-percent on-time shipping percentage as well as a complete line of leveling kits and mild lifts, and a great website that supports the line,” he explains.
“I think that expansion in the manufacturing area has helped to increase profit margins for our dealers,” says Duncan. “Images and tech support, drop-ship programs, special product package design, with the goalto cut down on inventory by having one part number replace several these have all been well received.”
So, with customers telling suppliers what they need, and the manufacturers doing all they can to help, is it working?
“One of our accounts, Turn 14 Distribution, has gone to strictly selling wholesale. We worked with them on pricing and inventory so this would be possible with our line,” says Fidanza’s Scheid. “The change for them meant a larger customer base and higher sales dollar per sale. It took the two of us working together to make it happen.”
“We have a new account that just opened their doors in Costa Mesa called OC Motorsports. They took over a large dealership and converted it to a truck performance shop,” says Poncher. “They did a buy-in on all of the major lift kits companies as well as ReadyLift. We made no promises, just told them that ReadyLift was here to support them and whatever they needed, we would help. Well, they have been selling two to three of our kits a day, which has helped them sell more tires and wheels than they thought possible. Now they are redoing all of their displays so ReadyLift is the main displayed product in their store.”
Online efforts seem to be showing results as well.
“There have been multiple examples of local diesel shops moving their businesses from strictly performance parts and installations to adding a retail website and capturing incremental business outside of their standard regions,” says Niakan. “This has lead to increased product sales and revenue they would have not normally seen with their old business model. We have seen a trend away from the eBay store model to the proprietary website where the business can focus on its own niche and market its own business.”
Companies are getting creative to make things work, adds CPP’s Duncan.
“It seems that cutting back in the area of advertising and marketing is working for some. Customer service will be king in tough times. Finding new niche markets within or outside of comfort zones is working for others.”
People often say that with hard times come valuable lessons. So, what things should performance retailers learn from this recession to ensure their long-term health and prosperity?
“Learn to listen to your customers and hear what they are really saying,” advises Duncan.”Take the time to source their needs, even if it’s outside yournormal supplier list. Customer serviceis the most valuable commodity you have.”
Poncher, too, says listening is the key.
“Be open-minded to new products and make sure you are on top of the latest trends in the marketplace,” he says. “And, most importantly, listen to what the customers are asking for.”
Now is the time to make your mark, says aFe’s Niakan.
“Take this opportunity to separate your business from your competitors. Tighten your relationships with your existing customers, suppliers and vendors.Ã‚ Make sure you are carrying an appropriate amount of inventory and try to capture every sale within those categories you can while not spreading yourself to thin. Sell your way out of the problem, don’t save yourself to prosperity. That generally never works.”
And finally, continue to do what you do best.
“Stay focused. Too many small companies try to make up for lost sales by becoming the jack-of-all-trades,” says Scheid. “Instead, stay focused on your core business. It may mean you work twice as hard for half the sales, but that’s what you do. Be flexible enough to work with your suppliers and customers, but don’t lose sight of what it is you’re good at.”