Dekk Partner Develops New Structure and Marketing Strategy

While there are a few retail chains such as Dekkman and Vianor operating in Nordic markets, the majority of tyre sales are down to a considerable number of independent operators with one or two depots. For most of these as much as 60 per cent of annual tyre sales are compressed into the four month period leading up to the onset of winter. This figure is higher in the North, where the winter season is both longer and harder. High transport costs, extreme seasonal business and little chance of same day deliveries means that high stock levels are usually required at each retail outlet. Despite these difficulties the independents are generally faring better than the equity chains.

Increasingly, independent tyre retailers in Nordic countries are joining what is now recognised as the leading buying group in the region and one of the most progressive international tyre buying groups; Dekk Partner, founded in 1994.

Perhaps the most important aspect of Dekk Partner is that it is owned by the members; each, irrespective of size, is an equal shareholder with an equal say in group activities. There are no suppliers involved in the group and no producer can buy shares. Dekk Partner is fully autonomous and self governing. Members are free to buy and sell what they want from whoever they wish, but they are rewarded by a loyalty bonus scheme, which naturally encourages them to buy their tyres from the group. Every member has to meet and maintain a strict set of standards for quality and customer service to ensure that there is uniformity of excellence across the group. Membership currently stands in excess of 300, with 135 in Norway, 110 in Sweden and 60 in Finland.

Dekk Partner’s Leif Kristiansen is the principal driving force behind its success. Having spent a lifetime in the tyre industry it was his vision that recognised the potential for the formation of a tyre retailer group that not only served as a buying point for tyres, but as a much wider partnership aimed at helping the independent compete on the same footing as an equity. The group’s success is testament to the foresight, energy and business acumen of Kristiansen, as still today it continues to expand its boundaries.

The annual Dekk Partner conference took place this year in Riga, Latvia and was attended by the majority of the membership, together with invited suppliers and guests. In his opening address Leif Kristiansen mentioned that for the first six months of this year Dekk Partner had, quite significantly, increased its market share. Despite some forecasts to the contrary sales of winter car and truck tyres had been very good. He went on to say; “during the life of Dekk Partner turnover had increased from an opening year of approximately 227 thousand euros to a predicted 270 million euros for this year. Central billing and loyalty bonuses had also increased in line with turnover. This year’s financial forecasts are holding up well, net costs are running parallel with budgeting despite the low cash flow from April until August during the traditionally weak business period. Fleet contracts in 2008 are anticipated to reach 23 million euros.

“This is largely due to increased fleet business in Finland and Sweden. The incentive schemes now available to the group membership now included low price car leasing, shop fascia and interior fitting, uniforms and free travel to all meetings.” Kristiansen ended his speech with a warning to members to secure payment from transport companies in Scandinavia, as many were currently experiencing financial difficulties.

An interim report outlining the ongoing progress for the restructuring of Dekk Partner was given by the chairman of the board, Deniz Bavautdin. “The primary plan is to form a new Norwegian parent company with daughter companies in Norway Sweden and Finland,” said Bavautdin. “To achieve this Dekk Partner AS will be divided and a new company Dekk Partner Holding AS will be created. The operational arm of the group will remain as Dekk Partner AS. The current Swedish branch office will be transformed into a limited company, which will then be known as Dekk Partner AB. There will also be a new holding company in Finland, Dekk Partner OY. The main advantages of this new structure are fivefold:

1. An improved organisation with each country having its own headquarters, which will lead to advanced communications and transfer of information and will also minimise the risks of the parent company.
2. Enhance methods of financing the company.
3. Improve co-operation with other companies in Nordic countries and elsewhere in Europe.
4. The holding company will have the ability to sell its shares tax-free.
5. The holding company will be able to receive tax-free dividends.

With this new structure in place Dekk Partner AS will be more professionally functional and better prepared for all future challenges. The founding of the holding company in Norway will not cause any taxation problems for the company or its shareholders. A postponement of the tax to be paid by Dekk Partner AS on the conversion of the Swedish branch to a limited company can be arranged. This will mean that the calculated profit shall only become taxable when and if the shares of Dekk Partner AS are sold.

“A series of modern method computer programmes have been produced to assist members to achieve a successfully functioning business and to keep costs under control. These include stock control and administration systems, vehicle-to-tyre analysis and budgeting.”

Erik Gabrielsen, from one of the leading Norwegian PR and advertising agencies TIBE spoke about several new marketing and branding initiatives to be introduced. “While Dekk Partner has, in recent years, been very astute with high exposure sponsorship of sporting and other commercially viable events which has created familiarity in Nordic countries of the Dekk Partner name, we now want to place more emphasis on concept. This will be actively progressed through branding awareness campaigns. Branding is all about building strong preferences. The group image will be further enhanced by the introduction of a new English language slogan that Dekk Partner has initiated– ‘we guarantee our customers a good experience’ – in so doing we will be offering products and services that customer’s trust. We will also be asking customers what they think when they see the Dekk Partner logo, do they immediately recognise tyres? What can we offer the consumer as a further incentive to buy? – a free tyre change; comfortable waiting areas offering free tea and coffee; unique give-aways of Dekk Partner branded merchandise such as wheel cleaner spray, tyre pressure gauges, gloves, umbrellas etc. And a tyre guarantee that incorporates an insurance benefit to replace a flat tyre free of charge. Dekk Partner is already the leading tyre chain in the region, so let us now become actively involved in a totally proficient promotional programme aimed at complete customer awareness of all the products we market. Remember the phrase, ‘satisfied customers will always return’.

“By adopting an active marketing strategy all members will benefit. A new website is now up and running. This new site is very easy to navigate and under the strap line – ‘Enjoy Your Drive’, will show the public and trade alike what Dekk Partner is good at. This will be vigorously supported by increasing advertising exposure; innovative promotional designs will be produced to create a new and exciting image. Customer-friendly promotional videos will be made available for members’ use in tyre shops and at exhibitions, seminars etc. Internal communications will be improved by way of a group newsletter, allowing members to promote their successes and for head office to keep members more speedily informed of developments.”

Said Leif Kristiansen: “Dekk Partner will continue to grow, of that there is little doubt. The independent has the potential to dominate the Nordic retail tyre trade as long as we continue to offer the best possible standards of quality and service to all customers at all our outlets. We are fully prepared to meet the challenges presented by the equities and newcomers to the market; this includes subsidised cross border ‘nationals’ and ‘multinationals’, as well as pirate dealers selling parallel imports at rock bargain prices. By working together Dekk Partner members will continue to prosper.”