Point S – From Private Brand to Leading Brand

According to Fabien Bouquet, international operations director at point S Development, the rise of large tyre retail chains and (to a greater extent on the continent than in the UK) manufacturer owned or controlled equities means locally minded independents increasingly need to raise their game to a national and even international level to remain competitive. At the same time the current professionalism of wholesale businesses and manufacturers’ increased willingness to sell directly to automotive dealerships and garages means this shift in the market has also led to a decrease in retailers’ business-to-business wholesale revenues. This in turn, says Bouquet, requires retail businesses to increase their focus on sell-out sales. Point S’s strategy is to be both a purchasing group and a trademark designed to support sell-out sales, their approach naturally lends itself to the sale of an own brand tyre. So, in the mid-Nineties (1995) Point S launched its first private brand. Since then the name has changed a few times but the group has now settled on the Summerstar and Winterstar monikers it uses today. Despite the fact that it does’t use the chain’s name as its tyre brand, the Point S logo is still an integral part and remains a permanent fixture on any Summerstar or Winterstar tyre’s sidewall, a strategic move that is designed to support the marketing and brand awareness of the chain as a whole In terms of technology, Point S’s brand offers close to the level of a premium tyre as it is made by a leading European premium tyre manufacturer, namely Continental. The quality of the product is supported by favourable test results conducted by the respected TUV labs.

Point S has even refused production agreements with unknown far eastern suppliers on the basis of quality control; apparently they simply couldn’t provide consistently high quality products. Tesco, Body Shop, Ikea and Point S? Looking at the sector more broadly, it is important to ascertain where particular private brands fit in the market. The fact that private brands are distributed exclusively through retail chains, wholesalers and cooperatives is already well known, but how do the various approaches to private branding differ? There are said to be four types of private brands which can each be categorised according to their price positioning: the base price, high price, mid-price and ‘best value’ approaches. The base price brand approach is exemplified by the ubiquitous Tesco Value range – cheap as chips, but also low quality.

The comparatively expensive range of Body Shop toiletries exemplifies the high price approach – good quality but actually higher than average “own brand” products. The likes of Ikea and H&M represent the middle of the road level of private branding – medium quality and mid to budget price. For his part Fabien Bouquet describes Point S’s Summerstar and Winterstar tyres as being positioned in the best value category – 30 to 40 per cent cheaper than premium tyres, but hot on their heels in terms of quality. Bouquet didn’t give his opinion on which category each of the European market’s leading private brands fit into, but it is clear that the difference comes down to how much the marketers favour the actual brand they are working with. There is nothing wrong with a stack ‘em high, sell ‘em cheap approach in the context of a wider product portfolio, but the most successful lines (like Point S’s and companies like it) use their brands as a stepping stone to the best quality and highest margin premium brands, while still offering the dealer a strong economic incentive. As Bouquet says, it is easy to sell a budget tyre, it requires more to sell a private brand. And the proof of the pudding is in the fact that Point S sells more private brand tyres than budget products.

And, for those of us working with seasonal tyre sales, it is interesting to note that summer-orientated lines register a higher proportion of private brand sales than winter specific options. Private label demand is expected to increase in the years to come as it continues on an already visible upward trajectory. Due to the confusion of the exact definition of the term private brand (some people refer to exclusive brands as private brands) and the various methods of distribution, exact figures are difficult to pin down but Bouquet expects European consumers’ increasing demand for private brands across the board to be reflected in tyre sales. In a survey of sales across all product sectors, AC Nielsen found that private label market shares crossed the 40 per cent mark in markets such as UK (43%), Switzerland (53%) and Spain for the first time in 2006.

By the time the 2008 Private Label Manufacturer’s association yearbook had been compiled, this had swelled to include Germany (40%) and seen the Swiss’s taste for private labels grow to over 54 per cent of purchases. The market least comfortable with private label products is reportedly Italy (16%), a fact that is also said to be reflected in the traditionally brand conscious market.