Micheldever’s 2011 sales to exceed £350 million
With a trend of consistent sales growth over the past five and half years, and with the company on-track to exceed £350 million in total turnover this year, Micheldever Tyre Services (MTS) is shaping up to be the largest business of its kind in the UK despite a challenging market environment. To put this in perspective, the best turnover of a company in this sector reported last year was somewhere north of £330 million. Tyres & Accessories recently met with wholesale director Alan Baldwin and the company’s new wholesale marketing manager, Peter Hayden, to find out more.
MTS currently operate 15 hub distribution centres, supported by an additional six regional warehouses. These sites are capable of providing a minimum of two deliveries per day to around 60 per cent of the UK population. The remainder are served with a guaranteed next day service. But it doesn’t stop here, the company’s roadmap clearly highlights “sustained investment and expansion” in this network in order to add “even greater depth and delivery frequency over the coming year.”
Company representatives told T&A that MTS aims to provide the benchmark in logistics processes and organisation which enables it to provide what is purportedly “best in class delivery reliability and flexibility…tyres to our customers where and when they are needed.”
But perhaps the best way to illustrate this service in the company’s ability to “flow” tyres between warehouse locations often within 48 hours and at no cost, ensuring that customers have access to our company wide stockholding in real time: “We believe that this is a key differentiator in our favour and is the product of major investments in infrastructure and personnel,” Peter Hayden told T&A, adding:
“We currently operate a dedicated fleet of more than 400 vehicles, which provide a daily service to 7000 delivery points. These deliveries arrive within a consistent time period to enable our dealers to plan the working day and to maximise their service to the end customer.”
Range philosophy
Micheldever’s product range philosophy is “to provide the widest exclusive brand portfolio across the key market segments and to develop strong margin opportunity for dealers.” According to the company, this is achieved by managing dealer networks in a structured manner, minimising local conflicts and ensuring balanced market penetration in the area. This portfolio is currently comprised of: Kumho, Falken, General (car and 4×4), Toyo and GT Radial. Then there’s Enduro, Autogrip and Ovation in the budget segments.
Alan Baldwin explained: “Within this overall proposition, we have developed fully supported, authorised dealer programmes which provide unique benefits in respect of preferential trading terms and increasingly diverse local marketing initiatives. We have identified dealer training as a key ingredient of this and have started to implement a number of new initiatives in this area drawing on extensive internal know-how. To sum up, we firmly see dealer support programmes as much more than simply a signage exercise, in short they have to drive customer traffic into the premises of our dealers and yield real incremental business. To push this we are providing highly specific marketing literature at local level to meet a variety of dealer promotional and communication needs which enables appointed dealers to fully develop and capture business in their trading area.” The Micheldever representatives also pointed out that they have identified “extensive numbers” of open points across the UK where its plans can quite sensibly accommodate new outlets that have not yet committed to an MTS programme.
Added value
Despite the difficult economic environment MTS representatives remain confident that the company can provide additional value to tyre retailers, genuinely helping them improve their businesses with an expanded menu of marketing and operational support initiatives. For example Alan Baldwin explained how the company has recently identified the growth in “spurious part worn tyres sales within the market”, identifying this sector as a major threat to established and reputable tyre retailers: “Recognising this, we have issued dedicated literature to communicate the potential safety and performance implications of these products. We feel very strongly that dealers are fully informed and equipped to sell the positive safety, performance and economic advantages of fitting recognised brands. It’s a process that we will continue to drive and we would hope that this work is more vigorously adopted by the manufacturers across the board.” MTS are particularly hot on this issue and while virtually everyone agrees that the old estimate figure of around 2 million part worns a year is probably outdated (3 million is the number now more commonly quoted), Alan Baldwin reports that it could even be as high as twice this figure and could therefore explain the drop in retail volumes experienced recently.
Tyre law policing is another area for action in the opinion of MTS’s management: “When we benchmark UK market conditions with other key European territories we are alarmed at the lack of real and sustained enforcement in our lands. Again, marketing communications are being used to raise awareness of this, but we feel that an industry – wide approach is needed both to accelerate this and crucially, to lobby for more effective implementation of the existing tyre laws.”
Offering stability to suppliers and staff alike
When it comes to supplier relationships, MTS aims to provide a stable relationship based on “integrity and the desire to serve the market and customers in partnership.” This is demonstrated by the company’s ability to integrate its operations with the manufacturing processes of its key suppliers. Again, investment in this process has been central to these plans. And by honing and refining demand planning systems MTS’ management believes the company has been able to bring market leading availability to its customers during prolonged periods of capacity constraints.
The stability philosophy extends to staff development as well. “Over the past year and looking to future expansion plans we have instigated a number of robust, key initiatives in terms of training and career development for our team. As our organisation grows, we are fully committed to meeting these future challenges with a team that is fully trained and capable of growing into new roles and responsibilities. In this regard, every member of the MTS team will receive at least two full days of formal training this year,” Peter Hayden explained, adding: “In addition, a group of 100 plus high potential individuals are currently engaged on specific professional skills development which will equip them to take additional responsibilities in the coming years.”
So what do the customers think?
When assessing a company’s performance, perhaps it is best to let the customers decide what they think. Independent market research carried out earlier in 2011 determined that the eight most important criteria of wholesaler service to tyre retailers in order of importance are: reliability of delivery service; stock availability; fair pricing policy; breadth of range of product available; sales order process; sales office support; complaint handling process; and the effectiveness of the online stock ordering programme.
After quizzing in excess of 300 independent tyre retailers, each of whom were asked to score their respective wholesale suppliers on a broad spread of product range, logistics service and customer support processes, the researchers found that MTS were the top scorers in every one of the eight criteria – six of them by quite a large margin. Many of those quizzed deal with three or more wholesalers on a regular basis, suggesting comparisons could meaningfully be drawn.
“What is especially pleasing in the study is the margin of difference between our results and those of the other outlets identified. We are encouraged that the rigor we apply to all areas of our operation and in listening to our customers is seen and well recognized by the outlets we serve daily. The study has shown us quite conclusively that on the key measures of product availability, competitive pricing and reliability of delivery service, customers have ranked us as their preferred wholesaler. We feel that this is the best compliment that we could possibly receive, an objective assessment, direct from customers placing us in what we feel is a well deserved position!”
Customers will get another chance to cast their vote on their favourite wholesale at the NTDA Tyre & Fast Fit awards, this year in Birmingham. When the company was nominated, Micheldever representatives told T&A that the company was “absolutely delighted” to be receive that recognition. A spokesman for Micheldever added: “We are very grateful for the support of our customers in recognising our efforts and backing this with a nomination in the Wholesaler Category.”
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