Tough times for tyre distributors?

As we look forward to 2012 there is no sign to economic pressures that blighted 2011 lifting any time soon. On the contrary, with the financial confusion surrounding the eurozone and with credit ratings agency Standard and Poor’s threatening to downgrade any of the 17 countries associated with it, there are still many challenges ahead. That said it was apparently a good year for some.

In the UK the tyre business appears to be remains as fragmented as ever. According to research produced by Plimsoll, the market is polarised between those getting it right and those struggling to recover. David Pattison, author of the 2012 Plimsoll Analysis explained: “Having taken stock of the market heading into 2012, we found 178 companies in parlous state and clinging on for dear life. We have rated them as Danger accordingly. Stubbornly lower demand was the final nail in the coffin for many. The mistake they made though was to not make those painful cuts early enough to protect their business.”

However, there are still green shoots in the market with the number of companies rated as Strong rising to 425. Pattison explains, “We rated these companies as Strong in our latest report and I have to congratulate them. In fact, many of them retained a Strong rating throughout the last 3 or 4 years. They have managed to be commercially successful without jeopardising their financial stability. While others fail around them, they are in pole position to capitalise in 2012.”

Stapleton’s embraces year of development and change

One such company that is continuing to weather the storm is leading wholesaler Stapleton’s which won the 2011 TAFF award for wholesaler of the year for the second year running in October. Asked to what he felt the company could attribute this success to, managing director Yutaka Kimbara said: “Tough times these may be but I believe the way we’ve weathered this climate is testament to the genuine value our retailers get from our ‘working for the customer’ philosophy. As much as we’d like to, it’s not always possible to absorb the impact of the price and supply volatility we’ve been experiencing – but our constant commitment to delivering an ever more seamless, efficient and competitive service pays dividends in customer loyalty, as this latest TAFF award proves!’

Key developments of the company this year include the acquisition of the North East’s largest tyre and exhaust distributor, North Eastern Tyre and Exhaust (NETE), back in February 2011. Just nine months on, NETE’s processes and people are already said to be integrated with Stapleton’s existing team and operational philosophy. As you can imagine this feat of co-operation and change management is something the company is said to be proud of and which has “made no small contribution to this year’s success” according to Stapleton’s representatives.

NETE brings on board a large logistical contribution, including 75 more delivery vans, six new warehouses (Leeds, Sheffield, Knaresborough, Middlesbrough, Stockton on Tees and Newcastle) and a stockholding of 225,000 tyres. Combined with Stapleton’s existing stock that means a total of 1.2 million tyres at any given time.

At the same time the Stapleton’s team has reportedly embraced their new NETE colleagues including five new business development managers, a 15-strong sales force and a 130 person supply chain team.

There has also been change in Stapleton’s product offering. According to the company, these days, it’s not just premium brands such as Bridgestone, Continental, Dunlop, Goodyear, Pirelli and Michelin that Stapleton’s customers ask for by name – it’s private and exclusive brands like Prestivo, Matador, Kleber, Nexen and Primewell. And, with the latest exclusive manufacturer, Maxxis, on board, new products from Nexen and Primewell soon to be launched and continued enhancements of Stapleton’s offer to its retail customers, the company is predicting “many more exciting developments in 2012.”

Along with this year’s successes, won in the face of significant prevailing winds, a number of unanswered questions surrounding the continuing execution of Stapleton’s parent company Itochu remain. Having bought Kwik-Fit shortly after the NETE purchase was completed, in October Itochu embarked on a consultation process with the retailer’s head office employees regarding the integration of its Scottish headquarter with “those of Itochu’s other UK automotive businesses, Stapletons and North Eastern Tyres, into one central head office”. This 120 day process is scheduled to end shortly and the result is likely to be known in the new year. For their part, the two companies involved continue to operate as separate and parallel wholesale and retail businesses, with insiders reporting that further steps have been taken to solidify this during the year. Nevertheless it will be interesting to see hear the results of the consultation process when it is completed.

Following what was a year of good news and expansion for Stapleton’s, managing director Yutaka Kimbara was keen to show his appreciation and avoid complacency: “I’d like to thank everyone who has supported Stapleton’s throughout 2011 and look forward to further cementing relationships next year. I’d also like to assure our customers that we intend to continue striving for new ways in which to meet their needs and exceed their expectations and secure many more successful years for all concerned.”