Embracing changes, building relationships: KRT at 40

Kings Road Tyres is 40 years old this year. While you could be forgiven for associating the more famous Kings Road in Chelsea with the Group’s name, it actually derives from the Richmond street of the same name, where what was Thames Haulage decided to get into the tyre business due to its large outlay on rubber for tipper trucks. Though it has evolved during the last 40 years from these beginnings to comprise divisions dealing with tyre wholesaling, tyre services and a retail outlet, the company places great emphasis on the continuity of its personnel. Indeed, KRT’s 40th anniversary as a company is also credit control manager, Barry Hill’s 40th year with the company, while the company’s owners – Commercial director Mark Cooper, Financial director Simon Lister and managing director Adrian Bader – have industry experience of over a century, much of which is with the KRT Group. The Group employs over 200 people, with a sales team of over 25 in Wholesale, over half of which has been with the company for 20 years. “KRT is where it is because of the continuity of people,” Bader says.

The KRT Group comprises Kings Road Tyres as “the major trading part of the company”, explains Bader, “which is predominantly wholesale to tyre dealers across the UK”, while there is also Kings Road Tyres Ireland, the newer part of the wholesale business, formed in 1998. “I was the first man in Ireland with an empty warehouse and an empty office,” Bader says. In addition to the brands it sells exclusively, KRT has Uniroyal Truck Tyres, which trades independently under licence as sole franchise. Tyrework is one part of the service side of KRT, located in the south of England with four centres fitting tyres to trucks, other machinery and other off-road vehicles. And then there’s Tyre Business Solutions (TBS).

“TBS is a fleet tyre management centre managing major accounts,” Cooper explains. “It is more in the car and van sector of fleets with a little bit of truck. There’s no stock, fitters, vans or warehousing. It’s a very sophisticated setup, going back into the fleet’s computers, updating their records. That started in 2010, its first full year was 2011, and it continues to grow into 2012.”

Purchasing and Marketing manager, Tim Bader completes the summary of the Group’s activities with Hilltop Tyres: “When Kings Road bought Euro Tyres, they bought the Ilminster site and the Arkham site, and now Hilltop is a retail outlet in Ilminster.”

KRT is described by Adrian Bader as a “very spread business, but still very much connected to the tyre industry, and it’s evolved over these 40 years into the business it is today… we’ve got eight wholesale distribution centres, four truck service centres and – technically – three retail businesses.”

Tyre Business Solutions

Beginning with the newest part of the Group, Adrian Bader comments: “Over these years we have always looked to expand the business in the ways that the industry is changing, and the way that the industry is taking different roles in itself. Manufacturers are dealing, more and more, directly with fleets, which means that, whilst being a big service provider to the manufacturers, we also have to manage our own fleets. To do that, we have to take control, and TBS allows us to manage fleets ourselves, rather than through the manufacturer.

“We see that as a way to move forward. We expect to expand [the TBS] call centre, and in fact we have done so already. We’ve doubled turnover since it opened.”

Cooper continues: “It’s a different type of business than we’re used to, but it’s very complimentary. For want of a better word, it fits into the jigsaw of the other parts of the company. We’re now actually putting work from Tyrework through into it, so we’re connecting the two a little bit. It’s very complimentary to us.

“There are somewhere around 750-plus service providers within the network; mostly drive-in stores. From the second half of this year we’re starting to put work from Tyrework through into TBS, so instead of paying fees to outside agencies, we’re paying fees to ourselves. It makes a lot of sense, though it was a very slow approach to make sure it worked.”

TBS was started with the concept in August 2010 and by 1 October, KRT had taken on what Cooper describes as “a major customer”. TBS continues to adapt alongside this major customer’s systems in “a partnership” used to develop its own systems, which allows other customers to use these developed products.

When T&A asked why TBS become a viable option in 2010 Cooper explained that the development was “customer-driven”, since there was an opportunity to develop a system for a customer that was going to move.

Cooper characterises the objective of TBS as less to do with saving fleets money, since it is “difficult to show money saving”, and more to do with managing systems that allow fleets to increase their business. “Our turnover of systems has increased dramatically… but their business has gone up in an even steeper curve. We believe that the two lines are not parallel; that their increase in tyre spend is disproportionate to their increase in business. [Although] the money [fleets spend] has gone up, there’s actually a saving. When you deal with hire fleets, it’s the way that you manage their businesses for them [that is important].”

As far as the future size of TBS goes, Cooper downplays the potential for large-scale growth: “it depends how far we want to go with it. I don’t see it rivalling KRT in terms of turnovers and volumes in the years to come, but it will be a very significant part of what we do within the Group. We like to see it as a complimentary service to Tyrework’s operation. It’s a separate entity [to Tyrework] because its software systems had to be different, but it’s linked in. I can’t see it going outside of Tyrework and into KRT as an offering, so it’s a complimentary business.”

One thing Bader says they are “mindful of” is “doing it in a way that doesn’t encroach on any of our customers’ business. We’ve done it in a way that ensures that any business we’re doing is new business to us and it’s not taking any business away from our current customers. That was important to us.” Cooper identifies TBS’s competitors as “similar type internet-based management systems.”

“I don’t think we’d have got to 40 years if we’d gone through those 40 years treading on people’s toes,” Bader says. “With our biggest customers I take it very seriously if they have a concern because I want their business long-term. I find it much easier to work with them over a concern rather than make it confrontational.”

Uniroyal

The KRT Group started marketing the Continental Group’s Uniroyal brand in 2000. It had been predominantly sold through National Tyres when it was still a commercial tyre fitting business owned by Continental and KRT “came up with a proposal in which we would market and sell the product to UK tyre dealers with exclusive, dedicated staff, warehousing and systems,” Bader explains. “We believed that way the brand would remain established and keep its identity. And that’s what we’ve done for these past 12 years.

“It’s a quality product made by one of the world’s leading manufacturers and that’s the basis we sell it on. And we protect customers in the sense that if we have a good Uniroyal truck dealer in a town or city, we don’t go and find five other customers in that same town.” KRT has marketed Uniroyal on this basis, with customers knowing they won’t be undercut by other dealers in the area. The brand is marketed completely separate to KRT’s wholesale operations, and Bader says this flexibility helped to sell the idea to Continental.

“It’s got its own warehousing, logistics and sales and a separate account system… It gets the support and strength of the Group, but it trades independently,” Bader says. “That’s the confidence we gave Continental… Had they done it, it would have just fitted in with their other brands. If we put it into KRT there was a danger it would be another tyre in our line-up and be diluted. To do the numbers and do credit to the brand, we had to do it exclusively.”

Describe the quality of the brand, Bader points out that it is made in Europe by one of the world’s leading manufacturers, so “it is a premium quality tyre sold at a mid-range price”. It also has a loyalty factor, according to KRT, and Bader emphasises the value of “not overselling” the brand: “they have the confidence of quoting on a Uniroyal, and winning the business on a Uniroyal that’s not going to be undercut by a bloke down the road.”

The Uniroyal brand’s loyalty is shown by Bader’s estimate that they still sell the brand to “90 per cent of the people we started with” after 12 years. “In that time, we’ve found new customers,” Bader continues. “We had to, because the numbers we took on were too small for the business. We wouldn’t have been able to run a business on the number of units being sold. So we had to treble the business.”

KRT Wholesale in the UK and Ireland

While KRT’s wholesale business and brand strategy was covered thoroughly in T&A October 2012, it is worth summing up this major part of the Group’s business. KRT in Britain uses all its own vehicles from “seven strategically placed distribution centres that can get to the whole of their area, within reason, next day,” Bader says, emphasising the importance of service to KRT. While the company does not have a location in Scotland (except for Uniroyal brand tyres), Bader explains that this part of the UK is covered by its Newcastle and Carlisle branches, working up the east and west coasts respectively.

“With distribution, you’ve either got to extend what you’re doing yourselves, and make it the most efficient or cost-effective, or you’ve got to do away with all of it and rely totally on a third-party logistics company.” And the limitation of this solution is that “you’re only as good as they are”.

On the other hand, this approach costs more to run. “You’re never going to be as efficient as a logistics company,” Bader says. “Their speciality is distribution, but what they don’t see is the personal custom that we provide.”

Another distinguishing point identified by Mark Cooper is the company’s ability to work “with manufacturers in [long-term] partnerships”. Bader remembers Bridgestone’s entrance into the UK as “a virtually unknown brand” and that KRT was well-placed as a Firestone Key Dealer to partner with the brand, “and we saw the potential of their products. They were very low priced, good quality products. We recognised that… and decided to back that company for all it was worth, and as our business has grown, their business has grown… We actually put them on the map in the truck segment.”

KRT remains a loyal customer to Bridgestone and enjoys similar relationships with Continental and Michelin. According to Bader: “We need brand policy longevity. You can’t have a customer ringing you on a regular basis and not understanding what you are selling him. He doesn’t want to buy two of this brand one week, and to be offered a different product when he comes back for two more the next week.” This brand longevity was key in KRT winning the Matador commercial tyre supply deal, Bader says.

Though KRT was always doing business in Ireland, it formed a company there in 1998 as Kings Road Tyres  Ireland. “We had the opportunity where we could see a way into the Irish market using a proper KRT setup and structure. And we’ve grown that business over the last 14 years,” Bader says.

Though the business is also wholesale there, Bader contrasts the difference in the way business is done there, and in brand strategy; “to say it’s a complete mirror of KRT UK is not strictly true. Because of the road network in Ireland, to try to deliver to the whole of the country using your own fleet of vehicles is absolutely impossible. So we use our own vehicles for the Dublin area and third party partners for the north and everywhere else to enable us to do next-day delivery to virtually the whole of Ireland, including Northern Ireland.”

KRT and tyre wholesaling history

When Bader says the Group has “been in it since the start of wholesaling as we know it” he emphasises the evolutionary qualities of KRT: “Wholesaling was a really strange form in the 1970s”, he says due to the lack of “foreign brands”. Wholesalers had manufacturers’ second and third lines until brands such as Stomil entered the market from eastern Europe. KRT imported Stomil (known as “the Polish Uniroyal”, Cooper remembers) for 30-plus years. “We built our business on eastern European brands way before the Chinese brands came along,” Bader says.

Through its own changing role in the market, KRT wholesale’s 40 years reflect the development of tyre wholesaling – where once the wholesalers could perhaps be seen in a negative light by manufacturers, they are now well established in partnerships – and those now running KRT have built their careers as the character of the sector changed. Bader suggests that “as a wholesaler,your biggest competitor will always be your supplier.”

“The key to that is working in a way that offers you business and opportunities within the scope of what they’re doing. We were the scourge, but it’s where every manufacturer came to when they wanted to move volume. It was like the awkward brother; you didn’t really want to know him, you didn’t talk to him, but he was still there. [Since wholesalers are now manufacturers’ biggest customers,] I don’t think any manufacturer talks today about wholesalers in derogatory terms.

“It’s a bit like how they’ve spent years trying to stem the flow of Chinese tyres. Now they’ve got 40 per cent of the business, the Chinese brands have got 60. Things change, and you can’t stop them. You should be involved in change because if you’re involved, you will inevitably come out with something. If you resist it, you’re going to get caught out.

“We’ve embraced all the changes. Sometimes we haven’t wanted to, other times we’ve seen the benefits of doing so. You’ve got to build good relationships with suppliers and have longevity of brands – that’s the key.”

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