If you’re an independent tire dealer or wholesaler serving the general public directly or indirectly you pay attention to consumer tires. Makes sense. After all, the real volume is in passenger and light truck tire sales.
But volume is only one side of the profit equation. It’s no secret that margins in passenger tire sales are ultra-thin. And, if you’re focusing only on mainstream tire sales, you could be missing a substantial opportunity to increase those sales and your profits.
Key to increasing profits in almost any business is diversifying product offerings in other words, selling a mix of mainstream and niche products. In tire dealer terms, if you’re offering a healthy range of consumer and specialty tires, you’re still getting your volume sales, but you’re also adding profit boosters to the mix. It’s akin to ensuring you have a balanced diet: You need your “bread and butter,” of course, but not at the expense of all other nourishment.
One niche that continues to boast good margins and healthy profits is the lawn and garden segment, a small market that has been growing steadily for years.
Compared to passenger tires, “a dealer can make 20% more profits in lawn and garden tires,” says Hank Chang, manager of marketing and product development, specialty tires, at Kenda USA. “Margins on passenger tires are low because everyone sells them,” Chang continues. “Specialty tires require specialty dealers.”
According to Steve Coles, customer service manager at Greenball Corp., lawn and garden tires are also profitable because of an increased number of suppliers entering the market. “For many years, the replacement tires were only available from the retailers that sold the vehicles,” says Coles. “In recent years, many import companies have entered the marketplace with the proper sizes and types of tires at a lower cost, making this a more profitable market for the tire dealer.”
Though there are many opportunities to serve the walk-in retail customer the “average Joe” who needs to replace the tire on his John Deere mower the real profit opportunities, experts say, are planted firmly on the commercial side.
“The commercial lawn and garden segment appears to be experiencing the most significant growth at this time,” says Brian Preheim, product manager at specialty tire manufacturer Carlisle Tire & Wheel Co. “Golf courses, school districts, commercial landscapers/cutters and local municipalities would all be good target accounts,” he says. “Commercial landscapers and golf courses are probably the heaviest users and represent the best opportunities.”
“An increase in commercial landscaping has led to an increased demand for replacement tires,” adds Coles. Other potential customers include gated communities, airports and parks.
According to Tom Beattie, sales manager at North Gateway Tire in Medina, Ohio, walk-in customers plus commercial buyers equal above-average volumes in the lawn and garden tire business. North Gateway Tire considers itself a specialty tire dealer; it carries lawn and garden tires along with its mainstream passenger and light truck tire lines.
In 1988, North Gateway began pitching its services to local golf courses. The dealership started offering lawn and garden tires and associated service to local businesses that could use them, and the concept took off. “We started with a two-page booklet of offerings; now our catalog has close to 30 pages of offerings,” says Beattie.
North Gateway soon realized its golf-course business was only the first step in serving a much larger market. “The construction, recreational and housing industries grew considerably,” says Beattie. “As the market grew, we grew with it.”
Of course, getting the word out was essential to North Gateway’s success. “We ran a display in our showroom, spring through fall, to show customers that, in addition to passenger tires, we also handled lawn and ATV tires,” Beattie says. “A lot of customers would come in for tires on their everyday vehicles and see that we also had specialty tires.”
“A dealer does not need to have an established relationship with commercial accounts to be successful with these products,” adds Coles. “These contacts can be created with good salesmanship, advertising and displays.”
A dealer’s job is far from complete, however, once word hits the streets and customers start looking for specialty offerings. That dealer has to keep those lawn and garden tire profits coming, and the key to that appears simple at first glance.
“If you offer a fair price and good service, you’ll get repeat business,” according to Beattie. But the best-kept secret of success in serving the lawn and garden segment inventory is not so simple.
“With lawn and garden tires, there are a lot of sizes and tread designs, so people tend to be afraid of the inventory,” Beattie explains. “They have to realize that it’s a gradual growth market.” In other words, patience is crucial. There’s much preparation before payoff.
That preparation begins as soon as you start researching what it takes to be profitable in this niche market. Beattie says there are three “must-haves” for a dealer that wants to be successful in the lawn and garden segment inventory, knowledge and service. Note that none of these can be attained and cultivated overnight.
As for inventory, dealers don’t necessarily have to stock every size and tread design to be successful in the lawn and garden segment. Preheim recommends dealers establish a relationship with a reputable distributor that can quickly supply the tires they need.
But, bear in mind that the distributor channel should complement, not replace, some on-site stock. “Offer upgrades in load capacity or tread pattern,” says Preheim.
“A dealership should carry at least the 10 most popular sizes and tread designs in the segment,” says Coles at Greenball. “This information can usually be obtained from the tire distributor.”
Barring that, though, one of the best ways to learn what to stock is to talk to potential customers. “Research the local area by talking to people,” Chang suggests. “Learn what kind of tires local vehicle users are using and what is coming OE to determine the type of tires you need.” Learning the needs of the local area is important, Chang says, since each geographical location is different.
Coles recommends looking at vehicle manufacturers’ catalogs and flyers to determine the most common tire types and sizes being used on newer tractors and other construction or landscaping machinery. That can help plot out an inventory strategy.
Perhaps complicating the inventory challenge for tire dealers, though, is the trend toward application-specific tires, Chang notes. “There are many different tread designs and sizes for different applications,” he says.
Commercial applications in particular demand high-quality tires, typically with four-ply construction, for puncture and wear resistance and, ultimately, less downtime at the job site.
Learn The Differences
Tightly interwoven into all of this preparation and market research is Beattie’s second must-have for success knowledge. Dealers not only need to know which tires are being used, they also need to understand any technical differences separating commercial lawn and garden from mainstream, consumer tires.
Preheim says a good distributor will not only help a tire dealer supply the right tires at the right time; it will also offer advice about the market and about special programs or promotions that can help dealer profitability and sales.
One particularly fruitful source of knowledge, according to Preheim, is local events lawn and garden expositions, perhaps. “One could walk regional trade shows, talk with the stocking distributors and, best of all, engage with the customers,” he says.
So, what about Beattie’s third must-have for success service? Commercial landscapers, contractors and even municipalities are essentially businesses. So they care about reducing costs and increasing productivity. A flat tire means downtime, and that means money lost.
“Most of those target accounts won’t tolerate much downtime,” says Preheim. “Stocking a good quality product and providing prompt service take priority over simply having the lowest price.”
So, it’s important that dealers first recommend the most appropriate tire for a particular application, then be available should the customer require service.
North Gateway Tire operates a service truck and is currently implementing 24-hour road service for its commercial lawn and garden tire customers. But Beattie says that’s an advanced step, not for beginners. “Getting a service truck should be a down-the-road solution,” he says.
Start with knowing how to mount and dismount four-, six- and eight-inch-diameter tires commonly found in the lawn and garden segment. Coles recommends tire dealers consider purchasing an adapter for their mounting machines to make it easier to service these small tires.
“The lawn and garden tire market is vast and still growing,” says Coles. “There are many opportunities for the independent tire dealer to increase sales and make excellent profits.”
The lawn and garden segment is nothing to fear as long as you prepare your turf for the business. “It starts with a little knowledge, having the product and going from there,” Beattie says.