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Tire-and-Rim Rental Stores Slow to Get Rolling

(Atlanta Journal-Constitution) It was in May 2004 that Atlanta-based Aaron Rents opened its first rim and tire store, called Rimco.

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The concept: people who can’t lay down $2,000 to buy flashy rims and tires can rent to own them over 12 months.

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Ken Butler, Aaron Rent’s new chief operating officer, says he’s still testing out new ideas for the Rimco concept.

It’s similar to Aaron’s rent-to-own stores where beds, sofas and TVs can be purchased over time.

Four years later, however, while there are more than 1,500 Aaron’s stores here and in Canada, the Rimco chain is still small, with 30 corporate stores and eight franchised stores.

Aaron Rent’s new chief operating officer, Ken Butler, says he’s still testing out new ideas for the fledgling Rimco concept.

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“We haven’t been pushing it much,” said Butler, 55, walking around a store on Memorial Drive in Stone Mountain, Ga. “We want to perfect it.”

As he walked the showroom, chrome rims gleamed and high performance tires beckoned to be driven.

But Butler saw a lot of things that needed attention. He gave a stream of suggestions to John Allevato, 45, the new vice president of operations for Rimco. Allevato formerly ran Aaron’s Western division.

“You need to have one to show, two to go,” Butler told Allevato about tires that weren’t in stock.

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“You should mark the tires with their size and price,” added Butler, who has been with Aaron Rents for 34 years. He was promoted to COO this month as founder Charlie Loudermilk retired from his position as CEO, which was filled by his son, Robin Loudermilk, who had been president and COO. Allevato nodded “yes” to Butler’s suggestion but didn’t take notes. “I’ll remember,” he said.

Butler sees a huge growth opportunity in Rimco. He wants to make it the sister store of Aaron Rents.

If Aaron’s is everything inside the house – beds, dressers, sofas and flat screen TVs – Rimco will be everything for the garage – lawn mowers, pressure washers and weedwackers.

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Butler also wants to sell “widgets and gadgets” like custom car grills, car stereos, GPS units, chrome car accessories and gas caps to keep customers coming back more often.

“With only 30 Rimco stores, we can test ideas. We do a lot of experimenting,” said Butler. “We’re trying to make it more like Western Auto,” a now defunct chain that was partially bought by Advance Auto Parts. Western Auto specialized in selling tires and bicycles.

Butler has big plans. One idea is to launch a revolving credit card called “Rimco revolver,” in which the payment will stay the same each month – $99 – even if customers buy more goods. The maximum credit would be about $2,000, he said. He sees it as helping people rebuild their credit.

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Butler then wants to stock more seasonal items that will encourage customers to check out the store often: like bikes at Christmas and pressure washers in the spring.

One problem the chain has faced is that once a customer buys a set of rims, the customer doesn’t come back. Butler is trying to give them a reason to keep checking in.

David Magee, a retail analyst for the capital markets division of SunTrust Robinson Humphrey in Atlanta, said that Rimco, as a concept, should continue to be tested.

He doesn’t want to see it cut into Aaron’s core customer base, or stretch Aaron’s customers too thin financially.

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“The customer has got a very limited pay check and they don’t have other types of credit per se, so it’s a very finite wallet,” said Magee, who explained that Aaron’s and Rimco largely have the same customer base. “The danger is they don’t want to overburden their customers with credit. It’s a little bit of a fine line.”

Still, Magee said he trusted Aaron’s executives to go slowly and deliberately with the Rimco business. Aaron Rents is a client of SunTrust Robins Humphrey.
Allevato said Aaron’s has 10 new Rimco stores in the pipeline that will open in the next six months; four by franchisees. Aaron’s, by contrast, has opened 133 stores since June 2007.

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Butler would not disclose Rimco’s revenue per store. In the second quarter, Aaron’s earned $23.3 million on $411.2 million in revenue, which includes Aaron’s and Rimco.

Tampa-based rival Rent-n-Roll has more than 50 locations across the country.
“We didn’t invent the rim and tire concept,” said Butler. “We discovered it in the Midwest. Several franchisees want to buy into a competitor’s rim and tire store.” So Aaron’s built its own version.

Rimco’s marketing so far is limited to direct mail targeted at ZIP codes near its stores and fliers sent to Aaron’s customers. Some radio ads air locally on stations.

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Butler is still testing to determine how to market Rimco.

For example, 65% of the business at the Stone Mountain store is women buying rims as presents for their husbands or boyfriends, said store manager Lewis Butler, who is not related to COO Ken Butler.

“People don’t understand leasing tires, but it really works,” said Ken Butler. (Tire Review/Akron)

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