Saying “Yes” (by Jeff Short)
Several months ago, I began an interesting conversation with Hankook’s Kevin Hyatt about the importance of retailers stocking tires. Kevin is sort of double qualified on this topic. At the time Kevin was Regional Director of the Northeast. Since then, Kevin has been promoted to Director of Corporate Accounts for Hankook. That means Kevin is in an entirely new part of the tire world. He’s responsible for handling his company’s business with outfits like Ford Motor Company, ATD, Discount Tire, and The Tire Rack among others. This change has only made Kevin more aware of the importance of supply, as I found out this morning when we continued our conversation about what can contribute to a dealer’s success.
Over the years, Kevin has noticed that the dealers who are committed to investing in inventory are the ones consistently showing real sales growth. They simply have more opportunity to say “yes” to customers that want to buy tires now.
Kevin explained that studies have shown that over 75% of consumers will buy new tires from the first person that recommends them. Of course many of our dealers already know this and are completely on top of their inventories and make sure that they are working for them. For others, it’s tempting to just throw your arms up and say, “There are too many sizes and I’ll never have the right ones in stock.” The good news is that while there are too many to have them all, good data can show you which tires have the best chance of selling regularly.
Kevin said that while Hankook offers 600 to 700 items, a realistic goal would be for a dealer to stock the tires that cover 80% of Hankook’s sales in their particular area. This isn’t 80% of 600. The 80/20 rule holds that 80% of Hankook’s sales come from only 20% of their offering. He thinks that the key to this is for dealers to partner with a distributor that stocks the line in depth and one that can share valuable data on what sells the best. I’ll give you a recent example: A dealer in Vermont says that he has room for 60 tires and he wants to stock Hankooks. We compiled data on tires sold from our Vermont sales history and added in Hankook’s statistics. We came up with the best 15 sellers that surprisingly cover 21.8% of Hankook sales in that area. 4 of each gave our customer the best 60 tire Hankook inventory possible.
If a dealer tells us what brand he’d like to sell and how many he has room for, we can crank out the best combination. This is a numbers game. We have seen a sweet spot with around 300 tires giving a lot of bang for the buck. Even then the job is not over. The dealer and the distributor will need to work together to ensure that the inventory continues to sell. Of course, we at K&W have a vested interest in seeing our dealers sell more tires as well. We are fortunate that we have access to important data that allows us to assist dealers in building an inventory that gives them the best chance for success. If you would like to discuss your inventory needs, we are here to help.