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July 18, 2017 02:00 AM

Point-of-sale panel helps gauge tire production needs

Miles Moore
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    HILTON HEAD, S.C.—A point-of-sale panel is exactly what the independent tire industry needs to make sure tire manufacturers make the right tires at the right time that consumers want to buy, according to a speaker at the recent Clemson University Global Tire Industry Conference in Hilton Head.

    GfK, the global leader in POS tire retail measurement, was approached some years ago to establish a retail panel and create an unbiased complex distribution channel for U.S. replacement tires that would be statistically sound and help reduce back orders, said Neil Portnoy, managing director-POS tracking for New York-based GfK.

    "Seven years later, the biggest problem is back orders," Portnoy said. "How can we have huge inventories that don't meet the needs of consumers?"

    The tire distribution channel simply doesn't work as it should, according to Portnoy.

    "Can you imagine a supermarket where Campbell's soup is constantly out of stock, or Crest toothpaste?" he said. "The reason they aren't is that retailers are sending their sellout data straight back to manufacturers."

    The U.S. is an important market, representing 40 percent of global demand, according to Portnoy. Independent tire dealers represent 62 percent of replacement distribution, he said.

    When global players approached GfK on establishing a retail panel on tires, GfK chose the independent distribution channel for study because it was the largest and hardest, Portnoy said. But it proved hard in more ways than one, he said.

    "We had to be very specific about the information we wanted," he said. "When we first approached dealers, they thought we wanted to take their customer information to sell to manufacturers. All we wanted to know was what tires they sold, to what customers, at what price."

    It was difficult gaining the trust of POS companies until John Gamauf, retired president of Bridgestone/Firestone North American Tire, joined the GfK retail panel in April 2015.

    "Without Gamauf, we wouldn't be here today," Portnoy said. "Everyone was willing to talk to him."

    Throughout the process, GfK also stressed that all dealers, large and small, would be treated the same.

    "We're an impartial market research company," Portnoy said. "Whether you have one store or many, you'll see the same data set.

    "What this industry needs," he said, "is a better way to predict what will happen."

    In its research, GfK discovered that 147.5 million replacement tires were sold through independent channels in 2016, at a value of $20.3 billion and an average per-tire price of $135, Portnoy said.

    Miles Moore, Rubber & Plastics News

    Neil Portnoy

    Passenger tires sold totaled 81.5 million, down 3 percent from 2015, Portnoy said. Prices averaged $113 per tire, up 2.8 percent from the previous year, he said.

    Light truck and 4x4 tire sales totaled 66 million, up 1.4 percent from 2016, according to Portnoy. Per-tire prices averaged $163, up 0.9 percent from the previous year, he said.

    Of the 41.7 million tires sold in the fourth quarter of 2016, 1.8 million were winter tires, up 5 percent from the previous year, according to Portnoy.

    "Once the snow begins to fly, winter tires become very popular, with an above-average selling price," he said. "But seasonality is less impactful for run-flats, while units and prices remain relatively stable over the year."

    However, the most important revelations from the data were the fluctuation in sales among popular sizes and the rankings among popular brands, according to Portnoy.

    Tires in size 225/65/17 sold 3.8 million units in 2016, up 25.9 percent from 2015, he said. Other sizes sold more by volume, but still sold less than in the previous year:

    • Size 195/65/15, 3.9 million units in 2016, down 3.5 percent;
    • Size 215/6/16, 5.2 million units, down 3.7 percent;
    • Size 205/55/16, 5.8 million units, down 8.1 percent; and
    • Size 265/70/17, 6.8 million units, down 8.5 percent.

    "That's the information manufacturers need to know," Portnoy said.

    Tire dealers also benefit strongly from this information, according to Portnoy.

    "They are getting information they never got before," he said. "In the case of some smaller dealers, this is the first time they've ever seen data from their stores."

    It is vital to keep the independent distribution channel vibrant, according to Portnoy. "We're going to make the industry smarter," he said.

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