A while back I was talking with Don Heelis, sales manager for Cimcorp Automation Ltd., a firm that supplies automated handling systems for tire manufacturing and distribution.
Once we finished talking about the inroads Cimcorp's "Dream Factory" concept has made in the past couple of years, the topic shifted to the buying habits of younger generations along with how the retail game has changed. Think rise of Amazon and fall of Sears.
As a bit of background, Heelis said he's raised three millennials. And he can say for certain baby boomers are not millennials. When baby boomers came of age, a great majority of them wanted to have a car, and they were willing to work on the vehicles themselves. Their fascination was with the vehicle itself, while the younger generation has a similar emotional tie to the smart phone.
As for his kids, they own vehicles, and they will put gas in it, but he said even that's an effort for them. And the younger generation, when buying tires, wants them now. He said that shift in buying behavior has a direct impact on tire manufacturers, with a trickle-down effect for companies like Cimcorp. With the escalating number of tire sizes, a service center can't keep everything in stock, so that brings the need for regional distribution centers.
That is one of the main drivers for Goodyear and Bridgestone forming such an alliance as TireHub. You have to have a facility to get the product to market, but it's an expensive proposition. You can't replicate this in every city, Heelis said, so you have to consolidate them and have a way to get the product out in an acceptable time frame.
Then we got to talking about Sears, the massive company that grew with baby boomers but now is struggling to survive. Sears, in its day, had excellent distribution channels and the massive catalog with a wide variety of products. They also sported some of the strongest brands in appliances with Kenmore and tools and power goods with Craftsman. I told him how I never would buy a lawnmower other than a Craftsman because of the quality, but how my latest one—bought at a local hardware store that carried the brand—was clearly inferior.
Heelis said in a way, what Amazon offered on the internet was similar to the old Sears catalog. So how did Sears miss that and get trampled in the process?
For one thing, Amazon isn't a traditional retailer with brick and mortar stores and legacy costs to support. They're more of a software, automation and order fulfillment firm, that just happened to be selling retail products. They didn't make anything, and they looked at everything a totally different way.
This also can be a lesson for the major tire companies. They may see where they need to get to, but they have to make sure they know the best way to get there.