NETWORK EXPANSION GATHERS SPEED
POINT S DEVELOPMENTS
The expansion of the network of independent outlets that has already taken place in the USA and South Africa is also gathering speed throughout Europe. For Italy, it has new goals, beginning with doubling its current share of the tyre market
Mino De Rigo
THE 2011 season was the most successful for the network with the green dot that has almost doubled the number of member outlets in the last six years. The result: 2,400 outlets in 26 countries, annual sales of 13 million tyres corresponding to a 6% share of the European tyre market in volume. But Point S, a cooperative that unites over a thousand independent retailers in a network of tyre and vehicle service centres, still has its foot on the accelerator.
Fabien Bouquet, head of international operations and general manager of specially dedicated company Point S Development, said: “The expansion plan envisages critical mass coverage by at least 50 outlets in each country or economic macro area: the most recent results include agreements signed in May with Slovenian distributor Špan d.o.o. for the setting up 20 Point S outlets in the coming years, and in June with the Swedish chain, Däckarna, which has 40 independent outlets”. A move that brings the number of associated centres in Scandinavia to 160 and to 24 countries in which the network has been established on the continent. As part of the framework of a wider network globalization strategy, they are in addition to the United States and South Africa: the former thanks to a partnership with Independent Tire Dealers Group (ITDG), which shares with Point S the organization model and the business formula centred around the purchasing group; the latter is based on an understanding with the Unity Tyre Trading (UTT) consortium composed of 11 retailers who own 18 outlets and envisages the association of 30 centres in the country’s main economic areas.
A market share doubled
In Italy, Point S has 140 outlets, the owners of which hold capital stock (in the specific case, capital stock in Pneus Service, the brand dealership) and maintain their entrepreneurial independence. “The network’s market share is about 2% in Italy, but the aim” – Bouquet emphasized – “is to double it within three years. A plausible goal considering that Italy’s distribution structure is certainly not helped by considerable fragmentation”.
As minimum requisites, not less than half of the membership candidate’s business must be associated with tyres, equipment must include at least one hydraulic ramp, and the level of service must be in keeping with the image of the brand. There are a few exceptions for emerging countries, provided that subsequent alignment is included in their development programmes. “This is because the expectations of quality are certainly not at the same level as those of mature markets. And growth margins are usually very wide”. It is to be noted that Spain is the only large European country that is not included in the network: “Basically” – Bouquet maintains – “the standard of quality does not meet requirements; in addition to which it is still a long way from finding a positive solution to its economic situation”. The motto of the green dot network can be summed up by “the most suitable product at the right price for the right driver” as part of a commercial and assortment policy that keeps its independence.
Independence above all
“If one of Point S’s constants is the maintenance of financial independence from the industry and suppliers, then another is the guarantee of profitability for our members with a model that leverages group buying and a very precise brand and positioning policy”. Sales targets are not an obligation.
But the other side of the autonomy coin that is the essence of the network is low capitalization which in fact prevents growth by acquisition. “But in any case we have achieved an international dimension that can leverage high quality standards and strong brand identity. Once the preparatory work is completed – and this takes up to three years when new countries are approached - the territory is developed with the support of numerous marketing actions and our members are the first to benefit from these”. And then there is the image of a brand that enables them to sell products with their own label.
Retailers are no longer alone
“For members” – Bouquet explained – “private labels are an obvious opportunity because they are based on excellent value for money. Another of our strong points is the framework agreements with the majority of the main leasing and rental operators. It is true that margins in the fleet business are often lower, but it is equally true that they can be offset by traffic volumes and a product mix that targets the highest segment”.
Two out of three members deal not only with cars and commercial vehicles, but also with trucks; light mechanics represents integration by default, with services ranging from oil changing to brakes, from shock absorber maintenance to exhaust and battery replacement. “Nowadays, specialist retailers” – Bouquet added – “cannot be alone. By joining our network they can count on the best opportunities for choice, without any pressure from suppliers, while staying independent but with substantial backup”. Which is useful because service has never been so complex, “it involves buying, marketing, sales, internet visibility; economic and financial management, IT and customer satisfaction, stock management, the monitoring of availability and the authorization procedures typical of fleets”. The declared aims of Point S now are to consolidate its positioning and complete its presence in Europe: during the next two years another 250 outlets will be added to the network.
• Tyres, spares and accessories
Not just tyres but also brake discs and pads, batteries and lights, disposables, accessories and vehicle cleaning products: this is the range of Point S products that are part of a strategy that fully leverages private labels, thanks in particular to agreements with such partners as Brembo, Ferodo, Varta and Philips.
Obviously, tyres are at the heart of the private label offer. They are made by one of the major European manufacturers under the umbrella of a line of tyres for cars and SUVs called SummerStar and WinterStar, respectively, in addition to the Summer Van and Winterstar Van series . “This year” – said Fabien Bouquet, managing director of Point S Development – “we have one million tyres available for sale throughout Europe. They are standard products made exclusively in Europe: quality tyres with an aggressive price tag because they are positioned behind the second line by the manufacturer who worked with us also on EU labelling”. Making its debut next year is the new WinterStar family, whereas the SummerStar, introduced in 2009 and updated in step with the developments in processes and manufacturing materials, will have to wait until 2015. “It is our custom to carry out independent tests of all the other products that are Point S branded: a quality policy that has its price but is amply repaid”.