PNEUSMARKET SPREADS ITS ROOTS IN THE NORTHEAST
A NETWORK IN EXPANSION
With a shrewd expansion policy that this year included 4 new outlets in Veneto, Alto Adige and Romagna, the chain in the northeast has strengthened a business that hasn’t excluded partner shopping and aims point-blank at 360-degree service
Mino De Rigo
THE NETWORK is growing step-by-step with new outlets that enable it to extend the borders of a presence that is traditionally in the north-east and the relocation of points of sale that consolidate the spread of its roots in the territory. This is how Pneusmarket, the Marangoni Group’s chain of service centres, is pursuing its expansion. But there are none of the previous leaps ahead in a crisis with a stranglehold on a sector that has seen the yearly collapse in volumes that is now dangerously close to 30%. “We continue to be in the best position in the market” – stated Stefano Zotta, CEO of Holding Pneusmarket – “but we have felt the effects of the economic situation. And, albeit slight compared to the previous year, the downturn in the first seven months of 2011 was close to 5%”.
With 41 proprietary services and 20 affiliates (two of which in joint ownership), 7 warehouses and 270 employees, in 2011 Pneusmarket’s turnover was about 75 million euros, 60% of which came from retail and 40% from distribution. “Today’s commitment” –Zotta went on – “confirms the resolve to expand the historical territory: after our drive into Lombardy, we widened our field of action to include Emilia Romagna”.
The network expands its territory
The aim is to have good coverage of the territory, gauge investments and consolidate sustainability. To open a new point-of-sale we have to find qualified local partners and be equipped to provide a service that is consistent with network level. This is what happened in Romagna where we opened three centres in the space of three years”. The first was in Ravenna in 2010, followed by an outlet in Cesena; a service centre will soon be opening its doors in Faenza.
Pneusmarket pursues its overall expansion at a rate of two new proprietary outlets a year. “In some cases we chose to refurbish existing centres and relocate them in areas with more traffic and amenities. This was the case of the centres in Bassano (Vicenza) and Castelfranco Veneto (Treviso), which had earned new locations before the summer and, at the same time, raised their standard of service. “Primarily” – the CEO of the northeast chain pointed out – “they are centres that target cars. By 2014, the number of directly managed or affiliated outlets should be higher if in the meantime there should be opportunities with the entry of other companies”. The recipe that keeps the engine of development turning consists mainly of a wider range than that offered by the typical competitor chain, and attentive customer service that can make the difference.
More services, busier outlets
We are losing less than others” – Zotta added – “because our points of sale are better able to support sales volumes compared to smaller ones. Customers who don’t want to spend much and might even turn down premium brands, are more likely to go to a large specialized centre where they will find offer and services, rather than to a workshop or the local garage. Service is at the basis of good customer relations and satisfaction, and we try to get them to come back to the outlet as often as possible”. And with a view to increasing the occasions for services, it has introduced lines for vehicle inspections which, for the moment, will involve four of the chain’s centres.
The high cost of fuel means that vehicles are used less and, combined with the numerous critical aspects of the economy, this delays the acquisition of new cars. Maintenance has become imperative and Pneusmarket centres aim to offer customers access to all-round multi-services. They have a multi brand offer and rapid logistics that can count on 7 depots in the Bolzano-Trento-Verona axis, in addition to Padua and Udine”. Across the Pond they would call it “one-stop shopping & servicing”, and this is thanks to a comprehensive range that goes from tyres and sport suspensions to light mechanics, scheduled maintenance and vehicle cleaning.
The value of customer relations
At the moment” – Zotta pointed out – “not all our centres are equipped to carry out all the services, but we are heading in that direction. To increase profits services must be developed further. And no road will remain unexplored. Apropos of this, with an insurance company we are looking into the possibility of acting as an agency. We could use the outlets for other activities outside the sector, but the revenues are not worth the effort”. Also contributing to its turnover are fleets, “which not only account for about 10% of the car business turnover, they also help to increase outlet activity. Drivers who have leased or rented cars often have a family and they tend to use our centre so it becomes a reference point also for work on all the other vehicles in the family.
In general, our aim is to be chosen because of our attentive and very precise service”, on which Pneusmarket is relying to maintain its position. “Also because” – Zotta emphasized – “we use our product margins to make us even more streamlined. Tyre specialists must give up the long-held notion that has always associated earnings with tyres and understand that optimizing their business is the only way to stay in the market. They must use the weapons that other channels don’t have and which customers need: quality service”. Which also means reminding them about maintenance and getting them back into the outlet frequently.
Industrial and agricultural business
This must be made to bring results. And if customers are loyal they will be given preferential treatment, unlike those who arrive carrying their tyres”. Some of the Pneusmarket outlets are dedicated to more than just cars, motorbikes and light transport, they also service agricultural and industrial vehicles. The latter is a sector with problems, but it still amounts to about 30% of the chain’s annual revenues of 75 million euros. “The segment” – Zotta said – “is obviously in trouble but there is no shortage of healthy customers. Rather than invest in workshops that need a lot of space and, as a consequence, have high rents, we preferred to expand the network of vans for mobile assistance: customers don’t waste time and money to get to our outlet and the overall service is better. As to agricultural and earth moving vehicles, this is a business we handle by zone”. Volumes in Trentino Alto Adige come from agricultural vehicles used for harvesting fruit and have fairly small tyres, but in Friuli Venezia Giulia agricultural vehicles represent more regular business that increases Pneusmarket’s sales by about 750-800,000 tyres annually. Another development is the upcoming inauguration of a new outlet in Merano, which will bring the number of new outlets in 2012 to 4: a good sign for the future.
• Pneusmarket model ready to set an example
It is true that in the past those who tried failed, but today” – Stefano Zotta maintains – “the market is going in the direction of shortening the supply chain and this is already obvious outside our borders”. And the crisis shake-out that is making selections could accelerate the issue. How is the network organized? The Holding controls four operating companies that divide the territory.
The key management figures are Pneusmarket partners with full responsibility for commercial activities. “Obviously, direct involvement in the company’s financial results translates into greater drive to perform.” Of course the accelerator is not only applied to directly managed outlets but also to the affiliates. Pneusmarket expects them, first and foremost, to respect the image of the brand on the basis of precise parameters with regard to signs, pop material and clothing in addition to equipment, reception, centre tidiness and cleanliness. “Quite often we provide the affiliate with office furniture that we have specifically designed, or with internal renovations: retailers can also receive all this as a bonus based on turnover results”.