In undercarriage components, independents have seen their share drop from 46 percent to 35 percent, while dealers have risen from 32 percent to 43 percent.
Electrical? Independents owned half the business in 1989; 20 years later it had dropped to 38 percent. Dealers, however, saw their share double from 13 to 26 percent.
This was the unsettling picture that equipment market research firm MacKay & Co. painted earlier this year during Heavy Duty Aftermarket Week.
While not everyone in the industry agrees that the independent distributor is in such dire straits, there is little argument that the aftermarket has been changing. Today's independent distributors face increased competitive pressures for a number of reasons, including:
* Increased emphasis on all-makes parts programs by truck makers and dealers - including access to relined brake shoes, previously the bailiwick of the independents
* Increased heavy-duty commodity parts offerings from retail auto parts chains
* Rapidly changing technology in truck equipment and limited access to electronic diagnostic information needed to service some components
* National fleets turning to original equipment truck manufacturers and their dealer networks for parts sourcing, driven by OE central computer capabilities and national footprint.
During an HDAW '10 session looking at the dealer vs. distributor battle, Bill Ryan, owner of Point Spring and Driveshaft, says his strategy is to try to stay ahead of the curve. Point Spring has 10 locations in Pennsylvania and surrounding states, 50 service bays and $6 million in parts inventory.
"Although the dealers have always been the biggest competitor, in the last 10 years we have looked at them and said, 'We have to be the best in the supply chain. Wherever we can improve, we will do it.'"
Traditionally, one of the strengths of the independent distributor has been the knowledge of its people and their ability to provide excellent customer service. Make sure you take full advantage of those strengths, improve upon them and market them aggressively, whether it's your free delivery, breadth of inventory, extended shop hours, or the ability of the customer to reach a true parts expert at a moment's notice.
Ken Luzader has been on both sides of this issue, having worked for a Cummins distributor, an International truck dealer, and Clarke Power Services.
"The first thing the independent HD distributors need is to provide real value to their existing and potential customers," he says, including being an expert on the products they sell, stocking a broad and deep product offering, and understanding the customer's business needs.
"The HD distributors need to have good technical knowledge of their products - know related parts needed for a repair, know what substitutions will work if an item is out of stock or no longer available, even basics like knowing where to find the part number."
Luzader points out that the OE competition that's doing all-makes is trying to support many different product lines. "They are usually really good at supporting their franchised product line, but that is where the bulk of their knowledge and inventory investment is usually concentrated."
Steve Crowley, president of Vipar Heavy Duty, echoes that argument.
"The independent distributor has a huge advantage of product knowledge, not just what the OEM told them about," he explains. "There are a lot of countermen and service guys that really know a lot about commercial vehicles. And at the end of the day they know the customer better than the other guy. No matter what brand of truck, they know what works best for that vocation."
Staying on top
As the industry faces an increasingly older workforce and rapidly changing technology, it's more important than ever to make sure you recruit, train and develop your people to stay on top.
Andy Robblee took over as president of longtime distributor Six Robblees' about 18 months ago. "When I took over as president, our longest tenured employee retired; he'd been here 45 years," Robblee says. "And we have many employees like that, with tremendous knowledge. Customers come to rely on that. They say, 'I trust this guy, he knows what he's talking about, he knows what he can commit to and what he can't commit to.'"
Building those great people of the future is something Robblee says he's "always at work at." His company does have a training program, he says, but admits, "We need to have a strategy for replacing some of the retiring people. In some branches we have a great succession plan. In other areas it's up for grabs. We'll have to stay vigilant on that one."
Technology also can help you make the most of that knowledge resource. Online ordering, for instance, can help free up counterpeople from taking routine phone orders. Computers at their fingertips give them even more resources to help the customer beyond what's in their own brains.
"Technology and upgrading your system every few years used to be a nice thing, but now it's table stakes to stay competitive," Crowley says. "For instance, information systems to keep counter people and service people locked into the information so they can have latest service bulletins and techniques. The same for sales people so they know the technical pieces of the part, and are able to sell the right part."
A national footprint
Most independent distributors focus on local and regional business. Lyle Bass, president of Power Train Service with nine locations in Indiana, Kentucky and Ohio, says as far as he's concerned, the dealers are welcome to big fleets like UPS and Yellow, because they mean lower margins.
But there are opportunities in adding multi-region and even national fleets to your customer list. Marketing groups, for instance, are adding locations and using technology to help members solve the footprint issue.
HD America, for example, offers fleets a consistent pricing program, national warranty program, local or national billing, a preferred fleet card program and more.
At Vipar, Crowley notes, stockholders (its term for members) have access to "a fairly sophisticated array of tools to compete on a national or regional basis, using the strength of the network." For instance, Vipar allows distributors to offer a number of high-tech programs for large super-regional or national fleets, such as centralized billing, online parts ordering, electronic catalogs, customized catalogs, paperless purchase orders, data mining and more.
"We can do anything a dealer can do, and I believe we can do it better," Crowley says. "It really allows the distributor to compete with almost anybody."
To the service bay
A number of distributors and industry observers believe adding a maintenance and repair dimension to the business is one of the best ways for independent distributors to thrive.
"The best way to make inroads in selling fleets parts is to provide service for them," says Dave Fulghum, vice president of MacKay & Co. "The fleets continually say they would like to outsource service work, but our data doesn't suggest the dealers have picked it up. Independent garages that provide service continue to grow share in the face of the OE dealers trying to push back."
As Point Spring's Ryan points out, "It just makes you so much more valuable to the customer."
When you're offering service work, you can sell the part at a higher margin than you would selling it wholesale to an independent garage or selling at a bulk discount to the fleet. Plus you make money on the labor.
"I believe customers have a real need for people who can do service work," Ryan says. "Really, that's not the business they're in. They're in the business of hauling kids in buses or hauling refuse to a landfill or putting up a telephone line or hauling freight. So I think there is an opportunity there."