an Iga viewpoint
Will You Be a Boiled Frog
or a Leap Frog?
by Tim Smale
Have you heard the news? It just hit our industry, and it will probably have a great impact for independent glass shops everywhere. Safelite and Pep Boys entered a partnership that will promote auto glass replacement and repair at Pep Boys service centers in 37 states. With the addition of Pep Boys 7,567 store and service network, Safelite now has 8,000 locations in which to do auto glass repair and replacement. So what? You might say we have seen this kind of partnership come and go. Think again.
Auto parts retailers are focusing much more on service these days, and service-oriented chain stores tend to be skilled in merchandising services. They also have greater resources than independent shops do to obtain technician training. This is especially true since the do-it-yourself trend is decreasing and the do-it-for-me trend is increasing. A recent study showed that there are an estimated 35,800 service bays in auto parts outlets. Details of the Pep Boys deal with Safelite are unavailable, but any tendency for business to be directed to shops other than independents cannot be good for independents.
That is just the way these things starta deal here, a deal there, a company sold here, companies acquired there. Consolidation is akin to the boiled frog syndrome, not as a delicacy, but as an analogy. They say (I have never tried it) if you place a frog in boiling water, it will immediately jump out. However, if you place it in a pan of tepid water and slowly turn up the heat, the frog cant detect the change in temperature and will boil to death!
I believe that we are seeing the signs of consolidation in this industry, and in every case I have ever seen, independents suffer when this occurs.
During my 13 years with Dana Corporation, a $14 billion leader in the automotive and truck parts industries, I learned a few lessons that may apply to the glass business. First, I saw the automotive industry transition from independents to retail chain stores. Then, I saw the same thing in the heavy-duty truck parts world. Many of my independent customers and friends either sold out to the nationals or became one of the many chain stores. Programmed distribution they called it. Personally, anytime I hear something is programmed, I can envision the sameness that will soon occur.
Consolidation is about taking waste out of a process and making it more efficient, and thats what national chains do best. Taking cost out has a huge, positive effect on profitsmore than adding volume or raising prices. Chains know how to standardize a process to take cost out for themselves and consumers. I dont have any problem with standardization and efficiency gains that naturally come as a result of consolidation. Its only a problem when its done at the independents expense. When we start to see chains like Safelite enter into partnerships such as this one with Pep Boys, and auto glass repair and replacement services offered in Walmarts (coming soon to a town near you), we have a commodity on our hands that is ripe for consolidation. The chains mass marketing and cost-efficient ways of getting to market means trouble on the horizon unless you beat them in their own game.
How can you compete against the consolidating powers of the national chains? The best way for independents to survive the onslaught of consolidation in this industry is to work together with other independents to ensure their survival. Here are some ways you can survive during this period of consolidation:
Join a group buying program;
Make informed decisions about how, and to whom, you send your insurance invoices;
Market quality and safety to your customers;
Join trade associations;
Participate in group forums that match your business philosophy and are working to give you a better, more efficient way to do business, and help you sell service.
The IGA is developing programs (like a national warranty, group buying program and training and certification assistance) that are designed to help you compete directly with chains and keep the effects of consolidation to a minimum.
The great baseball player Lou Gehrig once said, You dont get the breaks unless you play with the team instead of against it. If you are an independent and want to stay that way, join others to help you become stronger, and you will stand the test of increasing consolidation in the auto glass industry.
Tim Smale is chief executive officer of the Independent Glass Association, a non-profit trade association of approximately 800 independently-owned and operated member glass companies across the United States.
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