Modern Tire Dealer

JAN 2019

Magazine for the professional tire industry

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M T D J a n u a r y 2 0 1 9 24 I n d u s t r y A n a l y s i s even in some months. At a high level, by continuing to give employees additional training via Monro U, reinvesting in store re-image initiatives, continuing to enhance its online presence, among many other efforts, should help them close the gap between competitors and should drive increased customer traffic with the ultimate goal of retaining those customers for many years to come. MTD: What are your thoughts on Sears? Healy: Sears is in an extremely precarious position, but all hope is not lost. I believe there is a chance for them to survive, but in a significantly reduced footprint and format from where they are now. I think they have the opportunity to exist for many years to come in their new concept — small format stores. However, for the company to thrive they really need to establish a product identity and try to garner relevancy with younger generations who will ultimately be the consumers of the future. As it relates to Sears Auto Centers, time will tell, but we do not see meaningful evi- dence that a turnaround is in the cards as of yet. While a partnership with Amazon has been formed, we note this is not exclusive. Additionally, we think entities like Costco and Walmart seem better positioned to get a share of wallet from consumers who elect to get their tires at big box retailers. MTD: What impact has tire manufactur- ers' online tire sales had on the market? Healy: Currently, tire buying research is done online but tire buying transactions are largely done in person, from our perspective. I do not think there are any notable impacts that these online efforts have had so far; they remain such a small percentage of overall activity and will continue to remain that way in the near-term. However, I believe that manufacturers need to continue selling through these channels and other manufacturers will enter these channels, as well. As the more digitally savvy generations get older and begin commanding a greater percentage of consumer spending, these online sales channels will gain increased importance. MTD: Do you believe online tire selling in total units will continue to grow? Healy: It would be crazy to think oth- erwise, but I think the migration will be gradual but continual. It may take some Healy: Monro's strategy mainly involves significant reinvestment into various aspects of the business (digital, consumer-facing initiatives, employee improvements, etc.) to help it break from challenged sales and historical under-performance against peers. From our perspective, the strategy is showing very strong early signs of success, with high-single-digit same-store sales levels for each of these manufacturers in 2019. With changes in distribution, how dealers buy and who they buy from will be key. e question we ask ourselves is — is the brand or the distribution partner paramount to the dealer? 2019 will tell us more. MTD: How would you describe the strategy of Monro Inc.? Is it succeeding?

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