Angled Hindsight: Use Partnerships to Secure Success By Nick Staub They say hindsight is 20/20. With the changes we’re all experiencing in the industry, it sure would be nice if we had that clarity today. I think we can get that view if we look back and sideways. The rotating electrical portion of the auto parts industry is far less mature than the general auto parts industry. I have watched mega companies, well…freak as they enter the world of volume auto parts distribution. The level of competi- tion and razor thin margins are balanced by ginormous volumes and shaky A/R. Not a place for the weak of heart. I believe the general auto parts industry is about 20 to 30 years ahead of where we are today in the rotating electrical field. Yet we are definitely related parties. Perhaps we are like that uncle they don’t talk about. If ’’m right, which would be galactically unlikely according to my wife, co-workers and children, how can we look in the auto parts rear view mirror to see what is in store for us? To answer this you have to remember what the auto parts industry was like in the mid 70s through the 80s. In the mid 70s there were tons of independent auto parts stores. There were very few, if any, programmed jobbers. That was what we called NAPA stores. They had gone into a program. The independent stores of the day shopped their WD’s against each other to get the right deals and they ran their businesses the way they wanted to. The independent store owner was king. Yet as time progressed, the independ- ent parts store began to lose its ability to leverage its purchasing volumes as effectively with the WD’s. Certain WD’s began to say “if you choose to buy from the other WD down the street, then I will sell directly to the garages that you sell to.” To which the parts store owners said, “Then we’ll never buy from you, you no good &#@%!” The parts stores began to have to choose alliances more strictly. They couldn’t support those who would com- pete with them, that was a given. That alone reduced the number of vendors they could play against each other. Loyalties to certain WD’s actually helped some independent owners because the WD’s gave them extra dis- counts for increased purchasing. The kingdom they once enjoyed was not quite as cushy as it used to be, but it was still better than being a peasant. The industry evolution was only beginning however. WD’s that didn’t sell directly to garages watched those that did and thought, “Hmm, look at those guys. They’re selling to the garages for less than the parts store was, but higher than what they sold to the parts store for. They are cutting out the middle man and increasing gross profit at the same time!” This caused a couple of reactions. One was that more WD’s began to “cross the line” and sell direct. The second was that the WD’s who chose to be loyal to the parts stores started to flat demand the parts stores purchasing loyalty in exchange for the suppliers market loyalty to the distribu- tion chain. Now the kingdom was defi- nitely under attack. This is when program parts stores really began to take over. It was the only safe harbor for many independent store owners. Their loyalties were being demanded from all suppliers and they only had so much to go around. Kinda like the finger in the dike theory. Once both socks are off, you’re options are truly limited. Anyway, as NAPA developed and Carquest entered the fray, the independents chose their dance partners or died. Although they gave up some inde- pendence they received many benefits. Many were hand held into the computer age. They were sharing information and learning ways to make their busi- nesses more efficient. They spent more time selling parts and less time shop- ping vendors. The store owners were still the customer and they still had independent blood coursing through their veins. They would not always fall in line and occasionally they would buy outside the program. But not so much that it jeopardized their “mem- bership.” That was the inception of true partnering in the automotive industry. Both parties brought some- thing significant to the table. Supplier brought product, data, and advertising among other things. The independent store owner brought the financial investment, entrepreneurial drive and the relationships that it had forged over many years. Now the kingdom was permanently changed, new flag and all, but Big Brother is there now to help light the way and we can still shake our independent tooshies when we want. Today the bond of partnering in the automotive industry is simply unbreak- able. It would not matter how good and cheap your units might be, it is nearly impossible for you to sell products to many NAPA stores unless the unit doesn’t exist in their program or they are temporarily out. They are so inter- twined with their supplier that buying outside of the program requires special procedures. Special procedures increase cost. Special procedures are difficult to teach to n