Almost all U.S. tire dealers offer wheel alignments as an additional service. But not Discount Tire Company.
Bruce Halle, its chairman, insists that by keeping his business simple—it just sells tires and wheels—he can maximize value for customers and establish a more distinctive brand.
Halle founded the company in 1960 when he opened his first store in Ann Arbor, Mich. Today, the nation’s largest independent tire dealer has more than 800 stores and $3 billion in annual revenue.
Halle’s competitors keep expanding their service and product offerings to capture a bigger chunk of car owners’ expenditures.
Why does Halle resist? Because his strategy is to address what the consumer is actually buying: tire replacement.
Most drivers just want to get in and out quickly with tires that work properly. They don’t care about the brand; they simply want a reasonable price and a fast, painless experience.
Halle motivated his mechanics to replace tires as speedily as possible.
He also designed his stores to be comfortable. Even the restrooms are cleaned frequently.
As a result, most consumers come away satisfied with their purchase. They get a good deal—the company offers low prices—in a setting that’s clean and efficient.
Excelling in this niche, Halle didn’t change the formula as his company grew. He saw how his rivals added wheel alignments, but he knew he’d need to recruit higher-paid mechanics who might not mesh well with lower-paid tire employees.
Moreover, Halle knew that wheel alignments require heavy use of service bays. This would prolong customers’ wait for replacement tires, thus risking the core advantage that differentiated Discount Tire in the first place.
— Adapted from “The synergy mirage,” Michael Rosenbaum, www.chiefexecutive.net.