Bridgestone: Romano Daniels

Bridgestone: Romano Daniels

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At a time when franchising was mainly characterised by burgers, restaurants and hardware stores, a major tyre manufacturer spotted the opportunity to do something unheard of – apply the franchise concept to the tyre industry.

Bill Taylor, MD of Firestone in the early 80s, believed that it was possible to establish a retail arm that would bring together the smaller operators currently trading in the market. This belief lead to the opening of a pilot Supa Quick store in Port Elizabeth in 1986, and over the past 25 years, Supa Quick has grown to become the biggest tyre franchise in South Africa with over 250 outlets across the country.

The franchise now falls under the Bridgestone Retail brand owned by Bridgestone Holdings, following the subsequent acquisition of Firestone by Bridgestone in 1996.

According to Romano Daniels, MD of Bridgestone South Africa Retail, when Supa Quick first entered the market the industry was characterised by a low focus on service. The franchise was poised to turn this perception around by delivering on service expectations.

Developing the Franchise Model

Daniels explains that the introduction of the Supa Quick franchise saw a slight shift in focus, in comparison to where the company started. “The core business was tyres because of the association with Firestone,” he explains, adding that the challenge was striking a balance between the owner of the brand who was supplying tyres and the profitability objectives of the franchise operators. He says that Firestone had to determine how to sustain an independent retail brand without compromising the future sustainability of its own brand.

In the late 80s a true franchise model emerged: one that was no longer only about tyres and pricing, but provided a back-up service as well. There was a strong support team that helped individual operators be part of the supply chain.

Daniels says a coach and mentor dynamic was needed. “In franchising there is a catch phrase, ‘Be in business for yourself, but not by yourself’. We needed to mentor a number of individuals and give them the option to be part of a franchise system.” He adds that Supa Quick was the pioneer of tyre franchising.

Lessons Learnt

While Firestone was breaking ground with its new franchise, Daniels says it learnt some very important lessons. “Whilst there was a need to distribute tyres through a channel, there were also needs on the other side. The operators needed to make money. There needed to be a balance between distributing the product and making money.” Daniels explains that as a manufacturer it was easy to view the world from one side of the fence, but once you put a foot on the other side, your perspective changes.

The brand realised that a different partnership had to be formed. The expensive lessons were learnt in the realisation that the relationship between a supplier and customer was different from the relationship between franchisor and franchisee. Supa Quick Pty Ltd was formed as a new company to manage this relationship, and the structure of the company was based on how best to manage franchisees. Within the Supa Quick company, much focus was placed on things like relationship partnerships and support structures to make it a viable business proposition.

Growing the Brand

From the early 90s to 2000, the Supa Quick brand enjoyed “massive” growth. Daniels attributes this to the franchise being something fresh to the market. He says the franchisees experienced tremendous success. But when something is successful, it attracts competition. “There were suddenly new entrants who wanted a slice of the pie. But this is always a good thing.”

Daniels says there were now a few franchises starting to compete in the tyre industry and that the free reign Supa Quick enjoyed before had to be shared. “The increased competition forced Supa Quick to challenge itself to maintain profitability and diversify its product range,” he explains. While the brand was extremely successful with tyres, it couldn’t sustain this level and there was a need to diversify.

“The entire brand shifted from tyres, and added shocks, batteries and exhausts,” says Daniels. This developed the model that Supa Quick is still currently applying as part of its franchise offering. In the ten years from 2000 to 2010 the model established a unique space for itself in the marketplace, Daniels explains.

Franchisees can take comfort in that they are not only competing on tyres, even though this is still the bulk of the business. The closest opposition to Supa Quick now are tyre and rim businesses.

According to Daniels, the brand’s turnover exceeds R1,5 billion a year and the aim is to be at R2,5 billion by the end of next year. Supa Quick is responsible for up to 30% of all tyres distributed in South Africa.

Remaining Relevant

Supa Quick, says Daniels, is in a strategic position to compete effectively by offering a model unlike any other to both franchisees and customers – a model comprising a one-stop-shop. “The strongest brand equity is a customer’s perception of the product,” he adds.

Looking at the decade ahead, Daniels says Supa Quick is working on a new revised model that will have a distinct differentiation in the marketplace. “Whenever we introduce something, people copy us, we pull ahead and people follow,” he adds.

Supa Quick has identified the major challenges it faces and is working on the next “leap forward.” Daniels says there have been two major shifts in the marketplace which affected the operations of the franchise. Firstly, Original Equipment Manufacturers (OEMs) have changed their products to make them more efficient; they are using components that last much longer than in the past, which has resulted in a decline in turnover in specific product categories for the industry. Government’s move to reduce the sulphur content in fuel has also resulted in less corrosion, and a reduced need for repairs to exhaust systems. Daniels says Supa Quick has to find new solutions for the next ten years to pull ahead of its competitors.

The other major shift has been in the world economy. “Consumers’ wallets have been arrested by debt. About 75% – 78% of their disposable income goes towards servicing some form of debt,” Daniels says. He adds that Supa Quick deals with a product that is more of a grudge purchase. People don’t have available income, but the products need to be purchased. “Most people do not budget for the product on a monthly basis.” Daniels says the franchise is looking at ways to manage the brand, maintain its customer base as well as attract new consumers, but in the same vein maintain a sound franchisor/franchisee relationship. “The operator has invested money, so when there are changes in the marketplace we have to look at how we adjust to the changes in the best possible way.”

Another factor is that cheap imports represent 35% of the market. Daniels says the challenge is to maintain a profitable model for franchisees that are selling a product they need to make money out of.

Keeping Watch

Daniels says it is vital to look at how to position the business to ensure that relationships are formed to attract and retain customers. He emphasises that a model that secures repeat business is required for the next ten years.

Further, Daniels says the franchise has to watch what is happening in the market all the time. For example, the proposed roadworthiness legislation, if implemented, will require that every vehicle which is ten years or older produce a roadworthy certificate every two years. “We have to watch new car sales, the second hand market, government legislation impacting the Ministry of Transport and road infrastructure,” he says.

“To be successful in the next ten years we have to change our footwork. We can’t do the same things to retain customers as we have been doing for the last 20 years. If the next ten years look the same as the last 20 years then we are failing.” However, understanding a problem, is 50% of the solution.

Attracting Franchisees

According to Daniels the tyre replacement market is now characterised by tyre franchising, and there are, relatively speaking, very few individual operators. “The South African consumer trusts franchise systems. There is a higher trust index buying from a franchise rather than from someone consumers know very little about,” he adds.

Supa Quick mainly attracts two types of operators; retailers from non-tyre franchise systems who want to do something different and existing tyre retailers mainly from the opposition. Daniels says some franchisees are lost to the opposition as well, but Supa Quick recruits more than it loses.

The franchise wants to have the largest tyre footprint and as such has an aggressive recruitment strategy. “We focus on recruiting prospective franchisees who could benefit from the brand, but the brand must also benefit from the operator. The brand services you and you service the brand.”

The Importance of the Right Location

According to Daniels, consumers change their behaviour and the manner in which they travel to a point to spend money. Supa Quick devotes resources to developing market intelligence that guides decision-making and ensures that outlets are positioned in the most suitable locations. Timing is also a very important consideration. The information collected is used to predict how consumers will visit certain places to spend money over the next three years.

Daniels says it is essential for a Supa Quick franchise outlet to be visible, accessible and convenient. “A customer is already irritated by having a flat tyre, they don’t have the patience to seek out a building that is hard to find,” he explains. Instead they will choose a brand that they are constantly exposed to.

Supa Quick works with its franchisees to relocate if they are outside the ‘shortleg’ (the route to buy) and open up new stores where there is new development. But, Daniels says, there is a shortage of ideal sites. Although Supa Quick has achieved success in spite of location, he concedes that site management is a critical driver of any sustainable business.

Learning the ‘Supa Quick Way’

All franchisees go through ‘The Supa Quick Way’ training to expose them to the retail company’s culture. But one of the things the franchisor is constantly improving is its formalised training programmes. ‘The Supa Quick Way’ training is ongoing and teaches franchisees and their staff how to manage the customer from the initial visit to waving them goodbye. The franchisor also offers training to the technical team employed at a franchise, including the branch manager and sales people.

Supa Quick has a dedicated training facility and a technical training manager who visits every Supa Quick site to check and assess the staff as competent. Daniels says staff turnover in the industry is relatively high, so this is something that constantly needs to be checked. There is also an area manager who services every Supa Quick to deal with any complaints. “We can’t allow one franchisee to hurt the brand,” he adds.

The evolution of the brand

The red and white colours used in the Supa Quick branding were taken from the Firestone brand. The brand’s name was conceived on the premise that one day service excellence would become the buzzword. ‘Supa Quick’ was chosen because the waiting time for tyre fitment had previously exceeded one hour. The franchise wanted to reduce the waiting time so that customers would say ‘that was super quick’.

The Supa Quick Franchisee

Daniels says it is important for franchisees to have an entrepreneurial streak, over and above financial ability. The franchisee should also appreciate the Supa Quick brand and understand that they are part of a bigger system. “If they don’t understand that they have to comply to a directive, there will be a problem.” In the interview process, Daniels says franchisees are selected on the basis that they understand these two things.

Franchisees are recruited from other retail franchise businesses and competitor franchises. It is critical that they fit into the organisation because of the culture, says Daniels. They should be comfortable fitting in with the way the franchise operates.