Sam's units test Goodyear tires - Sam's Club

Discount Store News, April 4, 1994

FISHKILL, N.Y. -- The Sam's Club here is one of seven throughout the country testing the sale of Goodyear tires -- despite Goodyear's assertion that it will never sell to a club.

Although Goodyear agreed in November to sell a special makeup line, Viva, to WalMart, it vowed then never to sell to clubs. A Goodyear spokesman said his company is sticking to that pledge and that any Goodyear tires Sam's Club is carrying come from a middleman.

A tire associated in the Fishkill Sam's said his club orders the Goodyear tires through Sam's headquarters in Bentonville, Ark., so he has no idea where Bentonville acquires them. The slim margins of clubs, in the 8% to 10% range, leave little room to pay a wholesaler's markup.

Sam's is testing two of the regular Goodyear lines: Invicta and Eagle, as well as its Aquatred and Tiempo models, so the test clubs carry many of the identical tires that independent Gooodyear dealers stock.

When Goodyear agreed to sell to Sears in 1992, it also developed a makeup tire that wouldn't compete with the lines its dealers carry. The move into the mass market, nonetheless, caused an uproar among its independent dealers, who feared the added compettion in an already firecely competitive tire replacement market. Similarly, Michelin developed a special discount line when it began selling to Kmart and a special club line when it begann selling to Sam's.

Writing in its Goodyear's Dealer Magazine, Barry Robbins, vice president, marketing, Goodyear North America, defended the move into mass merchandising channels as a "strategic course of launching pre-emptive product for the replacement market, building brand equity and revitalizing the distribution of Goodyear products."

Over the past two years, Goodyear added 1,500 outlets for the Goodyear brand, including Wal-Mart, Sears and Discount Tire, a West Coast chain, Robbins, wrote.

Along with the Goodyear lines, the Sam's Clubs in the test also carry Michelin, General and Pirelli.

Tires are a key category for clubs, accounting for $1.07 billion of the club industry's 1993 sales, James M. Degen & Co. estimated in a study for Club Business, a newsletter DSN publishes. Clubs stock between 110 and 140 tire skus and devote between 5,000 sq. ft. and 5,300 sq. ft. to the category. Modern Tire Dealer estimated that clubs acocunted for 8%, or 13.2 million, of the 165.5 million unit replacement tires sold last year.

Effective March 1, the Goodyear Viva line replaced General tires in the 520 Wal-Mart stores that operate a Tire & Lube Express Center. The balance of the 2,022 Wal-Mart discount stores don't stock tires since they have no tire mounting facilities.

The Fishkill Sam's Club also reveals another tire development: a special tire sales room at the store entrance displays a sample of the tires it stocks. The tire salesroom has its own register, so customers don't have to lug their purchases through the main registers. It offers a standard Wal-Mart wooden bench for customer to sit on while waiting for their tires to be mounted.

In another improvement, Sam's tire clerks will pick a customer's tires from the stock on the floor and carry them to the service bays from the tire salesroom.