Goodyear boss highlights radical changes in tire distribution

Akron, Ohio – Trends around stock-holdings at distribution companies show how tire makers need to adapt radically to customer-driven changes in the market, believes Richard Kramer, chairman, president and CEO of Goodyear.

In a keynote speech at the International Tire Exhibition & Conference in Akron 12 Sept, the Goodyear boss described SKU (stock keeping unit) proliferation as “an early warning sign” for the tire industry.

This proliferation is driven by automotive vehicle makers, continued Kramer, commenting: “Vehicles are changing rapidly to deliver what customers want.”

Noting that an average of 625 SKUs tire stores in 2017, compared to 267 in 2000, Kramer estimated that a dealer with two full sets of tires under each SKU in 10 stores would need to stock 50,000 tires every day.

“This trend puts a premium on distribution,” he said. “Dealers need multiple deliveries of tires each day, and that raises the value of distribution. It is a major factor in the consolidation of independent tire distributors.”

Goodyear, therefore, joined with Bridgestone to create the TireHub distribution network as a strategic response to SKU proliferation.

“We can better serve our customers by having our tires available when and where they want to buy them,” Kramer claimed. “We capture the value of our brand, rather than diluting it through distributors who might be promoting another brand over ours.”

Kramer went on to forecast that by 2030, 25% of vehicle miles travelled will be through shared vehicles, as compared to 4% in 2015. H also emphasised that Goodyear’s e-commerce platform was not designed to replace dealers

The emphasis of the market will go from individual vehicle owners to fleets, but none of that will change the need for independent dealers, according the Goodyear CEO.

“We believe that dealers are a key for us to get to consumers,” Kramer said. “At the same time, we bring customers into their stores. Goodyear e-commerce does not replace going to dealers, but just reflects how consumers want to shop.”

Edited from article in Rubber & Plastics News, a US sister publication of ERJ.