Business Unusual

What has made Tiger Wheel & Tyre so successful?

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AN EXCLUSIVE WITH CEO OF TiAuto GROUP OF COMPANIES ALEX TAPLIN the new face of retail following COVID-19

Mention Tiger Wheel & Tyre to the average consumer and their first impression of the retail chain is generally a positive one. Suffice to say this premium retail brand has long been considered a benchmark in the market. But with the lockdown threatening to cripple an already ailing economy, will the fine reputation they have worked so hard to build help to ensure the Group’s survival? 

We pinned down Alex Taplin CEO of the TiAuto Group of companies for an exclusive interview.

Alex, thank you for making the time. How would you respond to the perception that Tiger Wheel & Tyre, in particular, has essentially set the benchmark in the tyre and fitme nt sector? 

If this is the common perception by customers and peers, then I am humbled and obviously pleased. We certainly never set out trying to build an industry benchmark, but what we have been relentless and ruthless in, is perpetual improvement and an insatiable desire to deliver the best in everything we do. And because entrepreneurship is embedded in our culture, we challenge ourselves daily to find new and better ways to do things.

‘Status Quo’ people rarely feel comfortable in our organisation as we thrive in an environment of discomfort and disquiet. We believe inherently in the ability of people to improve themselves and their organisation and I drive everyone quite hard to ensure they achieve this.

“To make a mistake is human, but to never try is inexcusable”. 

Would you say this perpetual driving force is what differentiates you? 

Perpetual innovation runs in our blood and I suppose it is this characteristic that has enabled us to bring many firsts to the industry. Not all of them have worked I might add, but that is the nature of innovation. Some of the achievements that I consider noteworthy, although there are too many to go through, are:

First Industry Tyre Insurance inhouse,
First Credit Facility inhouse,
fully integrated cloud based ERP system,
First National Employee Education Support Programme for employees’ children,

our Young Learners Education Trust which began onboarding learners and apprentices way before our president made the call to society to do so, our TiAuto Training Academy – which has been running for 20 years and was entrusted with writing the wheel

alignment unit standards for our Seta – amongst others. We believe in taking calculated risks and then delivering solutions through a network of inspired people. 

What do you believe are the biggest challenges facing fitment centres at this time, and here we are referring to pre-Covid-19? 

This is such a complex and varied question that it is impossible for me to portend to understand the granular difficulties across the industry. The typical difficulties that I assume we all grapple with are a combination of factors, including deflation, tier degradation across the premium sector, product parity and this is largely driven by imported brands that have little or no infrastructural dependencies which maintain a price depression environment on prolonged terms.

There is a constant debate around whether the industry is consolidating or fracturing, and on any given day there are examples of both scenarios. I find that access to well trained and appropriate skills remains an internal priority in an industry that is perhaps not as glamorous as it once was. 

From a deeper embedded structural perspective, consideration would need to be given to the changing patterns of population, demographics, affordability, mobility developments and the evolution of e-mobility, vehicle ownership patterns and the like, to ensure that one’s business is adaptable through these inevitable changes. 

Auto dealers will continue to expand into the arena historically reserved for fitment centres, but similarly, the Right to Repair initiative and others of its ilk will continue to forge different opportunities. 

I think the most significant near-term risks and challenges will revolve around liquidity post the Covid-19 Pandemic and the State of Disaster. The entire industry will feel the impact of this recent disaster in some form or another be it via depressed sales as a much more radical rate, credit extension issues, cash collection issues and so on. 

Hopefully the country can rally together like never before, and that includes re-arranging our businesses to seriously address the ‘Local is Lekker’ approach like never before.

The world will not assist in any great measure – we will have to do this on our own with our collective shareholders. South Africans are renowned for being resilient and ‘making a plan’. I am sure this will be no different, but in the words of our President, His Excellency the Honourable Mr Cyril Ramaphosa – ‘’We dare not fail.” 

How is the lockdown likely to impact your business and the tyre industry in general? 

In short, dramatically. In the short term, we can expect virtually zero revenue for an extended period, and of course, we have to manage our cash reserves and human capital reserves in ways that were historically unimaginable. We are lucky to have a fantastic team, very sound shareholders, financial institutional support as well as a proud history of being an exemplary social citizen to fall back on. In these uncertain times it is important to have customers, debtors and reputation to fall back on.

It will certainly be Business Unusual for an extended period across the industry. I am sure there will be many casualties along the way which is desperately sad for a country that has a dire unemployment situation, but with the right level of adjustment and sacrifice, I am sure we will continue to navigate these tumultuous seas and identify opportunities therein. 

I think simply put – If you thought it was tough before – watch this space. 

Over the last few weeks both prior to, during and in contemplation of life after lockdown, the team and I have been very active in formulating an answer to how the lockdown will impact us. In truth, I don’t think anyone truly knows for sure, which I am sure is a deeply unsatisfying answer. 

That said, I suspect that life will be littered with very tough and ruthless OPEX conversations. Industry contraction is a certainty, and companies will be executing expenditure reductions at every level. 

The work-from-home protocol that we have become accustomed to, is likely to extend across many industries and general travel is likely to remain muted for many months or even years. It is a racing certainty that the old norms will vanish but what the new norms will be, is hard to say. 

Inflation is inevitable, and I am sure that South Africa’s inflation will accelerate until a new normal is found. This means that customers will continue to deepen their search for value. I like to think of value as ‘Value = Price + Experience”. The sum of the experience will be more important than ever before. 

Those that are resilient with strong balance sheets will likely gain some advantage, but in general, I think ‘cautious’ is the new norm for now. 

Were any of your stores allowed to operate during stage 5 of the lockdown? 

We have taken the call from the President very seriously, and we believe that it is vital to heed this call in the spirit that was intended during the level 5 national lockdown. We maintained a specialised call center to field calls from our customers that are accredited as essential services providers and ensured that we were able to assist them in their time of need in order to remain mobile and able to execute the fantastic work that they are doing on the frontline for the benefit of all South Africans. 

We chose a select few stores and franchisees across the country that had obtained the necessary certification. This service was only made available to those defined as essential services, as we did not want to profit out of a situation by ‘dodging’ the sentiment as demanded by our government and population at large at this time. Of course, this was executed with the highest standards of hygiene protocol to ensure safety to our people and our customers, and we have received many wonderful compliments as a result, and ironically also made new friends and customers along the way. All our stores under level 4 lockdown are open to all customers for emergency repairs only. 

The unavoidable revenue contraction has been dramatic despite these support efforts, as can be expected. 

Once lockdown is lifted, will your stores continue to observe social distancing practices, and if so, how? 

Definitely. In fact, we expect social distancing to evolve our industry for a long while to come. We are ready though, and we look forward to being able to help our customers again. Customers will seek out those companies that are good corporate citizens that make arrangements for their care and those of their employees. 

Do you foresee casualties in the market due to Covid-19? 

Absolutely, it’s unavoidable. There were many businesses that were just hanging in there prior to this pandemic, and the resultant economic contraction will certainly not help. Covid-19 will be looked on in future years as the ultimate leveler. 

What should retailers need to be focusing on in order to ensure their survival? 

Cash flow, cash flow, cash flow…… and in case I wasn’t clear, cash flow! Seriously though, that old adage that goes something like ‘a sale is not a sale until the money is in the bank’ is truer now than ever before. There is no such thing as cheap money, and retailers will need to think ruthlessly about this. We certainly are. Not forgetting excellent customer service too!

Do you believe the retail sector has become saturated? 

I have noticed that this has become somewhat of a popular theme in various industry media. To the extent that we can add any value to this debate is unclear in my mind.

The economic reality and lack of growth in the country together with a severely depleted Government and SOE capacity, had certainly taken its toll on the country incrementally for near on nine years now. Up until recently, the vehicle manufacturing sector has been fairly bullish thanks to expanded export programs, which to a certain extent would have provided some comfort to local OEM manufacturers, but SA vehicle sales have been on a steady contraction for some time now.

This, coupled with the fact that fuel consumption on a real time basis has continued to contract and a consumer under ever increasing pressure, has undermined consumer confidence. In a consumer led economy this is akin to a confidence meltdown nexus and a general economy contraction / recession. 

It will place pressure on all retailers across all industries, which will inevitably lead to competitive tension at an increased rate. I have heard many say that perhaps we have one or two local manufacturers too many, as well this contraction and sustained pressure from cheap foreign importers, but I suppose only they could answer whether or not they are able to sustain shareholder and stakeholder interests at a reasonable return level. 

We still believe that there is growth opportunity, and we will continue to target the niches where we operate optimally. I will add however, that the environment is going to change significantly in the next few years, and retailers and the industry should be ready to adapt and evolve continuously as historic models are unlikely to be those of the future. 

How many Tiger Wheel & Tyre and Tyres & More outlets make up the TiAuto Group? 

The group has grown from 23 company owned stores and 6 franchise stores in 1998 when I joined the Group, to 159 today. We have 144 stores in South Africa and 15 stores in sub-Sahara Africa. This is a combination of equity and franchise stores across both retail channels. 

We understand that Tyres & More is considered as the ‘more affordable brand’ within the group. Is this a correct perception? 

Tyres & More is certainly our newest addition to our retail channel expansion programme. The intention of expansion of the retail channel was to address a fuller service offering than what the Tiger Wheel & Tyre chain has become known for. They enjoy the full support of our centralised commercial department but are also free to explore their own entrepreneurial flair when the individual store technical prowess allows insofar as service offerings are concerned. 

I recently attended one of the bi-annual dealer meetings and what I can attest to is that the owners are a wonderful mix of the most enthusiastic operators in the industry today. There is rarely a problem that is not solvable nor an opportunity that is ignored. One would imagine that having been involved in the Retail fitment arena for 22 years that there is little left to learn, but the contrary is true. This elite bunch of operators teaches me so much every day and I constantly remain inspired by their creativity 

From a price positioning perspective, it would be dangerous and incorrect to bucket these stores into a ‘budget’ category, as they serve varied markets at varying product positioning price points in a plethora of product categories. Due to the product categories which they participate in, they provide a full service offering which lends itself to more mature vehicles and by virtue of this they tend to be more agile in the Tier 2 and Tier 3 tyre segments, although they compete with great alacrity in the Tier 1 segments too. I am regularly being sent pictures of Ferraris, Porsches and other luxury marques in their stores. 

I think they are best described as your ‘Neighbourhood partner in the Auto Fitment segment’. We only operate four equity stores in the Tyres & More stable as this is primarily a franchise operation and each store’s character is as unique and lively as its owner. 

Are you planning to open any more stores in the near future? If so, where? 

We certainly are. There are many opportunities available to us, but I do think that Covid-19 and the resultant economic inevitabilities will make everyone a little more careful. Africa is squarely on our radar, and we have made great partnerships who are chomping at the bit to continue execution. 

We have more stores planned for Zambia and a new flagship store that recently opened in Malawi. We have been truly blessed that the investment in our brands continues to deliver and illuminate opportunities, and win favour with franchisees in SA and beyond. My son recently moved to Australia…. So, you never know right? 

What advice would you give the consumer looking to purchase tyres or wheels at this point in time? 

Customers still consider their purchases on the basis of “The best tyres I can afford”. This is unlikely to change, and I would encourage customers to focus on quality like never before. I am not sure how many people can afford to gamble with quality right now. Those tyres have got to be able to “stay the journey”. I would also urge the consumer to ensure the tyres are insured against the risks of the road out there and to choose a fitment Partner carefully, one who allows you to get your life back on the road safely and reliably. 

Are there any marketing incentives being planned to boost business after lockdown, bearing in mind a hard-pressed consumer? 

That’s like asking for the KFC secret spice recipe (chuckles). This is an industry publication after all. You are going to have to watch this space…… 

Alex Taplin started out in the hospitality industry where he ran a private group of hotels in the Garden route in his hometown of George. He claims this provided some good insight into customer management and customer centricity. 

Being a petrol head at heart, he then transitioned into the Automotive industry through a 4-year stint with BMW at a dealership level involved with sales and sales management and this is where he realised that his career would certainly swivel to the auto industry for the longer term. 

On the 1st April 2020 Alex celebrated 22 years with the TiAuto Group, which incidentally, also marked his 25th wedding anniversary to his wife Mandy. He says he been blessed to have transitioned through and experienced various iterations of the Group over the years from a listed environment, an unbundling, and subsequently two consecutive private iterations too. 

Alex knew that he had found his long-term home at his very first interview with founders – the late Eddie Keizan and Keith Rivers who, he claims, were two of the most impressive people he has had the pleasure of knowing.

It became clear to him that this business had a culture of entrepreneurship and a warmth for its people and its customers. This really struck a chord with him. One of the cornerstones of the organsational culture was that every new person spend six months learning the ropes and this involved “getting stuck in” at every level of the business – learning to fit, strip and balance – alignment – driving – running cashier – packing stock and everything in between. 

According to Alex, this was a fantastic learning experience, one that truly humbled him to understand and appreciate the work that everyone in the customer value chain is responsible for. It is a process that the group still maintains today. 

He further adds that he was fortunate enough to be considered useful to the organisation from a management perspective which saw him evolving from a variety of store and regional management roles to culminating in a Group Retail MD role by the age of 30. Along the way, he was fortunate enough to work alongside the likes of Brian Joffe and other significant mentors who, together with an amazing team, helped mentor and develop his business acumen. 

“It has been a wonderful journey (with the notable exception of the recent Covid 19 Pandemic Lockdown which has certainly tested the mettle),” says Alex. “I cannot take any individual credit for the organsational success. We have many inspired people in our team that have and continue to contribute extensively to the family that is TiAuto as well as literally millions of satisfied customers that have and continue to support us through our journey.”