Every segment of the current automotive aftermarket seems to be in a perpetual state of turmoil driven by technology, complicated by the changing needs and perceptions of our customers and suppliers. When you factor in the move by OEM’s to establish their own nationally available OEM private label brand or “approved” products (that enable non-dealerships entities to sell value lines with the perception of the backing of the trusted OE brand) it gets even more lopsided. This has created an environment difficult to keep up with much less build a prosperous aftermarket business that continues to grow and serve your customer base.
The question that seems to get asked most often, “what forced the automotive service aftermarket to change so much”. Thirty years ago, the industry was driven by brand loyalty that came from growing up and changing the oil on the family ride with your brother or your dad. My family (particularly my dad) always had a brand favorite that verged on an obsession. When we got older, the DIFM solution we used always involved going to the service center that carried a specific brand of oil (my dad’s preferred brand of oil at the time). The consumer of today doesn’t have the same brand loyalty many of us grew up with. DIY for most people went away with drain plugs, dip sticks, and proper disposal of the used oil. As did loyalty to anything that didn’t meet new requirements for cost, convenience, and availability. The problem with brand erosion in the aftermarket is more complicated than just the passing of DIY. The question seems to be, are customers pulling away from premium brands and seeking lower cost alternatives to cut costs, or have the lubricant suppliers created such a proliferation of products at different price points that customers change their long time buying habits and preferences to take advantage of lower prices on what they perceive as equivalent products.
For many companies or buyer groups, the notion that customer brand loyalty was waning, created the option of having their own brand and the possibility to transition customer loyalty from a major brand to their own became financially attractive. These types of in house brands allow the company or group to sell reliable and cost-effective solutions while shifting customer loyalties and creating better margins previously not possible in the aftermarket of ten years ago.
No less challenging is the wave of consolidation that is overtaking the lubricant distribution business. Many smaller oil companies that were an important link in the supply chain from the manufacturers to the service centers have been purchased by large New York based holding companies. They are being consolidated into national distribution chains; getting away from the traditional regional players that dominated the business in the past. While it’s hard to predict the eventual outcome and its effect on the automotive aftermarket service industry, it is happening somewhere close to you right now.
The automotive aftermarket service industry leaders that see this clearly, are people that care about the success of the industry, and know their future success depends on adapting to the quickly changing requirements of a dynamic, evolving market place. All of us deeply invested in the service industry want what’s best for the independent automotive aftermarket, even if we can’t agree on the best method to arrive there. In the midst of this technical & supply chain evolution occurring around us daily, no one wants to get to the point where its all about price. Once you start cutting margins it becomes almost impossible to go back. With the price volatility inherent to products derived from crude oil, the price will always be driven by market forces we have no control over.
In a world of changing and eroding devotion to brands, the most effective solution for many aftermarket service providers is to focus on “your” business. There is no way we can be sure the brands we sell today will be here tomorrow. With consolidations, new technologies and diminishing brand loyalty, the service industry will have to focus on what it can control. That is what I would call “your own brand”. Make your customers loyal to your brand, not the one on the oil can. Some of this can be accomplished with advertising. Rather than advertise brands, tout the fact you offer a wide selection of all makes of lubricants meeting or exceeding OE requirements. You can cite brands, but it’s time to come to this conclusion, brands alone do not meet customer expectations. Keeping excellent service records with historical information on each vehicle and customer can have a much better return. Customers will be much more responsive to your business and the house brands you support if you can cite relevant real-world information. One good example would be showing your customers they are averaging 5000 miles or more between oil changes with outstanding results and fuel efficiency, using your service solutions. Its not marketing, its real data they can find relevant and helpful when making service decisions. Those who master this way of doing business will be the survivors, innovators, and leaders of the aftermarket service industry in the future. You need to provide more than a brand name product at a good price. You need to make your customers loyal to your brand not the one on the oil can.