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August 2003 Issue
The Jobber's Job: Working the Middle
Jobbers face a challenging task as the relationships between shops, insurers, paint companies, and distributors evolve
"We're doing more for less…"
"I think they forget who their customer is…"
"We're spending a lot more money on training than we used to…"
"Margins are going to get squeezed tighter and tighter…"
Sound like the concerns of a group of collision repair shop owners? You may be surprised to learn that all of those quotes came from INSIGHT's recent interviews with industry jobbers, a segment of the industry often seen as overlooked as the relationships between shops, insurers, jobbers and paint manufacturers continues to evolve. But perhaps more than ever, there can be great value for shops to understand the concerns of paint jobbers and the role they can play in the success of a shop.
Knowledge is key - but is it free?
Robert Gray says working with a good jobber is a key to success - for both a paint manufacturer and a shop. Gray, based in Cleveland, is the area sales manager for five company-owned Sherwin-Williams stores. He says the paint manufacturers as a whole have found they need to be much more involved with shops - and a good jobber is the way for the paint companies to do that.
Similarly, shops are looking for more from the jobber than just a quality paint product. That means in order to be successful, the jobber now must become extremely knowledgeable about collision repair - the repair process itself, insurance company relations, customer satisfaction, quality control.
"A jobber must know what to do to bring additional value to his customers' shops," Gray said.
Peter DeLuca of Industrial Finishes, a multi-line jobber that operates eleven stores in Oregon, agrees.
"Our knowledge of our products, and our people and our reputation are our strongest business asset," DeLuca says. "We have a track record of saving our customers money."
J.A. Lacy, president of mega-jobber FinishMaster, which operates 158 stores, says his company's emphasis on customer service and additional services is key to its growth.
"We are incredibly focused on the customer," Lacy said, explaining that FinishMaster tracks CSI every other month, and has developed a number of tools and services in direct response to feedback it receives from customers. For example, FinishMaster can help the shop look at its purchases by day, allowing the shop to order and use materials more efficiently. This ability to bring "new services, and service models that are new to the industry" recently helped FinishMaster become the CARSTAR chain's exclusive materials provider, Lacy said.
But jobbers are also concerned that they are being asked to offer too much in the way of added services for free - and that increasing competition is forcing them to comply.
"My customers expect everything now," one Midwest jobber said, saying he has added more delivery runs and even cleans the mixing rooms at some shops because that's a service his main competitor offered as an enticement to shops to switch suppliers.
Jobbers are going to have to cut back on the free services they currently provide because margins are just becoming too squeezed, predicted Ron Stazzoni, president of D & R Auto Paint & Supply in Omaha, Nebraska. Echoing what a number of other jobbers told INSIGHT, Stazzoni said his company offers shop management classes that go far beyond the paint application courses of years past. Jobbers, he said, aren't going to be able to offer such training, liberal credit and seven or eight daily deliveries without charging for some services.
"Something will be giving here soon," Stazzoni said.
Adapting to changes
But rather than cutting services, some jobbers are finding other ways to adapt in order to address the marketplace changes.
In Oregon, for example, Automotive Paint Specialties (APS), a single-line PPG Platinum Distributor with eight stores around the state, is spending more on training for its customers than it used to in order "to help our shops - and maybe move some of them away from the competition," according to Ben Tuma, president of the company.
APS also hooked up with Finatus, Inc., a Portland-based company offering a web-based regulatory compliance service. About a year ago, Tuma saw what Finatus had to offer - its website essentially automates the complicated process of writing and filing safety and environmental hazardous materials reports - and recognized that being able to offer it to APS customers offered a marketing advantage.
"We sell Finatus to the shops just like we would sell a gallon of paint," Tuma said. "They need somebody to help them with their compliance issues."
APS can sell the Finatus services to shops that are not its customers, but does so at a higher price. The jobber makes a small profit from Finatus sales, but views it primarily as a way to retain existing customers and gain new ones. Tuma even brought Finatus to the attention of PPG and 3M so they could consider aligning with the company on a national level.
"It's not as quick to take off as I thought it would be, but we're still doing okay with it," Tuma said of APS's relationship with Finatus.
As the relationship between paint companies, jobbers and shops evolves, some jobbers have switched from offering a single paint line to offering several. Some have moved the other way.
"There is a definite advantage to being a single line," said Ben Ihde, general manager of D & S Color Supply in Cleveland, which, like APS, is a single-line PPG Platinum Distributor. Products change so frequently now that it is hard to keep up with all the different ones, he said. His company only needs to keep up with one line instead of several.
"I like to know what I'm talking about," Ihde said.
Stazzoni agreed, saying his employees' knowledge of the product and problem-solving abilities are really what his customers are buying. If automotive refinish products weren't a difficult to use product, shops would buy it at Wal-Mart, he said.
"Problems keep us in business," he said.
Still, Stazzoni said his company sees a need to expand into industrial paint sales to keep growing.
"We always have our eyes open for diversification," he said.
Consolidation an issue
Consolidation is an issue for jobbers in a number of ways. Tuma said the growth of shop consolidators and shop networks is adding to the pressure on jobbers because of the purchasing power sheer size gives these groups. This in turn is leading to the formation of more shop alliances.
"It's scared a lot of these shops into thinking that they have to have their own buying group," Tuma said.
Stazzoni said this has also fueled consolidation within the jobber community as the gap between the distributors doing well and those not doing as well widens - again, much as it is with collision repairers.
Lacy, President and COO of one of the companies buying up other jobbers, also compared the jobber market to the collisin repair industry.
There is an increase in margin pressure and less revenue. “Competitiveness puts more pressure on jobbers. Some will respond more quickly and effectively, and they're going to be the winning jobbers," he said.
Relationships are key
A number of jobbers who asked that their names not be used expressed concerns about paint manufacturers investing in shops in exchange for multi-year contracts.
"My personal opinion is that paint manufacturers buying market share with investment dollars has caused the jobber, in the eyes of the shop owner, to have a decreased value," one west coast jobber said. "The shops want all the other services and stuff we offer, but they want the money, too. They're chasing the money but don't think about whether it's really the best move for them. It's not been good for the industry."
"I think they forget who their customer is," one jobber said of the paint companies. "Ultimately, the body shop buys the paint, but we're their customer. It seems like they're trying all these [network and value-added] programs that are direct to the end user, and these programs help the shops, but the paint companies are losing some of their focus, I think, on the jobbers."
But FinishMaster's Lacy sees the growing relationships between shops and paint manufacturers as a positive thing. He says the paint companies now have the resources to create tools to help shops, and that it's the distributor's job to "support and complement" this relationship. He doesn't view it as a threat to his business.
"The paint manufacturers are going to pursue the most efficient distribution model," Lacy said, obviously confident that companies such as his can offer that model.
Other jobbers say they feel the paint companies are "micro-managing" their stores, although some see this as a positive thing for the industry as it "raises the bar" to compete. Gray, for example, doesn't foresee paint companies eliminating jobbers, but continuing to "increase their involvement and control to ensure that the jobber will make the customers happy."
That's okay, he said, because he looks at his customers as partners. Their success is his success.
"Our growth has come from taking care of our customer," agrees APS's Tuma. "If they want something or need something, we're there to help them. This business still is tied to service."
INSIGHT will be keeping an ear to the jobber ground in the coming months to keep our readers up-to-date on jobber news. Any comments and feedback from our readers concerning this overview of the jobber marketplace is appreciated. o
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©2003 Collision Repair Industry INSIGHT