Twelve years ago, when Michael and Jessica Spencer opened TireSouth Inc. in the midst of the Great Recession, many people warned them that they were crazy.
“Now is not the time to open a business,” Jessica recalled, the chorus telling them.
And it was not easy. But that first TireSouth store in McDonough, GA is booming, and the Spencers are preparing to open their sixth store in the Atlanta, GA market in the second quarter of 2022.
Jessica, a second-generation tire dealer, hadn’t really considered following her parents into the tire business until the recession hit.
“That’s when the tire industry really shined,” she says. “All my friends and people I knew in construction and other businesses like that” were out of work.
“In tyres, it wasn’t our busiest period, but we were still carrying on. It got more appealing and it just hit me. All the training my dad gave me and everything I watched as a kid – it all fell into place. The light bulb has gone out.
Jessica had grown up in the family business, Larry’s New & Used Tires Inc. She worked there after school and on weekends.
Michael had also grown up in a small family business. They say opening their own tire dealership seemed like the right direction.
But they were adamant that they wanted to chart their own course. “We started when we were both 24,” he says. “We’ve learned all the lessons along the way – made all the mistakes we could. Now we’ve kind of figured out what we do, what our niche is and what works for us. We have a pretty good formula which is ready to evolve.
This niche may seem like a cliché, but it has proven itself.
“We are service-oriented,” explains Michael. “We are customer-centric.”
And with that mission, TireSouth grew.
The dealership’s first additional stores were not places the Spencers had scouted and dreamed of opening. They were needed to increase capacity and serve more customers.
“We had too many customers and couldn’t handle them all at the original location, so we had to open another one,” says Michael. “This is how we want to focus our growth – not just on the number of stores, not just by opening in different markets. We are growing because our customers demand it of us. We have put customer orientation first and it worked really well.
They have since taken over the two stores Jessica’s parents owned in Clayton County, Georgia, south of Atlanta.
Now with five stores in the Atlanta metro area, TireSouth has grown to have 30 service bays and annual sales of $15 million. Tire sales and auto service are 50-50. The company has 50 employees.
Growth of UHP
Part of TireSouth’s success comes from sales of ultra-high performance (UHP) tires. Michael says the process starts with “asking a lot of questions.
“A lot of new vehicles are fitted with UHP tires compared to standard touring or all-season tires. When it comes to replacement, a lot of times the consumer doesn’t know.
“So we ask about their driving characteristics and (ask): ‘What did you like about your vehicle when you bought it new?’
“We try to get to the root of what they’re going to be happy with rather than just matching the gear.”
This same practice applies to the growing number of customers interested in off-roading.
“’What are you trying to accomplish? Are you going to take a peek or do you want something that’s capable of off-roading? I believe the more questions our sellers ask, the more likely our store is to deliver the results a customer is looking for.
The CUV, SUV and light truck markets all represent growing shares of the UHP tire pie.
“We’ve always done a lot of pickups and light trucks because that’s what’s on the road here.
“Looking at the CUV/SUV market in terms of UHP and performance, it’s a segment that over the last two years has grown a lot for us.”
Michael says Hankook Tire North America’s UHP tires have been particularly popular with TireSouth customers.
“Hankook has been a big deal for us lately. They have a good value proposition when evaluating performance and price.
Jessica notes that guarantees have also become “a good selling point”.
And while they say tire supplies have been tight across the board, Michael admits the problem has been “perhaps a little worse” for UHP tires than for other products TireSouth sells.
In general, he thinks any type of specialty tire has been “a little harder to locate” than an entry-level product or passenger touring tire.
One thing that hasn’t affected UHP tire sales is consumer spending habits.
The Spencers say their customers have accepted price increases that have plummeted over the past year.
Jessica says, “2021 was a year of significant spending for our customers. I don’t feel like we’ve had much price pullback, which is odd for a pandemic and all the uncertainty. Let’s hope it stays that way.
Michael credits part of the dealership’s ability to weather rising prices to the work and time TireSouth employees devote to educating consumers.
They “explain the value proposition or features that come with a UHP tire versus an entry-level passenger tire.
“I think it’s about educating the customer and then stepping back and letting them make the decision. We try to explain the value and what we offer.
“If you take the time to explain it, most of them are going to find themselves in the tire that is best for them and their vehicle.”
Supply Chain Lessons
The struggle to find tires accelerates TireSouth’s plans to one day stock and run its own warehouse. For now, the company’s five stores mainly depend on daily deliveries from tire distributors.
A distribution center is likely in the cards at some point as the company adds more stores. The Spencers agree that the problems of the past year have underscored that need.
“Being more vertically integrated across our supply chain is something that appeals to us a lot,” says Michael.
“Being able to control that supply and not be so dependent on distributors” is appealing. And supply chain issues have “probably accelerated our plans on this.
“As we grow, we would like to buy more directly,” says Jessica. “We just haven’t changed positions yet.”
Unlike their counterparts in other parts of the country, TireSouth and other tire dealers in Atlanta are not that far from a good number of tire manufacturing plants nationwide.
Did that lessen the blow of tire supply issues? “I would assume” availability is better, says Jessica. “It was a challenge, but it was not a total upheaval in our profession.
“Sometimes you just have to work to track down something a little more difficult. But there are very few cases where we just can’t find something or you have a pending order status that doesn’t have an end date. (Tires) were harder to find, but we were able to get our hands on them 99% of the time.
Take care of employees
As the Spencers work through supply challenges, they apply the lessons they’ve learned from serving customers to managing their team.
“It’s the old adage, ‘Take care of the customer and they’ll take care of you,’” says Jessica. “It’s true, and with the employees too.
“We are in a time where staffing shortages are everywhere. If you take care of your people – customers and employees – you will find a way out and thrive.
In employee relations, this mindset is important. Jessica says she thinks there’s an advantage to being “neither too big nor too small”.
TireSouth has “always treated (our employees) well (and) exceeded expectations. I think we treat and pay people a lot better than our competitors and I think they know that.
The Spencers aren’t shy about sharing their vision and mission with employees, says Michael.
“We want them to be part of the growth and know where our heads are at and where we’re trying to take the business and how that affects them.
“When they feel like they’re part of something bigger than their day job, it definitely keeps them more engaged.”
Jessica says she reminds the TireSouth team that “the road to the top of the corporate ladder is not that long. We’re not a big company yet, so if you want to run a store, the climb isn’t that far. You can do it.
“They see us remodeling stores and building new stores. They see it, believe it and feel part of it. It keeps them motivated and it pushes Michael and me to pursue healthy growth as well.