Dunlap & Kyle Expand Retail Business

BATESVILLE, Miss.—First and foremost, Dunlap & Kyle Co. Inc. of Batesville is a wholesaler, deriving more than three-fourths of its $261 million in sales last year from wholesale distribution.

But Dunlap & Kyle’s retail business—initially established only near the company’s warehouses—has grown from a handful of stores to a network that will represent nearly 30 percent of revenues in the near future.

“There was a time when we were not sure about the future of the wholesale business,” said Robert H. Dunlap, chairman of Dunlap & Kyle, “so we put in a few retail stores to protect ourselves. We wanted a retail store at each wholesale location.”

Over time, the strategy evolved to building a number of retail stores within a 60-mile radius of each warehouse. currently there are 41 stores operating with four more due to open before year-end—in Jackson, Shelbyville and Gallatin, Tenn., as well as Shreveport, La. At least two more are on the drawing board for early next year, in Starkville, Miss., and Memphis, Tenn.

Most of Dunlap & Kyle’s retail stores operate as Gateway Tire and Service Centers, and the remainder will be converted in the future from their current Hesselbein Tire Co. banner. The stores range in size from 11,000 to 15,000 square feet, and most have 13 bays. “Thirteen is lucky for us,” Mr. Dunlap said.

The emphasis at each retail store is on tire sales, with about 70 percent of sales attributable to tires, and the remainder to automotive services. In some locations, however, as much as half of sales can be service-related.

The company’s retail activities are expected to account for 28 percent of Dunlap & Kyle’s sales this year, Mr. Dunlap said, up from 19 percent three years ago. The retail stores average nearly $1.7 million in sales annually, the company reported.

Most passenger tires sold are either the Multi-Mile or Toyo brand, although the stores offer as many as a dozen car and light truck brands. Gateway outlets sell tires for virtually all types of vehicles, including all-terrain vehicles and garden tractors.

Mr. Dunlap hastened to add, however, that the wholesale business remains strong for Dunlap & Kyle, as evidenced by a new warehouse in Houma, La., and another due to open next year in Lubbock, Texas. “In fact,” he said, “we can’t expand our wholesale business as fast as we would like to.”

The 45-year-old wholesale side of the business includes warehouses in Arkansas, Louisiana, Mississippi, Ohio, Oklahoma, Tennessee and Texas. Those sites handle 15 brands of tires. Through its wholesale and retail operations, Dunlap & Kyle serves all 50 states and 12 countries.

There is no question in Mr. Dunlap’s mind about what it takes to succeed in the tire industry—or what the biggest challenge is. It’s people, he said. “You need to focus on the internal development of people. We are totally dedicated to satisfying every customer, and that means training people to do what you want and need them to do.”

Mark Dravis, manager of the Gateway Tire and Service Center in Streetsboro, Ohio, said that training and communications throughout the company are ongoing processes. “We share lots of ideas and information among all of our stores,” he said, “and there is lots of training support from the headquarters in Batesville.”

Mr. Dravis joined Dunlap & Kyle four years ago after dealing with the company as a wholesale customer. He was impressed with the company’s dedication to customer service and now works to maintain it at the highest levels at his store.

The Streetsboro store, which he opened for the company in May 1999, is the second one in northeast Ohio. “Our goal is to provide the best products and service at a fair price and to be up-front and honest with each customer. We will not try to sell anyone anything that they do not need,” Mr. Dravis said.

Mr. Dunlap doesn’t worry about competition from discount stores. He tells a story about one tire center that began to show significant sales growth after a Wal-Mart located nearby. “Being close to a Wal-Mart is a great location for us because of all the traffic it generates,” he said.

Mr. Dravis, whose store is located across the highway from a Wal-Mart, agreed. “All of our technicians are ASE-certified and have chosen automotive and tire service as a career.” This, he said, is his outlet’s competitive advantage.

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