Market Strategy: Buy Low; Sell High
It’s time to take advantage of the falling value of the Canadian dollar.
2014 was a good year for the consumer sector of the tire industry in Canada. The market enjoyed strong growth with the winter segment generating the vast majority of the growth.
With an increase in consumer awareness of the need for winter tires, and the resulting rise in demand, tire retailers and wholesale distributors had a very busy, and stressful, Q4 2014. Many set new records for tire and wheel sales in October as well as in November 2014.
While we can reflect on 2014 and be happy for any gains achieved, we must now look ahead to the rest of 2015. April is not far away, and you should now plan to position your store to take advantage of sales opportunities that will arise from the changeover of winter tires to all-season or summer tires.
If you have your consumers’ all-season or summer tires in storage, now is the time to check their condition. If they are worn and need replacement, start the conversation with the consumer sooner rather than later. Give them the facts, offer them an “early bird” incentive, and make the sale early. This will allow you to have their new tires prepared and ready for a quick changeover when spring arrives.
Plan ahead, gain efficiency, increase throughput, improve productivity, capture more sales and drive profitability. It starts with a plan, and then you must act on the plan. No plan? Well now is the time to get started.
Value of the Canadian dollar
As we look ahead to the balance of 2015, we must also consider the status of the Canadian dollar. On September 1, 2014 the exchange rate was 1.08, when compared with the US dollar. In February 2015, the rate was approximately 1.25 – a negative slide of approximately 16%. The forecasts from the banks show that our dollar will likely weaken further as we go through 2015. The rate could be 1.30, or higher, later in the year.
The good news is that while the Canadian dollar has weakened, there have been no price increases from most tire manufacturers, and only nominal increases from some. This means you are now in the “sweet spot” for tire prices in Canada. Now is the time to put some inventory on your shelves.
Currently, tire retailers in Canada are in a very competitive position. You can compete, and in many cases, beat the “grey market” from the USA. Consumers who have traditionally shopped for tires with US-based Internet retailers are realizing that it is now cheaper, and easier, to shop at their local tire retailer. This is increasing the size of your market.
However, if as predicted, the Canadian dollar continues to lose value against the US dollar, we could face price increases from tire manufacturers. That’s why you need to plan ahead. Take a spring booking from your wholesale distributor at today’s great prices, and hedge against future price increases. Take advantage of today’s excellent pricing window and position your business to win in 2015.
There is money to be made when prices rise, but to make this money, you must buy low and sell high. Now is the time to buy low.