Falken discount tire

CHICAGO -- Sears is taking yet another major step in its off-the-mall expansion strategy by merging its two tire specialty chains into a single chain named National Tire & Battery.

The two chains now operate 275 stores under the names Tire America and NTW, and Sears will begin converting those stores to the new concept next month. Starting this year, Sears will open 100 new NTB stores per year until it reaches a goal of 700 stores.

In another aspect of its expansion outside its traditional shopping mall venue, Sears is making a major push to open auto parts stores under the name Parts America and expects to be operating close to 1,200 of the 8,000-sq.-ft. units by 2002, up from 288 today.

Sears reportedly is investing $1 billion to expand its presence in the automotive aftermarket but declined to confirm the figure.

In a third aspect of off-the-mall expansion Sears is pushing to open as many as 500 of its strip-center hardware stores, up from 165. Included in the '97 openings is a nine-unit test in the Columbus, Ohio, market of a new concept named after its Orchard Supply Hardware chain of 65 stores acquired last year in California. The 20,000-sq.-ft. Orchard Supply test store will not leverage the Sears nameplate and will add nursery and garden products, housewares and small appliances to the usual Sears hardware mix.

Declining mall traffic is driving the off-the-mall expansion strategy. In '97, Sears will open 12 mall-based department stores on top of 821. But few, if any, will feature a Sears Auto Center.

In addition to the new NTB stores, which typically measure 11,200 sq. ft. and have nine service bays, Sears operates 790 auto centers in its department stores.

Sears ceo and chairman Arthur Martinez said that the new NTB format offers "significant growth opportunities" and will complement its Sears Auto Centers in conventional mall department stores.

Sears dropped auto parts and all-round auto service in mall stores several years ago to focus on tires and batteries, just as NTB will. NTB represents an evolution from Tire America and NTW, Martinez said. "The best just got better."

Sears Automotive Group president Paul Baffico said each NTB store will stock 4,000

tires and offer 750 skus of various national brands, including Michelin, Goodyear, Pirelli, Bridgestone, Falken, Uniroyal, B.F. Goodrich and private labels Weather Handler and RoadHandler.

NTB will also carry custom wheels as part of its mix. About 35% of the tire offerings will overlap with those carried by Sears Auto Centers in mall department stores.

In batteries, stores will carry Sears and DieHard private labels, as well as Delco.

The merged stores will continue to offer repair services related to tires, such as brakes, shocks and front-end alignment.

Sears now claims to be the No. 1 tire aftermarket retailer in the nation, with '96 sales of 25 million, including its Western Auto chain, equal to a 14.7% market share. Last year it sold 8.5 million batteries, a 10.2% market share.

Sears is keeping its name off NTB stores so they can be located close to a Sears department store auto center, Baffico said. The two businesses will manage to co-exist in the same market because NTB will target the higher-performance end of the tire business and male customers. The Sears Auto Centers will stock tires in the standard performance spectrum and focus on serving female customers.

In PL offerings, the NTB stores will carry different makeups from the department store auto centers.

NTB stores will continue to accept the Sears credit card. In pricing, NTB will follow a market approach, not positioning itself as a low-price leader but rather matching anyone else's price.

Tire America once competed on price with Sears on the same tires, but the NTB stores won't. "We'll keep a close eye on that," spokesman Bob McHenry said.

Starting with Dallas in May, Sears will begin rolling out the NTB concept in existing markets, which are primarily in the Midwest, the Southeast and the Atlantic states, and complete the conversion of existing tire stores by August. New markets for '97 will include Detroit and Minneapolis, as well as Rochester and Syracuse, N.Y.

Sears will consider expanding to the West Coast in '98. The expansion schedule calls for 100 new stores per year, with a goal of 700 by the year 2001.

Sears expects the NTB stores to take over the tire sales Sears is surrendering from its 300 remaining Western Auto Stores. Sears is dropping tire sales and mounting in 242 Western Auto Stores this year by converting them to its Parts America parts-only stores. The fate of the balance will be determined over the next year, McHenry said. Some perhaps will be converted to NTB stores, while Sears will close others. Starting in '98, Sears plans to open 100 to 125 Parts America units per year until it hits a goal of 1,200 by 2002.

In customer amenities, the NTB store will include a customer waiting room that includes a play area for kids.

Sears will consider opportunistic chain acquisitions to expand NTB, as it did to jump-start its Parts America chain. But Baffico said Sears should have no trouble opening 100 stores per year from scratch, pointing out that AutoZone opens 300 new stores per year.