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|Articles - March 2014|
|Tuesday, February 25, 2014|
Page 1 of 2
BY LINDA BAKER
"A tire is so much more than a black round doughnut.” Dick Borgman, CEO of Les Schwab Tire Centers, is in a new store in Portland’s Sellwood neighborhood, explaining how a retailer selling a commodity product — a tire — differentiates itself in the marketplace. “The whole idea is to provide what we feel is an exceptional level of customer service,” says 58-year-old Borgman, whose carefully chosen words and button-down appearance reflect his background as a corporate attorney. “And that is all driven by store employees who have the experience and training that go beyond the selling of a tire and the servicing of the tire.”
Les Schwab has put a premium on customer service since 1952, when legendary namesake Les Schwab founded the company with one store in Prineville. (Schwab died in 2007.) But if the corporate principles remain essentially the same — the chain, now based in Bend, is famous for employees who run to the customer vehicles as they pull up to park — the world around this iconic Oregon business has changed dramatically. “So you have to adjust those principles to the world and to the size of the scale we have become compared to the 1950s,” Borgman says.
Debuting a new, modern store design, embodied in the Sellwood outpost, is one of those adjustments: “We wanted to make the store more comfortable and appealing for customers,” says Borgman. Improving the efficiency of retail and service operations was another goal. The result is an open floor plan featuring plenty of glass and skylights; windows in the showroom also allow people to watch what is happening with their car while munching on the company’s signature free popcorn.
The decision to update the Les Schwab store aesthetic coincided with another strategic move: expansion into Colorado and California’s San Joaquin Valley, specifically Fresno, as well as Baker City. “We had completed our growth in mature markets — Washington, Northern California and Idaho — so we needed to have new areas in which we could open stores,” Borgman says. Only a year after opening, the new markets are exceeding performance expectations by a quarter or more.
In 2013 Les Schwab grossed about $1.5 billion. The company operates more than 450 stores and employs about 6,500 employees, 1,800 in Oregon.
About that changing world: Several decades ago, Les Schwab’s competition was limited to other tire stores. Today the competition has grown and diversified to include big-box retailers such as Costco and Walmart, along with Internet retailers. On the procurement side, changes in the tire and auto manufacturing industries have created new inventory challenges.
“Car manufacturers introduce new models with different tire sizes all the time, which requires us to have the right products in the store when new-model vehicles come in,” Borgman says. “At the same time, vehicle age is pretty old in the U.S., so you have 10- to 12-year-old vehicles coming in, and you have to have product for them as well.”
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