Michael Welch : Brands and China

Well it’s been a good start to the year for us. We have recruited some great new team members and invested a lot of time in products and price. Added to that we have recently brought about some changes to our overall service proposition, investing in our store standards and practices – a fresh new format is coming which we are all very excited about, details to follow.

Generally customers are telling us that they are happy with what we are doing for them, but with a few exceptions as to be expected, all of which we are working hard to develop into our model – like same day tyre fittings, again details to follow shortly.

The market is interesting at the moment. The established manufacturer brands had a year of under performance last year, with the growth coming in the lesser known far eastern brands. This is partly due to availability – the fact that these new brands produce more plentifully than the established players but also because they are lower priced products and therefore have been well positioned to take market share from the big brands when customers have had to tighten their belts. The million dollar question is: are these brands equal in quality to the big brands?

It would be irresponsible to speak anecdotally on this subject – technically, and based on customer rating data, I would say that some of the new brands are not too far off in terms of quality and performance, some are way below, but are developing fast. It is the responsibility of the retailer to stock and promote those products that befit the customer expectations, however to a certain extent you get what you pay for, so my advice would be buying value rather than cheap is usually a good steer to ensure you don’t buy a pup – and consider the credentials of your retailer.

I recently took a trip out to China to check out the manufacturing facilities and brands. It makes for interesting viewing and certainly answered a lot of my questions. Far East product development has been largely driven by production, ‘how many can we make, how quickly and for how little’. This is a pull market, when the western retailers ask that same set of questions of the manufacturers on a daily basis what can be expected of the manufacturers (oh and we want quality and performance for the same price!), supply and demand. It seems that very quickly these manufacturers have seen the deficit in the price only approach and have begun significant investments in research and development thus investing in their brands.

So with lean infrastructures, plentiful supply, brands and the quality and price balance in order does this mean danger for the big brands – maybe, time will tell, or rather customers will.