Interview with MPD’s Mukesh Shah, Darren Wykes and Kevin Blazey. This feature originally appeared in CAT in Februrary 2019
If there has been one thing that the last decade has taught us, it is that the future of motor factors belonged to giant ‘trading platforms’ – what we used to call buying groups. Unless your factor business was very closely aligned to one of these groups – or indeed was wholly owned by one – the changes of long-term survival are precisely nil.
Well, that might be what the buying groups might like you to believe, but one independent factor has been flying in the face of this ‘wisdom’ since 1999. Braintree-based Motor Parts Direct recently opened it’s 118th branch, and the network now stretches from Falmouth in the West to Beccles in the East and from Hull in the North to torquay in the South. Perhaps most surprising is that a large part of the expansion has quietly taken place since 2017 – at around the same time that other independents and national chains were starting to think about consolidation.
There’s a reason for this branch-building exercise though. “Because we are independent and don’t belong to any buying group and what we believe is we need to achieve a certain critical mass” explained company founder and CEO Mukesh Shah, known to all in the business simply by his first name. “We can’t just expand in the South – we need to start moving up North and into Wales to be a certain size”.
The idea is that more branches mean that stock turn will logically increase, meaning that MPD can buy at scale and become, in effect, its own buying group.
2019: MUKESH: ‘I WANT A £200m BUSINESS BY 2025’
The story of MPD hasn’t been one of continued expansion. Indeed it didn’t open any branches for almost two years between 2015 and 2017 and prior to to the recent expansion drive most branches were dotted between East Anglia and the East Midlands.
Moving into a new area brings its own challenges. South Wales is a notoriously congested area for example, but Managing Director Darren Wykes is sanguine about the prospect. “Competition is healthy, it gives the customer another choice. Expansion has been down in part to lack of competitor activity as well” he said, adding that the five branches in Wales are still at an ‘early doors’ stage, but that the initial signs from them ‘have been promising’.
Like any factor, new sites are selected in part – but as MPD doesn’t service national accounts apart from on a local ‘as and when’ it is not an imperative to have one at every corner of the British Isles. In fact, the decision to open a branch is a little more complex. “It’s down to a culmination of things” said Wykes. “We go where there’s business available or an opportunity to open, but the main thing is getting the right people. If we can get the right staff, who in turn bring their own teams on board, that will pretty much seal the deal for us”.
The expansion has been possible partly through acquisition [and Mukesh is keen for us to point out that he’s keen to talk to anyone thinking of selling up] but mainly from setting up all new branches. An issue is that acquiring a business comes with its own set of problems. “Acquisitions bring their own problems. Get the right one and you acquire an established customer base and staff from day one. Stock is always an emotive issue for us, because an acquisition probably doesn’t have stock that runs in parallel to ours” said Mukesh, explaining that a lot of businesses for sale have mismatched or obsolete stock that will likely end up in the skip, but the business owner puts a value on above the sale price of the business.
Describing the expansion strategy as around ‘two thirds complete’ suggesting that there are ambitions to open another 40 or so branches, there are a number of ways in which the chain differs from any of the established nationals. For a start, talking to Mukesh and the team suggests a belief that the brand of the motor factor is not the most important element in obtaining loyalty and recognition from new customers. Mukesh suggested that a reason for hiring experienced staff runs far deeper than simply knowing how to use the stock control system.
“When we open in a completely new area, why would the customers care about who Motor Parts Direct is?” Mukesh asks rhetorically. “What they care about is that if John Smith that they have phoned for parts at various factors through the years is there, and they will contact them”.
Wykes concurrs. “We often find that the customer will follow that person. There is still a lot of loyalty for good staff”.
Brand Loyalty
Another MPD notion is the fact that garages are loyal to parts brands, and they don’t like it when factors switch suppliers. Marketing Director Kevin Blazey highlighted that the policy is to keep brands as consistent as possible. “Customers are still brand specific and they like everything to run as normal. They don’t like change. Because we are loyal to our customers, that brand is constant throughout our trading history” he said. “What we tend to find from some of the nationals is that they will promote a product for two or three years, and then that brand may well change. For example, if a factor supplies Brand XYZ on a braking programme and gets used to it and enjoys it, then they change supplier so the customer has to fit different brakes… well they don’t like that”.
Related to the above, MPD has never troubled itself with house brands. “We haven’t fallen into the trap of rebranding a whitebox product, it just doesn’t seem to fit the marketplace” said Blazey. “We do dual stock a number of products and offer an OE brand and an equivalent, so we give the customer a choice, but there is that stage a little further down the line that just doesn’t fit well”.
“What we find is that a white box product range might come from eight or 10 different factories, so what is going to be inside the box?” Mukesh added. “The quality consistency might not be there. It’s a big headache when you have warranty problems and so on, From our perspective we’d rather offer a brand at a lower price, but know that it is a good quality product”.
Changing market
Product aside, the market is changing and the fact that the market is oversupplied, with factors running too many vans in order to not upset the garage customers, is no secret. “In the long run I don’t think it will be sustainable. I think we’ll see a reduction in the number of factors out there. You can see it now, a lot of businesses closing down or being acquired by people like GAU” said Mukesh.
“In the long term garages will upgrade themselves to be a bit more efficient and won’t be ringing every half an hour for a set of pads, and then half an hour later for a set of discs for the same vehicle. I think in a few years time the market will become a bit more efficient, but for the next three or four years we will all have to go through that pain” he added.
Whatever the future brings, it is good to see an independent that values staff and customer relationships growing.
Go to comments