Really enjoyed this and I know we’ve chat about $VVV in the past. You pointed out that “store share and transaction share is >3.0x higher in its top markets” and that they are stealing share from Mom&Pop. Any reason for them to gain share in the future/what’s driving it? Assuming it’s a function of scale but want to get your perspective
Thanks for the comment! I’d say it’s a combination of service, scale, and location. The quality of the service you’re being offered at VVV is pretty consistent across stores and it’s a 15 minute in and out oil change. Your service levels can vary at mom and pops. There is also a stigma in the industry around mechanics taking advantage of a customer who is at an information disadvantage by selling more services than are needed. I’m sure that exists even when a customer goes to a VVV location but employees are taught not to cross-sell. If there is, in fact, something actually wrong with the vehicle, there is a process to explain why XYZ should be repaired.
Scale should help with both procurement costs as well as leveraging fixed costs to offer more competitive pricing. On the former, I need to dig more to see if there is any advantages (ST or LT) that VVV can get through Aramco but this is unclear.
And on locations, it’s helpful when you have a VVV unit that is located near your house, work, kid’s school, etc. so that you can go to any depending on your schedule, be in and out in 15 minutes, and all the data associated with your visits are kept under one roof. But the network advantages for VVV are (hyper) local so you really have to go in and win each geography which is difficult and time consuming.
I think the biggest share donor, though, will be dealerships. The cost is higher, service is much worse (need to give up your car for a day+), and can be very inconveniently located. Lot of low hanging fruit from this portion of the market.
Really enjoyed this and I know we’ve chat about $VVV in the past. You pointed out that “store share and transaction share is >3.0x higher in its top markets” and that they are stealing share from Mom&Pop. Any reason for them to gain share in the future/what’s driving it? Assuming it’s a function of scale but want to get your perspective
Thanks for the comment! I’d say it’s a combination of service, scale, and location. The quality of the service you’re being offered at VVV is pretty consistent across stores and it’s a 15 minute in and out oil change. Your service levels can vary at mom and pops. There is also a stigma in the industry around mechanics taking advantage of a customer who is at an information disadvantage by selling more services than are needed. I’m sure that exists even when a customer goes to a VVV location but employees are taught not to cross-sell. If there is, in fact, something actually wrong with the vehicle, there is a process to explain why XYZ should be repaired.
Scale should help with both procurement costs as well as leveraging fixed costs to offer more competitive pricing. On the former, I need to dig more to see if there is any advantages (ST or LT) that VVV can get through Aramco but this is unclear.
And on locations, it’s helpful when you have a VVV unit that is located near your house, work, kid’s school, etc. so that you can go to any depending on your schedule, be in and out in 15 minutes, and all the data associated with your visits are kept under one roof. But the network advantages for VVV are (hyper) local so you really have to go in and win each geography which is difficult and time consuming.
I think the biggest share donor, though, will be dealerships. The cost is higher, service is much worse (need to give up your car for a day+), and can be very inconveniently located. Lot of low hanging fruit from this portion of the market.