The Parts Alliance announced the opening of SC Motor Factors Croydon in February of this year. PMF checked in with Steve Gray, Divisional Director, and Tony Shearer, Operational Development Director, to find out how the branch has progressed after its first quarter.
Q. Thank you for taking the time to sit down and talk about the new Parts Alliance branch. How has SCMF Croydon come about?
Steve Gray (SG): Croydon is a new site and part of the Parts Alliance (PA), which means it’s a new facility, but certainly not new to factoring. The branch is an all-makes parts solution and has 4,500ft2 of floor space, with room to expand should we need to as the business progresses.
Tony Shearer (TS): We see this branch as very much part of the new generation of PA branches. When it comes to setting up a factor, it’s really a standard process. If you look at branches in other parts of the country, such as SAS, they are more or less the same as this, same size buildings, opened in the same way, in order to make sure we can achieve the greatest possible sales penetration in the area. All in all, it is very much a uniform approach.
Q. What sort of research is required before opening a branch like this?
TS: Well this is my area of expertise: branch placement. Croydon has always been on our radar as a key area that we didn’t cover previously. Before its opening in February, I would say Croydon was the PA group’s last white spot within this part of the M25 catchment area. Now that it is open to the trade, this branch has plugged the gap, and provides the last piece to the puzzle.
Q. So, how does SC Motor Factors fit into the overall Parts Alliance group?
SG: SC Motor Factors (SCMF) is the local brand, but it doesn’t run as a separate business. Whether it’s a CES, GMF or SCMF branch, they are all run as one company under the Parts Alliance.
TS: The PA is similar to companies that might have divisional numbers or regions. To briefly explain, the network is made up of regions, all of which have brand names as opposed to a number, in this case, SCMF. All the background support comes from the wider group and enables a local business to provide the highest level of service, something it may not have previously been able to do. In effect, it means a branch will have the strength of a local brand’s heritage, coupled with the scale of a larger group sitting behind it. People trade with SCMF because they trust the brand and they trust the people, why would we want to come in and jeopardise that relationship?
Q. Is maintaining the trust between a factor and its customers crucial to establishing a new branch?
TS: Certainly for somewhere like here. We were already delivering into this area from the Forest Hill branch, so SCMF was already a well-known name. Imagine if we came along and opened a Parts Alliance branch. Not everyone would have heard about the PA’s own brand, whereas they know and trust SCMF. They have already experienced trading with them, and it’s really just further expansion and mobility that we’re adding to the mix. Even though the Forest Hill branch is just down the road, the new Croydon branch provides vastly improved delivery times and accessibility. This morning we saw how bad the traffic can be, and within the M25 you have to be able to deal with that problem.
SG: At the moment, this branch only focuses on a three-mile radius, which consists of approximately 400 to 500 accounts. As Tony mentioned, the approach to starting up a branch is more or less universal throughout the country, however, the biggest variable is the range within which the branch provides its service. With somewhere like Croydon, the range is only three miles, but for rural branches such as North or South Wales, coastal areas, etc. it could be 30 miles. Our research tells us that operating within a 30 mile radius in those areas is more than likely going to take the same amount of manpower and time as operating within a three mile radius within the M25, which is why this branch has a motorcycle biased fleet – four motorcycles and two vans – to cope with the regular and heavy traffic.
Q. Is such a reliance on motorcycles for delivery not restrictive?
SG: You would be surprised what they can carry! If you look at the car part market, the biggest components, and one of the few that you can’t put on a bike, are exhausts, but in today’s world, exhausts are a lower contributing product group than they were 20 years ago, which means there is not much of a knock-on effect. Given that the bulk of our stock is smaller components anyway, a bike is the best way to make sure the parts reach their destination in good time.
Q. Looking a little further ahead, what’s the goal for the branch?
SG: It’s built with room to spare. The flooring solution we have allows for a two-tier racking system, organised in modules, so that it’s very easy to expand without causing any disruption to trading. When we hit certain trigger points, from a sales point of view, we can extend the second floor, opening up the branch to a greater stock holding capacity.
Q. When discussing expansion, often the topic of retail comes up. Is this potentially on the cards for SCMF Croydon?
TS: Approximately 90% of our business is delivery and the final 10% is formed of customers coming through the door and buying retail. The real challenge with retail however, is that sales are almost entirely reliant on distress purchases. People don’t tend to think about going to their local motor factor to have a look around the shop. Buying habits now show that drivers are not working on their cars as much as they used to. Specifications these days are rigorous, so people are reluctant to make wholesale changes, naturally restricting what a motor factor can offer to retail customers. For this reason, I would say we tend to have a streamlined retail approach. Fundamentally, we are a trade solution, but the door is open if customers want to come in.
Q. All in all, have you been pleased with the success of the branch so far?
SG: Absolutely! Each branch opens with a set staffing level and even though SCMF Croydon has only been operating for a couple of months, we have already had to increase the staffing level to accommodate for the demand in the area.
We have started off very strong from a trading point of view. Even before the doors were opened, it was a very slick setup. We had a team of people making sure that everything was in place so that when opening day arrived, the business was ready to go. Only yesterday we took a trip into town to celebrate the success of Q1, and I have no doubt that this won’t be the only cause for celebration.