A veteran of more than 30 years in the automotive aftermarket, Mike Schultz has served as executive vice president (EVP) for Federated Auto Parts since 2003. Federated is one of the industry’s premier programmed marketing groups, with more than 3,800 Federated Auto Parts Stores and 2,400 Federated Car Care Centers nationwide.
Prior to joining Federated, Schultz served in senior management positions with TRW and Federal-Mogul. While at TRW, Schultz held the position of vice president of sales — North America as well as national sales manager.
In his career at Federal Mogul, Schultz served in wide range of capacities including vice president of marketing, vice president/general manager of sales and marketing – North America, vice president of international and national accounts and director of sale — national accounts.
Schultz recently brought aftermarketNews (AMN) up to speed on his role at Federated, having celebrated his first year as executive vice president. He also shared with AMN his thoughts on the future of programmed distribution groups and Federated’s role in the marketplace.
You’ve been EVP of Federated for a little over a year now. How does it feel to make the transition from manufacturing to distribution? What are some of the adjustments you’ve had to make, moving from the manufacturing world to that of distribution?
After more than 30 years on the manufacturing side of the business, it’s refreshing to view the industry from the other side of the street. I truly enjoyed my time on the supplier side, and quite frankly thought I understood the distributor’s challenges and his needs. I have to admit I really didn’t understand the distributor side of the business as well as I thought. As a distributor, you’re closer to the jobber and the end user and have to consider that in product choices and promotions.
What kind of perspective does your previous experience at TRW and Federal-Mogul give you in your position at Federated?
There is no doubt that I am much better prepared to understand the manufacturer’s position because I understand their cost structure. I understand how their budgets, sales goals and marketing programs relate to the programs that are offered to the industry and this gives me some insight on how to deal with the supplier.
Does Federated have any new marketing plans you’d like to share with our readers? Any motorsports involvement this season? Federated has a long-standing involvement with racing – will you continue that, specifically Federated’s relationship with Kenny Schrader?
We will continue our involvement in motorsports and our relationship with Kenny Schrader. Federated’s members and customers enjoy racing and we plan to continue to support the venue they follow. In addition to providing hospitality programs at eighteen motorsports events, we will also continue our support of the Federated 300 NASCAR Busch Series race in Nashville, Tenn. We continue to expand our marketing activities including, motorsports, weekly and monthly promotions, education and training, and recently we just added a new Federated National Warranty program for our installers.
With the recent mergers taking place between groups like IAPA and Parts Plus, what do you see for the future of programmed distribution groups?
The consolidation of some groups is a logical “next step” considering the number of distributors that have been sold in the last two years. If a group loses some of its members because of consolidation with other distributors to other groups, they may have no choice but to look at merging with another group. We are fortunate that we have a great mix of members ranging from the very large to the medium-size distributor. Our scale is such that industry consolidation does not put us into a position where we would need to look for a marketing partner.
What, in your opinion, makes Federated stand out among other groups?
There are several reasons Federated stands out among the other groups. First we have a great membership that supports our approved suppliers by being committed to line commonality. We have what I believe is the strongest, most dedicated and hardest working management team in our industry. Our marketing programs are consistent in their message and with their frequency. We are the only group that has regional managers in the field. Federated is also one of the select groups that offers a member-owned co-managed warehouse that keeps members very competitive.
Does Federated have any plans for future growth?
Federated’s growth will continue as in the past. We will continue to add new members when it is appropriate and we will continue to have internal growth as our members open more stores and make acquisitions of their own. Federated’s members are extremely dedicated to the professional installer and because of that commitment, we will continue to gain market share at the installer level.
Where do you see Federated five years from now?
Obviously, the market will influence how Federated approaches the next five years. We feel strongly that the key to our success is to have members that are in total support of our programs and direction. The number of members we have is not nearly as important as the quality of our members and the consensus of direction we get from them.
What do you see as Federated’s strengths? And, conversely, what do you see as its challenges?
I believe I have already mentioned many of our strengths such as, marketing programs, member owned co-managed warehouse, commitment to installers and the support of our suppliers. As far as our challenges, they continue as they have in the past: competitive sourcing, large retailers, competing with the OE dealer, further consolidation of suppliers and distributors and keeping up with the technology of the industry.
Now, to take that same question to the broader level, what do you see as the industry’s biggest challenge?
As far as the industry goes, it has the same challenges as we do: technology, shortage of trained technicians, managing the OE relationship, consolidation, off-shore suppliers, parts proliferation, energy prices, cost of employee benefits and increased costs in both distribution and transportation, just to name a few.
With the DIY market receding and retailers changing their tack to take on more wholesale business, how do you think this changes the playing field? How do you see the competition, and the marketplace, changing?
First of all, the DIY market is shrinking, but it is a long way from being dead. As long as there is a DIY market, the large retailer will still concentrate his resources on that part of the business. It is true that the retailer is trying to gain market share in the professional installer area, and we obviously have to take this challenge seriously. We must continue to improve our services, product coverage, training, and stay competitively priced in the market. The groups, WDs and jobbers who recognize the challenges and strive for continuous improvement in the market place will continue to do well. The ones who ignore the issues and do nothing will not survive. Because of these challenges, it is important that WDs and jobbers do not try to do this alone. This is where the group and the support you get from other members help you survive in this fast changing and competitive market.
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