Wheel man


BY LINDA BAKER

Les Schwab has put a premium on customer service since 1952, when legendary namesake Les Schwab founded the company with one store in Prineville. (Schwab died in 2007.) But if the corporate principles remain essentially the same, the world around this iconic Oregon business has changed dramatically.

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 LesSchwab lowres AW07
 // Photos by Adam Wickham

BY LINDA BAKER

Les Schwab Tire Centers

CEO
Dick Borgman

Headquarters
Bend

Employees
1,800 in Oregon

Fun Fact
Stocks stores with approximately 6.75 million bags of popcorn annually


“A tire is so much more than a black round doughnut.” Dick Borgman, CEO of Les Schwab Tire Centers, is in a new store in Portland’s Sellwood neighborhood, explaining how a retailer selling a commodity product — a tire — differentiates itself in the marketplace. “The whole idea is to provide what we feel is an exceptional level of customer service,” says 58-year-old Borgman, whose carefully chosen words and button-down appearance reflect his background as a corporate attorney. “And that is all driven by store employees who have the experience and training that go beyond the selling of a tire and the servicing of the tire.”

Les Schwab has put a premium on customer service since 1952, when legendary namesake Les Schwab founded the company with one store in Prineville. (Schwab died in 2007.) But if the corporate principles remain essentially the same — the chain, now based in Bend, is famous for employees who run to the customer vehicles as they pull up to park — the world around this iconic Oregon business has changed dramatically. “So you have to adjust those principles to the world and to the size of the scale we have become compared to the 1950s,” Borgman says.

Debuting a new, modern store design, embodied in the Sellwood outpost, is one of those adjustments: “We wanted to make the store more comfortable and appealing for customers,” says Borgman. Improving the efficiency of retail and service operations was another goal. The result is an open floor plan featuring plenty of glass and skylights; windows in the showroom also allow people to watch what is happening with their car while munching on the company’s signature free popcorn. 

The decision to update the Les Schwab store aesthetic coincided with another strategic move: expansion into Colorado and California’s San Joaquin Valley, specifically Fresno, as well as Baker City. “We had completed our growth in mature markets — Washington, Northern California and Idaho — so we needed to have new areas in which we could open stores,” Borgman says. Only a year after opening, the new markets are exceeding performance expectations by a quarter or more.

In 2013 Les Schwab grossed about $1.5 billion. The company operates more than 450 stores and employs about 6,500 employees, 1,800 in Oregon. 

About that changing world: Several decades ago, Les Schwab’s competition was limited to other tire stores. Today the competition has grown and diversified to include big-box retailers such as Costco and Walmart, along with Internet retailers. On the procurement side, changes in the tire and auto manufacturing industries have created new inventory challenges. 

“Car manufacturers introduce new models with different tire sizes all the time, which requires us to have the right products in the store when new-model vehicles come in,” Borgman says.  “At the same time, vehicle age is pretty old in the U.S., so you have 10- to 12-year-old vehicles coming in, and you have to have product for them as well.”


 

LesSchwab lowres AW15Globalization has also changed the game. Despite their American brand names, Fire­stone and Goodyear, most tires are made in Asia because of the proximity to natural rubber and low labor costs. “That means when events happen in the world, it affects everyone who sells tires,” says Borgman, noting that everything from natural disasters to tariffs can disrupt supply chain. Fluctuations in natural rubber and petroleum commodity markets have also generated instability in tire prices. 

To navigate the changing marketplace, Borgman and his store managers are keeping a tight rein on purchasing and inventory, and they are engaging social media to extend brand advertising; the chain’s marketing efforts include preaching the relevance of tires to a younger generation that appears to be driving less, a trend “we are paying close attention to,” Borgman says. The company is also making sure customers, especially in the new markets, understand the Les Schwab “differentiators”: product selection, free warranties, plus non-tire related offerings such as brake, battery and alignment services.

Stellar workplace benefits are another distinguishing feature: The company’s pioneering benefits package includes profit sharing for all employees and autonomy for store managers, who are promoted from within. Intended to make employees feel like owners of the business, these policies were developed by founder Les Schwab. Borgman, who in 2006 became the company’s first chief executive not connected to the founder’s family, has continued the tradition — albeit with some modifications as the company grows. “I need to be a little more formal in having best practices and governance to ensure a company our size is sticking with those principles and that there is clarity to them.” 

It’s a strategy Borgman hopes will drive continued expansion; in the next two years, the chain plans to open 12 to 15 new stores in California and Colorado. “Really, the entire western U.S. is a growth market for us,” he says.LesSchwab lowres AW22

Think globally, act locally — and never forget your roots. In 2014 that could be the Les Schwab mantra. “Our focus has always been to be there for the life of the tire,” says Borgman, who is standing in the Sellwood store in front of a mural of Mount Hood and a community bulletin board, part of the new store design emphasizing localized art and neighborhood involvement.  “It’s not just the transaction with the customer but a relationship with them that allows us to take care of them during the life of that tire.

“You wouldn’t imagine the engineering and the materials that go into a tire,” Borgman adds. “A tire is surprisingly complex.”