From the Magazine: Jobbers feel the pressure of industry demands
Reflections on industry trends and succession planning in the automotive aftermarket
Having grown up in a multi-generational jobber business, I often reflect on both the past and future of the industry. Some of my fondest memories involve attending industry events with my grandfather and father or spending time on the golf course with other jobbers, where camaraderie thrived.
Back then, the aftermarket landscape was shaped by a strong entrepreneurial ecosystem. Market by market, jobbers were well-known fixtures, with deep relationships in their communities. They built trust with their customers, creating family-like bonds. While there was competition, everyone had their slice of the pie — each jobber knew where they stood in the competitive landscape, fostering mutual respect across businesses.
In the Hamilton, Ontario, marketplace for example, the industry began shifting in the 1990s and early 2000s. A once-balanced market with local family-run jobbers and small corporate-owned stores evolved rapidly. Small competitors positioned at the lower end of the market started absorbing business from used car lots and garages, which focused on budget-conscious customers.
Despite these shifts, the industry was still in a growth phase. With demand steadily rising, the number of competitors in Hamilton grew from a handful to close to 30 aftermarket competitive locations, as well as facing aftermarket pressures from the OE dealers — not to mention lubricant, and equipment specialist businesses that went direct channel.
But the first signs of major disruption in wholesale distribution came when large, publicly traded parts distributors began to implement strategies that fundamentally changed the landscape. By opening company-owned stores stocked with tens of thousands of square feet of inventory, these businesses essentially established mini-distribution centers. This allowed them to bring inventory closer to customers, transforming central distribution hubs into high-margin profit centers and lowering the price to the ASPs cutting out a level of distribution.
Meanwhile, parts proliferation significantly increased the amount of inventory required, putting pressure on jobbers to invest heavily in stock. At the same time, the rise of e-commerce further accelerated change.
Unfortunately, many jobbers — ours included — were not equipped to adapt to this level of change, lacking the necessary technology, talent and succession planning to respond effectively.
A notable example was Worldpac, which took the Hamilton market by storm with its expansive inventory, efficient logistics and innovative B2B e-commerce platform, Speed-Dial. Over the course of just three years, it became nearly impossible for us to compete in the import parts segment. I would estimate that one in every three import part sales during that period went to Worldpac.
Unfortunately, many jobbers — ours included — were not equipped to adapt to this level of change, lacking the necessary technology, talent and succession planning to respond effectively.
We often looked to the Greater Toronto Area (GTA) to anticipate trends. The evolution of Motorcade provided a glimpse of the future. Its sale to Entrepôt Autoparts set the stage for the next phase: A wave of mergers and acquisitions across the industry.
As the need for larger inventories grew, jobbers increasingly relied on credit facilities to finance stock expansion. At the same time, on the service side of the business, garages and repair shops took a different path by investing in real estate and diversifying their business models. The asset-light nature of service operations — combined with healthy margins — made them attractive to investors. In fact, in both Canada and the U.S., automotive service providers have become popular targets for private equity, with many mid-market firms adding them to their portfolios.
However, the same has not been true for jobber businesses. Financial buyers have historically avoided this segment due to its low margins, high asset requirements and limited free cash flow. These characteristics make jobber businesses less appealing to outside investors, which has forced many operators to approach growth cautiously.
Opening new locations in unfamiliar markets (“greenfielding”) requires a strategic, long-term investment to build trust and relationships from scratch. While same-store sales are often a safer growth strategy, expanding into lower-tier segments of the market carries risks, particularly around accounts receivable.
As a result, many jobbers opted to maintain the status quo, using their businesses more as retirement funds than as engines for future growth.
When I chose to join my family’s jobber business after university, I was well aware of the challenges. Although some jobbers have successfully passed their businesses to the next generation, many of these businesses are not positioned as growth engines. Without reinvention and reinvestment, they risk becoming obsolete as the industry evolves.
As I look to the future, I see that the path forward for jobbers will require reinvention. Businesses must modernize, invest in new capabilities and adopt more sophisticated planning processes if they hope to remain competitive.
My experience managing and modernizing our family business gave me a rare opportunity to buck this trend. Over the course of a decade, I focused on strategic modernization — investing in technology, processes, and talent to keep the business relevant and competitive.
However, as I witnessed firsthand, large corporations with access to scale, capital and centralized resources have a significant edge. Their ability to streamline operations and leverage economies of scale allows them to maintain profitability, while smaller businesses struggle to replicate these advantages.
The recent wave of M&A activity in the industry underscores the realities many jobbers now face. Long-standing family businesses are being acquired for modest valuations, as large distributors continue to consolidate the market. This trend makes me reflect on my own experience within our family business and the decisions I had to make to maximize its value.
Even with solid succession planning, the growing demands of the industry put significant pressure on independent jobbers to either scale up or consider exit strategies.
As I look to the future, I see that the path forward for jobbers will require reinvention. Businesses must modernize, invest in new capabilities and adopt more sophisticated planning processes if they hope to remain competitive.
The industry is changing rapidly. Those who are not prepared to evolve will find it increasingly difficult to keep up. For jobbers with the foresight to embrace change, however, there is still opportunity — whether through strategic partnerships, investments in technology or developing new business models.
Succession planning, in particular, will play a critical role in ensuring that these businesses can transition successfully to the next generation and continue thriving in an increasingly complex market.
Zakari Krieger is the Fix Network, Canadian vice president of Prime CarCare, responsible for the Canadian retail business, encompassing the Speedy Auto Service and Novus Auto Glass business lines
This article originally appeared in the November issue of Jobber News
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