Archive for September, 2014

When was the last time you visited neighborhood pharmacy? Not to disclose my age, but I remember getting a cream soda at the local pharmacy. Those days are over. Yesterday my medical insurance company told me that I can only pick up my medicine from Walgreen’s. Large corporations such as Rite Aid and Walgreens took over the pharmacy business. They are huge well financed corporations with locations all over United States and ability to give deep discounts and make agreements with major medical insurance companies. Small, one location, neighborhood pharmacies just could not compete. They are gone for all practical purposes.

Such is not the case for restaurants. Small mom and pop diners are able to coexist with such giants as Denny’s and Norm’s. Gourmet, one location Pizza places are able to make a good living located right next to a large chain’s like Dominos. Small local bistros are thriving right next to Applebee’s.

What about auto body shops or what they are called these days, automotive collision centers? Large corporations and huge consolidators have been buying smaller shops all over the country for the past several decades. It is a trend that has been picking up speed with intermittent success. M2 Collision Centers filed for bankruptcy in 2005 after buying and operating a significant number of big body shops in Southern California. Today’s consolidators are much more experienced. They are well financed and well organized. They have the ability to buy in balk cheap and sell cheaper. They are structured to give deep discounts to insurance companies, who have become a major source for collision work in recent years.

My personal experience with one consolidator showed me that they are hard to compete with and they might be here to stay. Moving my shop from Burbank to Pasadena last year, I was hoping to retain a good majority of my business because of close physical proximity between old and new locations. I went down to talk to my partners at Community Chevrolet. I have been doing business with those guys for the past fifteen years. It was a handshake contract that was based on mutual respect and trust. During our meeting I was informed that Caliber Collision Center approached Community Chevrolet and proposed that all ten of their big shops would buy parts from them in exchange for giving collision business to a local shop. It was an offer that Community could not refuse since their parts selling business was going to skyrocket. It made dollars and cents. I simply could not compete with that.

Still I believe there is a value in an independent, neighborhood body shop where an owner knows your name and personally greets you and asks you about your family. For example, I have been working on Mr. Joe Baldino’s vehicles since 1990. I have fixed his father’s car, his wife’s and his children when they got to be old enough to drive. He recently offered me his vacation home in Hawaii. When Joe brings his vehicle for repair, he does not ask me about an estimate. He tells me to call him when it’s done. He knows he will get exceptional repair along with personal service at a fair price. This cannot be accomplished at a corporate shop.

So, can the lesser sized independent shops survive and thrive among gargantuan corporate collision centers? Only time will tell.