Interstate Batteries will start selling its batteries at thousands of Advance Auto Parts stores across the United States and Canada next spring, a move that CEO Scott Miller said will increase sales by $1 billion in 12 months.
Dallas-based Interstate Batteries’ bread and butter has been selling batteries to professional mechanics and technicians in garages nationwide. While Interstate Batteries has built a reputation for quality by selling to professional installers, the 65-year-old company has lacked the retail exposure to gain the same popularity with shadetree mechanics and do-it-yourselfers. Interstate Batteries has about 200 stores around the country.
“We’ve been investigating for the last couple years who we might form a channel partnership with that gives us a stronger presence in retail,” Miller said.
They looked at the four big players: Advance Auto Parts, Auto Zone, O’Reilly Auto Parts and Nappa Auto Parts.
Talks with Advance Auto Parts progressed well because the Roanoke, Virginia-based company’s new CEO had previously worked at Frito Lay in Plano.
“Once the dialogue began, it was clear there was a complementary value on both ends of the equation," Miller said.
Six months later, they had reached a deal. Advance Auto Parts will take its private label brand off shelves next spring, replacing it exclusively with Interstate Batteries. The batteries will also be sold at various wholly owned subsidiaries and independently owned CarQuest locations.
For Interstate Batteries, this means unprecedented growth for 2018 and beyond. Crain’s Dallas recently talked with Miller about the Advance Auto Parts deal as well as the future of automobiles and battery technology.
Q: Going from 200 stores to 5,000 or more will be a huge change for Interstate Batteries. What will that mean for the company?
“It’s a game changer for our business. By March of 2019, we expect to have sold 8 million units through the Advance partnership on top of the 18 million that we sell. We’re fired up about that. That’s kind of an upstart move. It’s neat to be able to pull something like this off at ‘our age.’”
Q: Will anything change for your existing customers, the professional mechanics who install your batteries?
“When our dealers need a hotshot delivery for a battery that’s not on the rack, Advance will be there in less than 30 minutes. That’s better for our customers than we can offer today. The online platforms that Advance has will allow independent local dealers to buy online. Now they can order Interstate Batteries through Advanced. We’ll be even faster for [the] emergency needs that they have.”
Q: Vehicle technology is changing, how does Interstate Batteries’ stay on top of this trend?
“We feel like we’ve got our finger on the pulse of what’s happening with legacy internal combustion engines, start-stop (vehicles that shut off the internal combustion engine when a car is idling) and the hybrids. Our view is that the internal combustion engine has a long runway, start-stop will continue to grow and take market share. Then hybrids and finally EVs. While EVs get a lot of press, they are still a small percentage. They still don’t work for the masses.
In all four of those platforms, they all still use a traditional lead acid battery regardless of whatever kind of other battery they have in there for propulsion. The 12 volt battery will continue to have a very prominent role for the foreseeable future. That’s good news for us and good news for the industry.”
Q: Consumers want their batteries to last longer and charge faster. What kinds of breakthroughs are you seeing in that area?
“They’re still trying to unlock the code. We’re seeing progress but nothing that we would consider a breakthrough. Lithium-ion has got a lot of potential. We’ll continue to see lithium-ion have a larger presence going forward.”
Q: Interstate Batteries sells more than just car batteries, though. Could you talk about the range of products you sell?
“Our slogan is, every battery for every need. We’ve got thousands and thousands of stock keeping units from batteries for hearing aids to cell phones. We make everything, including one for a boll weevil detector. We custom build that stuff at our Des Moines assembly facility.”