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Sears Will Get Back Into the Lube Business in Just a Jiffy

March 24, 1995|DENISE GELLENE | TIMES STAFF WRITER

Sears, Roebuck & Co. on Thursday announced a deal with Jiffy Lube that restores some automotive services the retailer dropped after a scandal three years ago.

The agreement calls for Jiffy Lube to open oil-change shops in 456 Sears auto centers over the next three years, providing a service often requested by Sears customers.

Sears in 1993 restructured its auto centers, dropping oil changes, tune-ups and other services after the California Bureau of Automotive Repair accused the retailer of systematically charging customers for unnecessary repairs. Sears settled the case, taking a $27-million charge in 1992. Bad publicity cost the retailer millions of dollars more.

Jim Thornton, vice president of Sears Automotive, said Thursday that the auto centers haven't recovered from the repair scandal.

"It is a work in progress," he said. "There is a strong sense . . . we've turned around our business."

Revenue from Sears' 779 auto centers was $3.25 billion in 1994, up 2% from 1993. Sears doesn't report income from the auto centers. A spokesman said they are profitable.

Sears expects the Jiffy Lube deal to enhance its service and draw more customers to its auto centers and retail stores. "Whenever we can increase traffic, that is the upside," said Thornton, calling Jiffy Lube "a great draw."

The deal gives Jiffy Lube, a unit of Pennzoil, access to mall locations it might not otherwise get. Most of the company's 1,132 oil-change shops are free-standing structures.

Jiffy Lube will move into space emptied when Sears cut back its automotive services. The company said that the typical Sears store has 22 auto bays, but uses only 15 or 16.

According to the agreement, Jiffy Lube will remodel the space and pay Sears a percentage of its revenue. It will hire its own employees and operate the oil-change service under its own name.

As a result of the restructuring, Sears auto centers are almost wholly devoted to tire and battery sales. Thornton said those two items account for 80% of auto center sales, up from 60% in 1992, before the business was restructured. The company continues to service brakes and shocks and do front-end alignments.

Allen Wood, a supervisor with the Bureau of Automotive Repair who led the Sears investigation, said the company's performance has improved at its 68 auto centers in California.

"I wouldn't expect any company of their size in the state to have no complaints," Wood said. "We've sampled them and, quite honestly, I can't say we've found any consistent" problems.

Also in the wake of the scandal, Sears changed the way it compensates auto center employees, eliminating commissions for mechanics and reducing commissions for salespeople to 1% of sales. Employees receive a bonus based on results of customer satisfaction surveys and overall performance of the shop.

The Bureau of Automotive Repair had alleged that Sears' previous commission system gave auto center employees an incentive to oversell.

Jiffy Lube does not pay commissions to its employees, said spokesman Mickey Gentry. He said employees are instructed to follow manufacturers' auto maintenance recommendations.

Besides oil changes, Jiffy Lube replaces oil filters, lubricates chassis and checks fluids.

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