Driven Out, Auto Parts Chain Turns to Chapter 7

CANOGA PARK —  It was doomed for the long haul.

That’s the assessment Dave Golden made when he decided to walk away from Mom’s Auto Parts, the small chain of stores he had owned and operated in and around Newbury Park for two decades.

Golden, 72, was driven out of business by a familiar retailing culprit of the late 1990s: the superstore or “category killer.” He says his decision to file for Chapter 7 bankruptcy protection from two of his biggest creditors was one of the most difficult of his life.

“All my bills were paid, personally and business-wise, all my life,” said Golden, who liquidated Mom’s last year and retired to his home in a Canoga Park trailer park. “I always made a good living all my life. I had learned that from my old man. He taught me you’ve got to work. In declaring bankruptcy--that took a long time to come up with something like that.”

Indeed, Golden’s plight is a familiar one in today’s retail climate, said John Rooney, a professor of entrepreneurship at the Lloyd Greif Center for Entrepreneurial Studies at the USC Marshall School of Business.

“It’s very tough,” Rooney said. “You run a little video store and a Blockbuster opens across the street, then your sales drop by 30% the next day. You have to get very creative to survive. It’s very tough. Retail is a very tough business.”

Golden’s story reads like a textbook case of a firm forced to close its doors by bigger competitors with more resources and greater purchasing power.

He bought his original Mom’s in Newbury Park about 20 years ago and was making a “good living” eight years later when he decided to open his second shop in nearby Thousand Oaks. But even then, the superstores were staring to move in.

“Bigger stores were buying direct from the manufacturer, and we had to buy from distributors,” Golden said. “The manufacturers didn’t want to sell to individual stores.”

One bigger store, Pep Boys, moved into Thousand Oaks, causing walk-in traffic to tail off at the newer Mom’s location.

“Someone would ask for brake pads, and I’d say it was $18 after buying it from the distributor,” Golden said. “They could buy the same one from Pep Boys for $15. Other stores like Target got into the business. Target sold oil filters for $2 each, but they were costing me $4 just to get them.”

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The competition proved to be too much, and Golden finally closed the Thousand Oaks store in the late 1980s. He opened another store in Moorpark, where there were no other auto parts sellers at the time. But then history repeated itself.

“After six years, a Chief Auto Parts opened across the street,” Golden said. “We were doing $1,500 a day in walk-in business, and it dropped to $50 a day. The lease had run out and I was staying month-to-month, so I just closed it a couple of months after Chief came in.

“It’s competition, but you can’t beat the competition when you can’t beat the prices.”

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Reduced to his single original store, Golden stayed in business largely by supplying auto repair shops with parts. But then a Santa Monica-based competitor--also feeling the pressure from superstores--began to poach from Golden’s territory.

The competitor began sending a delivery truck up the Ventura Freeway three and four times a day through the San Fernando Valley to Ventura and back, supplying many of the garages that were formerly some of Golden’s biggest customers.

“The accounts were getting four deliveries a day [from the competitor] and they were selling it cheaper than I could,” said Golden, who estimates his business volume dropped from about $50,000 a month to less than $20,000 a month at that time. “They would take back stuff and offer full credit.”

At the same time, two of Golden’s largest creditors were clamoring to be paid, but they refused to take back his growing volume of unsold parts in lieu of cash.

Soon, Golden saw the writing on the wall and had no choice but to declare bankruptcy last year. He spent much of the next year paying off many of his small creditors, although the $38,000 he owed the two large distributors has gone unpaid. Today, the old Mom’s storefront in Newbury Park stands empty.

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While the odds are hardly in favor of small stores like Mom’s in the era of the superstore, there may still be some room for small shop owners in the retailing world, said Rooney of USC. He cited the Santa Monica company that helped put Golden out of business as a case in point.

“What that one guy did--that’s the kind of aggressive guerrilla marketing tactics that people have to employ to survive in this kind of environment,” Rooney said. “By thinking of yourself as providing solutions as opposed to just providing the part, that’s the key. If you try to compete on price against the big guy, you’re in trouble. But you can compete on service, on extra value and specialty products for your customer.”