When Hertz Thinks Differently

Yesterday’s announcement by Hertz that they are moving into the local hourly car rental business represents a big shift by a large enterprise (pun unfortunate, but intended) that will heavily affect some smaller businesses.

This is an excellent example of an elephant shifting strategy. Hertz, known for decades as a car rental company for out of towners needing local transportation for a few hours or days, now is moving in on Zipcar and Flexcar. The New York Times has all the details.

Important for us is to see that Hertz has recognized market conditions have changed, fewer people are traveling. They have also redefined their customer from business air travelers and tourists to urban dwellers needing short time-period individual transportation. This service is available in the US in only in New York City and New Jersey (and London and Paris), but with 40,000 cars in NYC versus 1400 cars for Zipcar, the odds are that Hertz can handle the incentory requirements.

The big question for Hertz is how small they can become. Can they match the pick-up and drop off locations? Can they actuallymatch the lightweight aspect of small business? What expectations are attached to the Hertz brand that may not translate well to this new business operating style (i.e., match the time-share mentality with the Hertz delivery)?

This is somewhat similar to Enterprise Car Rental. Their niche was working with auto dealers and repair shops, then they expanded into direct cutomer rentals and used car sales. While Enterprise successfully made the switch, there were some bumps along the way. It will be interesting to watch Hertz navigate similar obstructions.

The lesson for a small business is to keep moving because the elephants, like Hertz, are always shifting. What elephants are in your business segment? The end of the year is a good time to review your market niche and your alternatives for expansion should one of the elephants in your segment shift closer to your niche.

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