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The State of the Super Stores


2/23/2011

Every year, Counterman magazine reviews the current climate regarding super stores serving the aftermarket.
 

Every year, Counterman magazine reviews the current climate regarding super stores serving the aftermarket. The criteria we use to determine those on the list is simple: A chain must have 50 or more stores in order to be considered. We begin with the chain having the highest number of stores and work our way down.

There are 17 super store chains that made the cut. At the top are the biggies: Autozone, Advance Auto Parts and O’Reilly Auto Parts. From there, chains that are more regional with respect to
operations appear.

This year, we engaged the CEOs and president of three chains — Auto-Wares, Fisher APW and Uni-Select — to understand their views on the state of the aftermarket.

 

INSIGHT FROM THE TOP

Richard Roy
President, CEO of Uni-Select


What is your outlook for 2011 regarding the aftermarket?
We are in the process of converting company-owned stores to the Auto Plus banner and that’s something we intend to do more of in 2011. Some of them have been converted already. But some of the stores are being left under the names under which they were acquired because that’s how they became known as a name at that time.

We have 600 right now if you consider our independent jobbers and also some of our stores. We converted our independent jobbers first. Then we’re doing the company-owned stores right after.

We remain optimistic, I would say cautiously optimistic. We believe the aftermarket will continue to show growth and quite frankly, we do believe consumers will continue to look after the cars they have. We’ve seen some increase in new car units sold last year but at the same time, it’s nowhere near what it was in the past. We do believe looking after the cars they have, the consumer will continue.

What are your thoughts on your company’s need to enhance or grow the commercial side of the business?
We do very little retail, with the exception of consumer auto parts. Ninety percent of our business is catering to professionals, whether they would be jobbers or installers. Including all of North America, about one-third of our business is serving independent jobbers, and one-third serving installers. You need to provide value to those entrepreneurs. You need to provide them with a complete business solution, not only parts, obviously. You need to have the parts, great service with the proper product at the proper time and the proper price. You need to make sure they have everything they need to be very competitive.

How do you accommodate the commercial side of the business?
We’ve continued to focus on service, and making sure we provide great service, delivery and good fill rate. If you’re looking at the overall business, it’s always important to work on your talent on-hand. We provide training to our people and certainly are always looking at recruiting good people to enhance our team.

Proper product, fill rate, the proper promotion at the right time.

Auto Plus is for our independent jobbers and also our company-owned stores. We have embarked on several programs we’ll be sponsoring for races . We also have some publicity we’re doing on TV and the radio in some specific markets.

Does the company plan store acquisitions or expansions in 2011?
Our business has grown tremendously over the last few years through acquisitions. We just completed the acquisition of FinishMaster in the PB&E sector, with 162 stores in several states. We are planning to continue in our acquisition strategy and add additional stores and also warehouses serving independent jobbers in the coming years.


Bo Fisher
CEO, Fisher Auto Parts


What is your outlook for 2011 regarding the aftermarket?
We are very optimistic about the aftermarket especially since our 2011 sales thus far show strong double-digit sales increases. Consumers are trying to protect their second-largest investment and are keeping their current vehicles rather than purchasing new vehicles. We expect this trend to continue in the coming year and that is good news for the aftermarket. We are always concerned about the price of gas, as it is one significant issue outside of our sphere of control that impacts miles driven, sales and delivery expense.

What trends do you see emerging in the aftermarket?
The state of the economy remains uncertain for many consumers and they are looking for ways to extend the life of their vehicles. The professional technicians tell us that some motorists are bringing their vehicles in for preventative maintenance more frequently and following service intervals more closely. This shift in behavior is a good sign for the aftermarket, allowing our commercial customers to service more vehicles, sell additional parts and grow the market by capturing more of the unperformed maintenance that exists today. 

What are your thoughts on your company’s need to enhance or grow the commercial side of the business?
The main focus of our business has always been, and will continue to be, service providers and professional technicians. Our store and warehouse teams work very hard to help our customers be successful and have been rewarded with double-digit same-store sales increases for the past several years despite formidable competition.

We strive to provide the best possible service, quality, availability, outside sales effort, training and overall value in the aftermarket, thereby helping our customers grow their businesses. Our goal is to consistently have the correct, high-quality parts leave our stores within four minutes of every phone call. We rely heavily on the highest-quality name brand products that customers prefer. As such, our relationships with key suppliers are also very important and we deeply appreciate the quality, value and continuity that comes from long term relationships with suppliers.

How do you accommodate the commercial side of the business?
In addition to constantly improving and helping our customers be successful, we have one of the best car care programs in the industry designed to improve the marketing and merchandising of our customers to the consumer. From advertising and signage to a nationwide warranty and critically important electronic data, our goal is to keep our customers ahead of the competition.

Constant improvement (kaizen) isn’t just a slogan. For example, we increased our support of the Federated Car Care program by more than 25 percent last year, providing shops with programs like roadside assistance and their own websites, because we know that they have to compete for consumers’ business. Federated is constantly improving our marketing efforts under the talented guidance of Rusty Bishop and many others.

Does the company plan store acquisitions or expansions in 2011?
We are always looking for acquisitions if the math makes sense for both parties. Fortunately, we have little debt and are blessed with strong leadership that has significantly improved profitability in recent years. It is fun going to work every day when we have such dedicated and talented drivers, countermen, warehouse, sales and management teams. We strive each year to grow by at least 20 percent through a combination of organic growth and acquisitions which, when compounded, means that our goal is to more than double the size of the company every four years.


Todd Leimenstoll
President, Auto-Wares Co. Store Group


What is your outlook for 2011 regarding the aftermarket?
We are experiencing sales increases to start 2011. All indications are that this will continue as the consumers continue to hold on to their vehicles longer. The consumers are showing an increased willingness to spend on quality repair parts and service when we properly spend the time to explain the differences. This is one of the things that seems to be helping our average invoice increase.

What trends do you see emerging in the aftermarket?
Parts proliferation is forcing change in how inventory is being managed at all levels of our distribution. Data and feedback from point of sale has grown to be a critical part of our everyday life in the parts business. “Local stock” and “same day” availability of parts is becoming a larger part of the value proposition with all customers. It all starts and ends with having the right part and people who can get that part to the customer. 

Delivery dispatching and tracking software is becoming critical in larger markets to assure proper service levels while managing costs. Delivery methods seem to be moving away from all “hot shot” and allowing for routes when you can guarantee your performance. Gross profit margins continue to compress, creating a need to make the sale as efficiently as possible while still meeting all of the customers’ expectations on price and service. This will require being open-minded to new ways of doing business at all levels of aftermarket.

What are your thoughts on your company’s need to enhance or grow the commercial side of the business?
The commercial account is our primary focus. Always has been and always will be. Many of our retail sales directly relate back to these commercial account relationships as well. Our company invests heavily in training both for the commercial customers and our employees. We hold an annual event that trains more than 2,000 technicians and business owners in our marketing area. We intend to continue to make this investment both for the good of our customer and our industry. Measuring our service levels in delivery and same-day order fill will keep us focused on areas we can improve. And you can always improve on both.

We have implemented a “never say no” culture into our company. We combine this with tools for immediate feedback from customers and counter sales on “lost sales” or brand preference to steer.

Technology continues to evolve. Customers today have the ability to see parts availability from multiple suppliers. Not only do our sales people need to know their parts, they need to know how to best use the technology that our customers use. We have put an individual in place whose primary responsibility is to make sure we know how our customers are seeing and using our technology. 

We will continue to make sure we have ASE certified counterpeople in our stores and professionally trained salespeople calling on them to bring the product information, programs and technology to help their businesses be efficient. We train our people to “never say no” and find the part. The customer has already shown that they trust you when they called. We need to take it as far as we can to prove they made the right call.  

Does the company plan store acquisitions or expansions in 2011?
Yes, Auto-Wares is always looking for WD and store opportunities to improve our marketshare and expand our footprint. There are many positive things we have experienced from putting two good companies together. We do all we can to learn from our acquisitions and then translate the combined companies advantages to our new customers, existing customers and employees. While we enjoy growth, Our goal is not to be the biggest, but to be the best parts supplier in our customers’ eyes.

THE LIST

1. Autozone
Program Group Affiliation: none
Store Count: 4,404
DC Count: 9
Private/Public Ownership: NYSE - AZO
Wholesale vs DIY:
12% commercial/83% retail,
other 5%
Private Label: Duralast
Store Count Changes vs. 2010: opened 213; closed three stores

2. Advance Auto Parts
Program Group Affiliation: none
Store Count: 3,563
DC Count: 8
Private/Public Ownership:
NYSE — AAP
Wholesale vs DIY:
30% commercial/70% retail
Store Count Changes vs. 2010: opened 148 stores, including 38 Autopart International stores; closed five stores

3. O’Reilly Auto Parts
Program Group Affiliation: Parts City
Store Count: 3,570
DC Count: 23
Private/Public Ownership: Nasdaq: ORLY
Wholesale vs DIY:
40% commercial/60% retail
Private Label: Several exclusive to O’Reilly
Store Count Changes vs. 2010: opened 150

4. General Parts Inc.
Program Group Affiliation:
CARQUEST
Store Count: 1,500*
DC Count: 37*
Private/Public Ownership: Private
Wholesale vs DIY:
85% commercial/15% retail
Private Label: CARQUEST
Store Count Changes vs. 2010: none*

5. Genuine Parts Co.
Program Group Affiliation: NAPA
Store Count: 1,000*
DC Count: 58*
Private/Public Ownership: NYSE - GPC
Wholesale vs DIY:
80% commercial/20% retail
Private Label: NAPA
Store Count Changes vs. 2010:  none*

6. Pep Boys
Program Group Affiliation: None
Store Count: 612
DC Count: 10
Private/Public Ownership: NYSE — PBY
Wholesale vs DIY:
40% commercial/60% retail
Store Count Changes vs. 2010:
opened 25

7. Auto Plus/Uni-Select
Program Group Affiliation: Uni-Select
Store Count: 268
DC Count: 25
Private/Public Ownership: TSX - UNS
Wholesale vs DIY:
75% commercial/25% retail (from 2009 figures)
Private Label: Auto Plus
Store Count Changes vs. 2010: n/a

8. Fisher APW
Program Group Affiliation: Federated
Store Count: 364
DC Count: 15
Private/Public Ownership: Private
Wholesale vs DIY: primarily
wholesale
Private Label: Federated
Store Count Changes vs. 2010:
opened 52

9. BWP Distributors Inc.
Program Group Affiliation:
CARQUEST
Store Count: 125
DC Count: 5
Private/Public Ownership: private
Wholesale vs DIY:
85% commercial/15% retail
Private Label: CARQUEST
Store Count Changes vs. 2010: opened three

10. Replacement Parts Inc.
Program Group Affiliation:
Aftermarket Auto Parts Alliance
Store Count: 160*
DC Count: 3*
Private/Public Ownership: Private, 15% ESOP
Wholesale vs DIY:
70% commercial/30% retail
Private Label: PartsMaster
Store Count Changes vs. 2010: none*

11. Auto-Wares Co. Store Group
Program Group Affiliation:
Aftermarket Auto Parts Alliance
Store Count: 143
DC Count: 10
Private/Public Ownership: private
Wholesale vs DIY:
70% commercial/ 30% retail
Private Label: PartsMaster
Store Count Changes vs. 2010:
acquired 9 S-G Imported Car Part locations, five acquisitions, one new opening, seven closed/sold locations, 12 completely remodeled

12. Strauss Auto
Program Group Affiliation: none
Store Count: 57
DC Count: 1
Private/Public Ownership: Private
Wholesale vs DIY: 95% retail/5% commercial
Private Label: Strauss Auto
Store Count Changes vs. 2010: closed six stores

13. Hahn Automotive
Program Group Affiliation:
Aftermarket Auto Parts Alliance
Store Count: 82
DC Count: 32
Private/Public Ownership: private
Wholesale vs DIY:
80% commercial/20% retail
Private Label: PartsMaster
Store Count Changes vs. 2010: none

14. KOI
Program Group Affiliation: Federated
Store Count: 75
DC Count: 6
Private/Public Ownership: employee owned
Wholesale vs DIY:
80% commercial/20% retail
Private Label: Federated
Store Count Changes vs. 2010: none

15. Automotive Parts Headquarters
Program Group Affiliation: Alliance
Store Count: 73
DC Count: 1
Private/Public Ownership: private
Wholesale vs DIY:
70% commercial/30% retail
Private Label: PartsMaster
Store Count Changes vs. 2010: one new store opened in 2010

16. VIP Parts, Tires &
Service
Program Group Affiliation: Pronto
Store Count: 56
DC Count: 1
Private/Public Ownership: Private
Wholesale vs DIY:
10% commercial/90% retail
Private Label: none
Store Count Changes vs. 2010: one store closed

17. Merrill Co/Arnold Motor Supply
Program Group Affiliation:
Aftermarket Auto Parts Alliance
Store Count: 50
DC Count: 3
Private/Public Ownership:
Partnership
Wholesale vs DIY:
80% commercial/20% retail
Private Label: PartsMaster
Store Count Changes vs. 2010: none


*Denotes information based on available 2010 data













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