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Advance Auto Parts: ‘Plenty of Room for Improvement’ in DIY Business

CEO Tom Greco made it clear the company needs to address “some internal factors” to rev up the do-it-yourself side of the business.

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A rainier-than-usual spring put a damper on Advance Auto Parts’ first-half DIY retail sales. But CEO Tom Greco made it clear the company needs to address “some internal factors” to rev up the do-it-yourself side of the business.

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“We believe there’s plenty of room for improvement in our retail business that is not weather dependent, and we’re committed to addressing those factors that are within our control,” Greco said during the company’s Aug. 13 conference call with analysts.

Greco pointed to syndicated data showing that the company’s market share in DIY retail dropped slightly in the first six months of 2019, after Advance gained some market share in fourth-quarter 2018.

“Part of our shortfall was concentrated in certain categories where our actions did not produce the desired results,” Greco said. “Therefore, we’ve taken the appropriate steps to address the opportunities and have already seen improvement.”

Advance has several initiatives planned for the second half of 2019 “to stimulate sales growth in DIY retail,” he added.

Greco noted that Advance recently tapped former PepsiCo executive Jason McDonell to serve as its chief marketing officer. McDonell, who started on July 29, “brings an extensive background in digital and brand marketing” and already is “focused on driving traffic and improving the impact of our marketing investments,” Greco said.

Advance also is trying to improve the purchasing experience for customers who buy parts online and pick them up in stores.

The company hopes to grow that segment of the business by providing a dedicated location in each brick-and-mortar store for customers to pick up their online purchases.

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“We know they want to get in and out of the store quickly,” Greco added.

Greco pointed to two other initiatives aimed at boosting DIY retail sales: Advance’s new “Speed Perks” rewards program and its Walmart partnership.

In July, Advance rolled out the new Speed Perks program, after 20 weeks of beta testing in two markets showed “significant increases” in program signups and average spending per member compared to markets that weren’t part of the test.

Late in the second quarter, Advance launched its “store within a store” on Walmart.com. In the next phase of the partnership, Advance expects to offer “additional customer-fulfillment options,” such as the capability for customers to buy parts on Walmart.com and pick them up at Advance stores.

“We’re being very disciplined with this launch, which includes a select assortment of parts that will ramp over time to ensure all capabilities are functioning well and the customer experience is best-in-class,” Greco said. “ … We expect our branded, Advance Auto Parts store on Walmart.com will drive incremental growth for our newly formed partnership.”

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For the first half of 2019, Advance reported net sales of $5.3 billion, a 1.6% increase over the first half of 2018. Summarizing the first-half results, Greco said the company is pleased with its results in its professional and DIY e-commerce segments, but he characterized DIY retail as “a work in progress.”

“We’re in the process of executing several back-half initiatives in DIY retail that we expect will improve performance in an important channel for growth and profitability,” he added.

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