In addition to our annual list of super stores and the data points derived from them, we spoke to Bo Fisher, CEO of Fisher Auto Parts, and Donna Broome, senior vice president, commercial, for Advance Auto Parts, to get their impressions of the year ahead.
Bo Fisher, CEO
Fisher Auto Parts
The most recent “Aftermarket Supplier Barometer” survey conducted by the Automotive Aftermarket Suppliers Association (AASA), notes that 40 percent of AASA’s full-service aftermarket manufacturers said the outlook for their business declined last quarter, while only 22 percent said it improved. What is your outlook for 2013 regarding the aftermarket?
2012 produced mixed results. Some months were far better than others. We continue to be optimistic and believe that the aftermarket is delivering a great value that consumers will recognize for many years to come. Thus far in 2013, we are seeing normal sales increases despite strong comp numbers and competitors that are constantly improving. Consumers are trying to protect their second-largest investment and are often keeping their current vehicles rather than purchasing new ones. A key unknown variable — we are always concerned about the price of gas as it is one significant issue outside of our sphere of influence that impacts miles driven, sales and delivery expense.
There are many other companies in the aftermarket that are much larger or more imposing than we are. Yet, no matter what our lot in life, we are trying to build something on it. The aftermarket is perfectly situated for many years of growth. Will we contribute to that or will our peers? We feel fortunate that our family has been focused on the aftermarket for over 84 years.
How do you accommodate the commercial side of the business?
We have to admit that we do not accommodate commercial business, we live for it! 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 hard to help our customers become more successful. We strive to provide the best possible service, quality, availability, parts professionals, pricing, 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 “Out the door in 4.”
Time is money, so when time counts, count on Federated. There is a French proverb — people count up the sins of those who keep them waiting. There just has to be a sense of urgency to get the job done right, certainly right now. We also rely heavily on the highest-quality name brand products that customers prefer from premium suppliers that are our true business partners, advisers and friends. Professional technicians normally do a great job of adding knowledge, training, equipment and professionalism to offer high quality repairs at affordable prices.
While some competitors have a “one-size-fits-all” model or post signs in their store saying “Do it Yourself and Save,” we are flexible in our approach to each market and yet always focus on the specific needs of professional installers. We try to “never say no.” We are constantly looking at ways to make our program more valuable and are actively listening to our professional customers for ways to improve. Due to the increasing complexity of today’s vehicles, there should be growth available in the professional service portion of the business and we are dedicated to being the very best partner possible.
Our store and warehouse teams deserve the credit for our success as they are working very hard to help our customers be successful. Investing in top-notch human resources over the past 84 years, for our family, has always been essential to support customers and sustain continued growth. The key priority in 1929 remains the key priority today and yet, a business must evolve and change as it grows. Every manager must strive to consistently provide the widest possible array of programs that allows team members to improve their skills and become more efficient and valuable to the company, including strong merit-based rewards and recognition programs. We also encourage involvement and support of the communities we serve, including our recent support of Toys for Tots. We are very proud of our team and the culture that exists at Federated, where we realize that everyone needs to attempt to continuously improve.
What are your thoughts on your company’s need to enhance or grow the commercial side of the business?
While others may look at how to increase their “commercial” business as a percentage of their total, we are focused on how to help our professional customers grow their businesses. Our customers have many options; to grow, we must be adaptable and earn their business. In addition to constantly improving and helping our customers be successful, we listen closely to their needs and provide a comprehensive approach. Darwin’s research, dinosaur’s extinction and many successful businesses prove that it isn’t the biggest or strongest that survives, it’s the most adaptable. We believe that we have a responsibility to help our customers grow their businesses in terms of sales, profits and customer satisfaction and we work to support them in whatever it takes to make that happen.
We have employed new technologies including: inventory control, pricing analysis, computer software, inventory visibility, data mining, bar code scanning, enhanced catalog systems, electronic ordering and efficient information processing. An ever-increasing amount of our sales are electronically ordered through our Autoi installer link and this is growing quickly. Our overall growth, adaptable approach, and investment in new, larger and more efficient distribution centers and support systems is a commitment to our customers that we will be able to overcome the challenges of competitive pressures and inventory proliferation while supporting their needs well into the future.
Does the company plan store acquisitions or expansions in 2013?
We are always looking for growth opportunities when the culture, math and opportunity make sense for everyone. Fortunately, we have limited debt and are blessed with many talented people who have significantly improved our profitability in recent years. It is fun going to work every day when we have such dedicated and talented service: drivers, countermen, warehouse, sales and management teams. We strive each year to grow by at least 20 percent annually 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. We have exceeded our 20 percent growth goal on average in each of the past four years and we have plans to accelerate our annual growth rate to 30 percent.
There is an old adage that sometimes it is better to be lucky than talented. For all of us that are lucky enough to find ourselves working with other talented people in the aftermarket, we shouldn’t take for granted that we are in one of the best business models around. Within the limits of our constraints, we are always looking for geographically contiguous acquisitions as we cannot meet our annual growth goals through organic expansion alone.
We are one of the aftermarket companies whose financial strength makes investing in growth opportunities such as acquisitions, new stores, technology and new facilities an important area of focus. We find that acquisitions often bring an influx of talent, ideas and new product categories that helps support future growth. We are constantly investing in training (training was so important to my father), developing new programs and focusing on continuous improvement in everything we do.
Donna Broome
Senior Vice President, Commercial for Advance Auto Parts
How do you accommodate the commercial side of the business?
Advance Auto Parts Professional is committed to being a partner with our commercial customers on every level — our goal is to help our commercial customers grow their businesses and to provide them with the tools they need to best serve their customers. We accomplish that by providing quality and affordable parts and services, best-in-class customer trainings, and partnering with our customers to provide business solutions for their specific needs.
What are your thoughts on your company’s need to enhance or grow the commercial side of the business?
Advance is highly committed to the continued long-term growth of our commercial business — it is our No. 1 growth emphasis. Each year, we continue to make serious investments in commercial – including the launch of our Advance Commercial Credit program and adding new regional distribution centers. Advance continues to invest in local inventory – ensuring we can deliver even faster on the quality brands our customers need. We are also making investments in services such as nationwide warranty, online ordering and shop management systems.
Does the company plan store acquisitions or expansions in 2013?
In December 2012, Advance Auto Parts completed the acquisition of BWP Distributors. This acquisition greatly enhances Advance’s commercial footprint in the Northeast portion of the United States, and Advance will continue to operate two of BWP’s distribution centers. Advance plans to open 170 to 190 new stores in 2013, and work to integrate the 124 BWP stores we acquired at the beginning of the fiscal year, which will include the necessary investments to ensure we can get our commercial customers the parts they need, fast.
1. AutoZone
Program Group Affiliation: none
Store Count: 5,025
DC Count: 9
Private/Public Ownership: NYSE – “AZO”
Wholesale vs. DIY sales: 15% commercial/
85% retail
Private Label: Duralast
Store count changes in 2012: opened 193 new stores in U.S. and Mexico; closed 1
2. O’Reilly
Program Group Affiliation: Parts City
Store Count: 4,000
DC Count: 23
Private/Public Ownership: NASDAQ – “ORLY”
Wholesale vs. DIY sales: 41% commercial/
59% retail
Private Label: several exclusive to O’Reilly
Store count changes in 2012: 180 stores opened through organic growth; 56 stores acquired through VIP Parts, Tire & Service acquisition
3. Advance Auto Parts
Program Group Affiliation: none
Store Count: 3,794
DC Count: 10
Private/Public Ownership: NYSE – “AAP”
Wholesale vs. DIY sales: 38% commercial/ 62% retail
Store count changes in 2012: Added 137 stores, including 21 Autopart International locations. Closed 5 stores. Also acquired 124 BWP locations.
4. General Parts Inc.
Program Group Affiliation: CARQUEST
Store Count: 1,400
DC Count: 37
Private/Public Ownership: private
Wholesale vs. DIY sales: 85% commercial/
15% retail
Private Label: CARQUEST
Store count changes in 2012: CARQUEST will service 92 independent BWP locations not acquired by Advance.
5. Genuine Parts Co.
Program Group Affiliation: NAPA
Store Count: 950
DC Count: 64
Private/Public Ownership: NYSE – “GPC”
Wholesale vs. DIY sales: 75% commercial/
25% retail
Private Label: NAPA
Store count changes in 2012:
6. Pep Boys
Program Group Affiliation: none
Store Count: 758
DC Count: 10
Private/Public Ownership: NYSE – “PBY”
Wholesale vs. DIY sales: 11% commercial/
37% retail/52% service
Store count changes in 2012: 22 new
7. AutoPlus/Uni-Select
Program Group Affiliation: Uni-Select
Store Count: 300 Auto Plus; 160 FinishMaster locations
DC Count: 25
Private/Public Ownership: TSX “UNS”
Wholesale vs. DIY sales: 75% commercial/
25% retail
Private Label: Auto Plus, FinishMaster
Store count changes in 2012: none
8. Fisher Auto Parts
Program Group Affiliation: Federated
Store Count: 400+
DC Count: 15
Private/Public Ownership: private
Wholesale vs. DIY sales: primarily wholesale
Private Label: Federated
Store count changes in 2012: added new 26 new locations including Greenfield, Brownlee and Ridge & Kramer acquisitions
9. 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 sales: 70% commercial/
30% retail
Private Label: PartsMaster
Store count changes in 2012: none
10. Auto-Wares
Program Group Affiliation: Aftermarket Auto Parts Alliance
Store Count: 158
DC Count: 13
Private/Public Ownership: private
Wholesale vs. DIY sales: 70% commercial/
30% retail
Private Label: PartsMaster
Store count changes in 2012: Acquired 17
locations; 5 moved, closed
11. Hahn Automotive
Program Group Affiliation: Aftermarket Auto Parts Alliance
Store Count: 80
DC Count: 31
Private/Public Ownership: private
Wholesale vs. DIY sales: 80% commercial/
20% private
Private Label: PartsMaster
Store count changes in 2012: opened two new stores
12. Automotive Parts Headquarters
Program Group Affiliation: Aftermarket Auto Parts Alliance
Store Count: 80
DC Count: 1
Private/Public Ownership: private/employee-owned
Wholesale vs. DIY sales: 70% commercial/
30% retail
Private Label: PartsMaster
Store count changes in 2012: acquired 3 new locations.
13. KOI Auto Parts
Program Group Affiliation: Federated
Store Count: 75
DC Count: 5
Private/Public Ownership: employee owned
Wholesale vs. DIY sales: 80% commercial/
20% retail
Private Label: Federated
Store count changes in 2012: none
14. Merrill Co./Arnold Motor Supply
Program Group Affiliation: Aftermarket Auto Parts Alliance
Store Count: 56
DC Count: 2
Private/Public Ownership: Partnership
Wholesale vs. DIY sales: 75% commercial/
25% retail
Private Label: PartsMaster
Store count changes in 2012: 4 stores
acquired
