AutoZone Doubling Down on Megahub Strategy

AutoZone Doubling Down on Megahub Strategy

CEO Bill Rhodes said AutoZone’s long-term plan is to open 70 to 90 megahubs in the United States, up from its initial vision of 25 to 40 megahubs.

AutoZone’s strategy of offering expanded parts assortments in certain stores – known as hubs or megahubs – is working so well that the company plans to double the number of megahubs in its network.

During the company’s May 21 conference call, CEO Bill Rhodes said AutoZone’s long-term plan is to open 70 to 90 megahubs in the United States, up from its initial vision of 25 to 40 megahubs.

So far in its fiscal 2019, AutoZone has opened eight hub stores, and the company expects to open as many as 11 in the full year, Rhodes noted. Most of those will be megahubs.

Hubs and megahubs offer additional SKUS that previously wouldn’t have been available in a local market. Previously, AutoZone would ship harder-to-find or slower-moving SKUs to local markets based on demand.

Through its fiscal third quarter, AutoZone had 174 hub stores and 28 megahubs.

AutoZone has seen an uptick in DIY and commercial sales in markets where it has hubs or megahubs. The initiative has been going so well that AutoZone has been adding megahubs “in smaller markets than we envisioned originally,” Rhodes noted.

“As we’ve said all along since we’ve introduced these megahubs, they continually have outperformed our expectations,” Rhodes said during the call.

More than 90 percent of AutoZone stores have access to megahub inventories, according to Rhodes. While doubling the number of megahubs won’t add a lot more stores to their coverage area, it will shorten lead times, he noted.

“Many of those stores today will get [access to megahubs] on a three-times-a-day basis, some of them will get it on a once-a-day basis and others will get it overnight,” Rhodes explained. “As we expand this, we will go to more stores that have access three times a day and fewer stores that have access overnight.”

Finding “the right real estate” with the footprint to accommodate megahubs has been a challenge, and Rhodes acknowledged that AutoZone “would love to be farther along with megahubs today” than it is. On the plus side, though, the economics of opening megahubs has improved.  

“We are getting more productivity out of the existing box of the megahub itself, and we’re getting more productivity out of the stores that are adjacent and feeding off of that box, particularly the stores that have access three times a day or in the local market,” Rhodes explained. “So the economics changed and made it more beneficial for us to do it.”

You May Also Like

5 Tracks Vie for $50K in ‘Advance My Track Challenge’

Final round of voting took place May 9-15; track receiving most votes wins grand prize.

Advance Auto Parts, official auto parts retailer of NASCAR and entitlement sponsor of the NASCAR Advance Auto Parts Weekly Series (NAAPWS), announced the five NASCAR short tracks moving into the final round of fan voting in the third-annual Advance My Track Challenge.

The following tracks will be part of the final round of voting took place May 9-15. Each of these tracks received the most votes in their region during the first round of voting, which took place April 4 through May 5. The final round includes an additional track that received the next-highest number of votes among all regions. 

FleetPride Acquires Zender’s Truck & Equipment

This marks the company’s first service location on the West Coast.

Idemitsu, O’Reilly Auto Parts Expand Partnership

All Idemitsu transmission fluids now are available through O’Reilly’s national network of auto parts stores.

Arch Auto Parts Double Footprint of Main Distribution Center

Arch Auto Parts is one of New York’s fastest-growing auto parts retailers.

Worldpac Celebrates Opening of New Warehouse in Puerto Rico

The 30,000-square-foot facility has the capacity to house more than 400,000 OE and premium-brand auto parts.

Other Posts

Meet Niterra North America

NGK Spark Plugs USA transforms beyond spark plugs for a new era.

Lafayette Warehouse Joins Auto-Wares

Mike Brown will lead Lafayette Warehouse as general manager.

Fisher Auto Parts Acquires Market Street Auto Parts

Market Street Auto Parts has been serving North Lebanon County in Pennsylvania for more than 16 years.

Parts Authority Acquires B&L Auto Parts and Paint

The transaction was finalized on Dec. 16.