This aftermarketNews Executive Interview features Brian Kaner, CEO and president of Pep Boys, and president of the Icahn Automotive Service Division.
Let’s talk about where Pep Boys is in its current evolution – moving from both a parts and service business to now focusing on service. What’s the impetus behind this change?
Since Pep Boys was founded 100 years ago, our focus has always been to make car care more accessible. For our founders, this meant getting drivers the new auto parts they needed to repair the recently invented automobile. As we shift the Pep Boys business model to focus primarily on automotive service and tires, we’re doing just what our founders did: adapting to changes in the market and the demands and preferences of our customers. Our centennial is the perfect time to honor our heritage, celebrate our success, and jumpstart our future.
As a service-focused business – and one of the nation’s largest independent service chains – we are continuing to expand our national footprint, addressing the changing needs of vehicle owners, providing superior technician training and career development, and implementing a best-in-class service model. We’re now well-positioned to take advantage of the opportunities that exist in the industry.
We understand working with parts retailers like Advance are a big part of this evolution as well. Tell us more about this.
We have made several strategic adjustments to optimize our network footprint, one of which is working with other retailers to occupy open space next to Pep Boys Service Centers. In March, we announced that 109 Pep Boys parts locations in California are becoming Advance Auto Parts stores. This approach provides us with an opportunity to focus on service, refresh our connecting service centers, and provides a significant convenience advantage to being located in proximity to a leading parts provider.
By the end of 2021, we’re aiming to open over 20 new Pep Boys Service Centers, and we’ll have 30 distribution centers nationwide to ensure fast, convenient access to world-class automotive service for millions of consumers. We’ve also established a highly successful fleet service business and launched our Pep Boys Mobile Crew platform to bring popular services on-site. Across the board, we’re committed to delivering on our promise to customers: “We go further to help you go farther.”
Where do you see the biggest challenges and opportunities in service today?
The service category is entering one of the most promising periods in its history. It’s fitting to me that Pep Boys is celebrating its centennial during one of the most transformative times in the history of the automotive industry at the same time that customers’ purchasing power and preferences are shifting distinctly. Consolidation and the battle for market leadership in our industry continues and the opportunities belong to the provider who can differentiate and fulfill the demand for holistic vehicle service solutions. Over the next several months, the Pep Boys Road Trip, a custom branded bus, will travel across the country to affirm the Company’s commitment to the thousands of local communities it serves, mark the opening of new locations and kick off new business initiatives, and celebrate the Team Members and customers who helped the Company reach this remarkable milestone. The entire experience can be followed with the hashtag #pepboysroadtrip, and it’s different than anything else our competitors are doing.
But by far the greatest challenge facing our industry is attracting and retaining talented employees, particularly technicians. Several years ago, we launched a program called “Race to 2026” to do our part in attracting the 46,000 additional technicians needed to meet anticipated market demand for service in five years and help encourage more men and women to pursue viable, meaningful careers in the skilled trades. Companies like ours can play important roles in projecting the modern reality of working in automotive service. This isn’t your grandfather’s garage–it’s a technology-intensive business that depends as much on brain power as it does the ability to turn a wrench.
With scheduling apps and mobile repair businesses becoming more prominent, does this impact the way Pep Boys goes to market?
It does and I’m proud of our ability to have anticipated and addressed these and several other emerging needs as part of our mission to make quality car care simple, convenient and accessible for everyone.
The aftermarket is built on three foundational pillars: convenience, quality and value. What has changed over the years is how consumers define those three benefits. Today customers are looking for a more holistic service experience to save time and effort. Given the time demands facing our customers, it only makes sense that we explore new ways to deliver the services they need. Pep Boys Mobile Crew has been a pioneer in bringing popular services directly to customers where they work, shop or maintain their fleets. Over the past year, we have also introduced an end-to-end digital customer experience. Pep Boys customers can now book an appointment online, drop the vehicle off, text their way through the electronic vehicle assessment, track progress in real-time, and pay via mobile.
As new generations of consumers come into the fold, how is the company is addressing the unique needs of younger consumers such as Gen Y and Z consumers?
There’s no question that while our car parc is getting larger and older, our customers are getting younger. Consumers who are part of Gen Y now make up 22 percent of the U.S. population. Gen Z, which includes some 68 million U.S. residents ages 6 to 24, is projected to earn combined income of more than $30 trillion dollars by 2030. Use of technology and the transparency that comes with it are tables stakes for this group of consumers. We view information as an automatic trust creator and are doubling down on our digital capabilities to serve consumers in the ways that are most comfortable and convenient for them. A new generation of consumers is focused on what good you’re doing for community and society. While Pep Boys has always been a partner our local communities could rely on, we’re now contributing to causes on a national scale that support those who have served our country and practicing an approach to sustainability that ensures a positive future for the coming generations.
Why is it important for the entire industry to stay on top of these changing consumer trends/demographics?
Just like in other industries, if we, as service providers, lose sight of what vehicle owners want and need, some other business model will fill that void. There are countless examples of businesses that failed to anticipate and prepare for the evolving needs of their customers. I can tell you that Pep Boys is perhaps better prepared for the future than at any time in its proud 100-year history. The new Pep Boys service experience isn’t about what happens in our bays, it’s about giving people a great experience and getting them back on the road so they can be at the places and with the people that matter most.
Speaking of younger generations, Pep Boys is very active in working to recruit, train and retain bright young professionals in the service industry. Tell us about the progress you are seeing in these efforts.
With travel restrictions lifted, I’ve been able to get back into our service centers again and am so encouraged by the dedicated and talented people on our team. We’ve made tremendous strides in raising our profile as a desirable place to build a successful career. This is the result of a comprehensive strategy to promote our business and the industry among the next generation of prospective technicians including offering scholarships, paid training and mentorship, and ongoing career path guidance. Those who join the Pep Boys team can count on a positive, high-energy environment where they can do their best work every day. Over the next few months, we’ll be giving out $100,000 in technician education scholarships and announcing exciting new initiatives with our training partners as part of the next phase of this work.
How is Pep Boys preparing for the much-publicized shift to EVs and the unique customer needs associated with that? How will techs and the service industry need to prepare in general for EVs?
The pandemic has been a powerful catalyst for the EV category, as we’ve seen in the massive investments being made by longtime automakers as well as countless startups. The U.S. is already the world’s third fastest-growing EV market, and as these vehicles gain share, their owners will be looking for a trusted, non-dealer source of quality service and technical expertise. Pep Boys is positioned to be that trusted provider, partly because our existing national network directly overlaps with the densest coastal EV markets, and also because we’re ahead in investing in EV service capabilities. We’re already opening dedicated electric locations, with clean, sleek designs that are equipped with the latest service technologies including charging capabilities, diagnostic and scanning tools, software, and safety equipment. Pep Boys Electric Vehicle Service locations are staffed by professionals who are trained in servicing EVs and the advanced diagnostics essential for most late-model vehicles.
Has the pandemic and the changes to the way we did business during the past 15 months inspired any permanent changes to Pep Boys’ business strategy?
The pandemic tested every business, and we couldn’t be prouder of how our team responded. First and foremost, we kept our team and customers safe, and then we executed on our plan to ensure Pep Boys would reach its centennial year in 2021 and continue to be here for the next century. While last year was tough, it proved that we have the right plan and people to make Pep Boys the nation’s leading automotive and fleet service provider. Our iconic brand might be 100 years old, but we’re faster and more agile than ever.