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Rhodes: Pricing Isn’t Only Driver Of AutoZone’s DIFM Growth
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By Counterman
To help its customers get their performance vehicles trail-ready for summer fun, Dana Incorporated is offering special pricing through June 30 on its e-commerce site for enthusiasts,
link hidden, please login to view. Customers who visit DanaProParts.com can use the promo code DANAPRO10 at checkout to receive 10% off their order.
Visitors can quickly locate products using the year, make and model of their vehicle. They also can browse by product category for premium performance products, including Dana axles, driveshafts and components; Victor Reinz Reinzosilsealant; and cool Spicer gear. If the specific part is not found, visitors can complete an online form to make a special
link hidden, please login to view. “The summer season is here and enthusiasts from coast-to-coast are getting their performance vehicles in gear for some off-road excitement,” said Bill Nunnery, senior director, sales and marketing, global aftermarket for Dana. ”With 10% off all orders through the end of June, it is a great time for adventure seekers to visit DanaProParts.com, upgrade their performance vehicles, and make their summer journeys truly memorable.”
To learn more about Dana and Spicer performance products and sign up for the newsletter, visit
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By Counterman
During AutoZone’s fiscal second-quarter 2022 conference call in March, company executives asserted that its pandemic-driven sales momentum could be sustained, even after consumers blow through their stimulus payments.
AutoZone’s fiscal third-quarter results did nothing to convince them otherwise.
“We believed our competitive positioning was materially improved, as indicated by our significant retail share gains and rapidly accelerated commercial sales growth,” AutoZone CEO Bill Rhodes reflected during the company’s third-quarter conference call on May 24. “We believed customer behavior may have permanently changed. We continue to believe all of this today.”
AutoZone reported fiscal third-quarter net sales of $3.9 billion, a 5.9% year-over-year increase. The company’s fiscal third quarter ended on May 7.
Domestic same-store sales, or sales for stores open at least one year, increased 2.6% for the quarter. AutoZone delivered the 2.6% increase against some extremely tough comparisons: In the fiscal third quarter of 2021, same-store sales jumped nearly 29%.
If AutoZone indeed is able to sustain its momentum from 2020 and 2021, “it’ll be the fourth time in the last 30 years that the economy and society have been through significant shocks leading to material acceleration in our growth in sales and profits, without a corresponding decline back to pre-recessionary or pre-pandemic levels,” Rhodes said.
DIFM sales, which suffered in the first few months of the pandemic in 2020, continued to rebound. AutoZone’s commercial sales rocketed 26% higher to $1.04 billion, a third-quarter record for the company.
Weekly commercial sales per store also set a quarterly record, at $16,600, up from $13,500 in fiscal Q3 2021. The company averaged approximately $87 million in total weekly commercial sales.
During the quarter, AutoZone launched 43 net new commercial programs, finishing with 5,275 total programs.
“As I’ve said since the outset of the year, commercial growth will lead the way in FY 22, and our results in the third quarter and year to date reflect this dynamic,” CFO Jamere Jackson said during the conference call.
Rhodes attributed the DIFM growth to a number of companywide initiatives, including expanded hub and megahub coverage, “the strength of the Duralast brand,” technology investments, a more effective salesforce and improved delivery times.
Domestic DIY sales slipped 4.5% during the quarter – another case of tough comps. Rhodes noted that U.S. consumers received stimulus payments in the third quarter of 2021, which led to record DIY-sales growth.
“We’re very proud of our DIY results,” Rhodes added. “Considering we had such a tough comparison to last year, from the data we have available to us, we continued not only retain the enormous share gains in dollars and units built during the initial stages of the pandemic, but [also] modestly build on those gains.
“Our performance, considering the amount of time from the last stimulus and the ending of the enhanced unemployment benefits, has substantially exceeded our expectations and gives us continued conviction about the sustainability of the massive elevated sales levels we have experienced since the beginning of the pandemic.”
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By Advance Auto Parts
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By Counterman
Mighty Auto Parts recently announced three new hires to support its continued growth servicing the automotive aftermarket.
Mighty’s newest team members, Sunny Muehlberger, Elvia Vega and Kyle Brown, further strengthen the company’s service offerings. The recent hires, employed for their diverse talents and skills, will work at Mighty’s home office in Peachtree Corners, Georgia.
“We’re very excited to welcome Sunny, Elvia and Kyle to the Mighty team,” said Josh D’Agostino, president and CEO. “Each of our new hires brings innovative ideas, great experience and a fresh original approach to their respective roles. I’m looking forward to their contributions as we continue to grow the Mighty System.”
Sunny Muelberger joins Mighty as a senior product manager. She brings more than 22 years of experience in automotive aftermarket with Genuine Parts Co.
While at GPC, Muelberger held responsibilities in IT with barcode quality assurance, sales as a district manager, managing commercial markets in operations, and product management. Her extensive product management experience includes managing NAPA’s filter program, batteries, electrical, heavy-duty lines and the Dorman program.
At Mighty, Muelberger will have product responsibility for filtration, batteries and wiper blades.
Elvia Vega joins the marketing department as a marketing coordinator. She has more than five years of marketing experience in industries ranging from med spas to finance.
In her role, Vega will be responsible for overseeing the strategic digital initiatives and representing the Mighty brand across various social media channels. Vega currently is pursuing a Bachelor of Business Administration degree from the University of Georgia.
Kyle Brown joins the marketing team as a marketing specialist. In his role, he also supports all strategic digital initiatives as well as in-house video production. Brown currently is a senior at Georgia State University, pursuing a Bachelor of Arts degree in Film & Media.
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By Counterman
While O’Reilly Auto Parts launched its dual-market business strategy in 1978, the company’s roots are in serving DIFM customers. Over the years, the company has built up enough brand equity with repair shops that O’Reilly has been able to employ a premium-pricing approach with much of its professional-customer base.
“Throughout our history, we’ve been steadfast in earning our professional customer’s business by providing excellent customer service from highly trained professional parts people with rapid access to industry-leading inventory at competitive prices,” O’Reilly CEO Greg Johnson said during the company’s Feb. 10 conference call. “This unwavering commitment to customer service has allowed us to drive exceptional value for our customers and capitalize on competitive advantages to earn pricing premium in many of our markets.”
The unprecedented events of the past two years have changed O’Reilly’s calculus on growing its DIFM business. With some smaller independent parts sellers struggling to cope with the supply chain disruptions, demand volatility and inflationary pressures of the current market environment, O’Reilly sees an opportunity to grab a larger slice of the DIFM pie.
On the heels of record financial results for the full year and fourth quarter of 2021, O’Reilly recently rolled out targeted, companywide price cuts for DIFM customers, with the goal of winning new business and capturing more sales from existing professional customers.
DIFM Market ‘Very, Very Fragmented’
Johnson outlined the new DIFM pricing initiative during the company’s Feb. 10 conference call.
He asserted that the turbulent market conditions of the past two years – characterized by supply chain shocks and wild swings in customer demand – “have been more disruptive on the do-it-for-me side of the business, which remains very, very fragmented.”
The challenging environment in the DIFM market has magnified the gap between the large national retailers like O’Reilly and some of the smaller independent players, Johnson noted.
“Against this backdrop, we have been very successful in gaining professional market share and growing substantially faster than the overall market through the strength of our industry-leading inventory availability, tiered distribution and hub network and world-class professional parts people,” Johnson added. “However, we believe that the current disruptive environment presents an opportunity for us to enhance our competitive positioning and leverage our competitive advantages to drive accelerated long-term market share gains.”
Over the past few quarters, O’Reilly has tested several DIFM pricing strategies in multiple markets, and the company was “very encouraged” by the results,” according to Johnson. “After dialing in our strategy,” O’Reilly rolled out the professional pricing initiative companywide at the beginning of February.
Johnson emphasized that O’Reilly’s “service-over-price philosophy” isn’t changing. COO Brad Beckham echoed Johnson’s comments, noting that the goal of the initiative is to turbocharge O’Reilly’s gains in DIFM market share “based on all the services we offer along with a very competitive price.”
“We strongly believe that the lion’s share of the professional business in the marketplace is won day-in and day-out through exceptional customer service and rapid inventory availability,” Beckham asserted during the conference call. “However, we believe we can generate solid long-term returns by further investing in professional pricing.
“As an important part of our professional pricing initiative, we are intentionally not positioned as the lowest-price competitor in each market, and our store and sales teams remain as committed as ever to earning our customers’ business by out-hustling and out-servicing our competitors.”
‘Not a Race to the Bottom’
The pricing initiative was a hot topic during the question-and-answer session with investment analysts.
One analyst asked if the pricing initiative could be a slippery slope leading to additional price cuts in the future. In his response, Johnson insisted that it’s not “a race to the bottom.”
“I want to reiterate that this is a targeted approach. This is a very scientific approach that we’re taking,” Johnson said. “This is not across the board. This price enhancement was done by category, by SKU. And based on our performance, our supply chain strength, we still feel that we can charge a premium to our professional customers.”
Responding to a similar question from another analyst, Johnson emphasized: “We are not doing this to be the lowest price in the marketplace.”
“We’re not saying price is not important,” he added. “What’s more important to that professional customer is the relationship we have with them, the inventory availability that we have and our consistent performance and ability to get that part to them [on time] so they can complete the jobs they’re working on. Our professional customers will always prioritize that over price, assuming that we’re competitive on price. So we feel like this move will enable us to take additional market share, both from existing customers and from customers we may not be getting business from today.”
Beckham asserted that the pricing initiative is aimed at repair shops of all shapes and sizes, from the shade-tree mechanics and independent garages to the regional players and national chains.
In particular, company leaders believe the pricing initiative could help O’Reilly make inroads with its existing customers that are sourcing parts from O’Reilly and other suppliers – “maybe a piece from our public competitors, a really big piece from the independents and then another piece of their monthly purchases from a specialty company.”
“We’re already delivering to these shops,” Beckham added. “In some cases, we’re delivering part of the job that maybe they had to get another item from somewhere else. We just see tremendous opportunity [here], and our customers are telling us that with our inventory availability, our service, our people, if we can make some adjustments [on price], we really have a huge opportunity to turn into the first and only call for those garages.”
During the Q&A session, CFO Tom McFall provided more color on O’Reilly’s approach to setting price levels vis-à-vis its competitors.
“We have a wide range of competitors and … some compete solely on price. A lot of specialty, one-line suppliers get business by being absolutely the lowest price, and that’s not our business model,” McFall explained. “ So when we say we’re going to be within a competitive range, obviously it depends on how expensive the part is.
“… And what we have to remember is the biggest cost for our professional installers is their labor. And that ability to turn those bays is what turns their profit. So we want to make sure that we’re pricing holistically, for the quality of the product, the availability of the product, the team that we offer, the services that we offer – so we look at it in aggregate.
“There’s always going to be someone … who will be the lowest price. And if that’s how you sustain your business, if somebody comes along and decides to drop the price, you’re going to be in trouble. We want to have a relationship and a partnership with our professional shops that helps them make money over the long term.”
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