Quantcast
Jump to content

Shop AutoPartsToys.com for all Your Car, Truck and SUV Accessories at Direct Factory Warehouse Pricing


Shop AutoPartsToys.com for all Your Car, Truck and SUV Accessories at Direct Factory Warehouse Pricing


Shop AutoPartsToys.com for all Your Car, Truck and SUV Accessories at Direct Factory Warehouse Pricing

  • Welcome to Auto Parts Forum

    Whether you are a veteran automotive parts guru or just someone looking for some quick auto parts advice, register today and start a new topic in our forum. Registration is free and you can even sign up with social network platforms such as Facebook, Twitter, Google, and LinkedIn. 

     

Rhodes: Pricing Isn’t Only Driver Of AutoZone’s DIFM Growth


Recommended Posts

Earlier this month, AutoZone reported stellar results for its fiscal 2022 second quarter. DIFM sales set the pace.

For the quarter, which ended Feb. 12, AutoZone reported a 32.1% year-over-year increase in domestic commercial sales. The domestic DIFM sales total of $844 million was a second-quarter record for the company.

Weekly domestic commercial sales per store were $13,500 – another second-quarter record – up from $10,500 in the fiscal 2021 second quarter.

Overall, AutoZone’s fiscal 2022 second-quarter net sales were up nearly 16% to $3.4 billion. Domestic commercial sales accounted for 25% of that total – yet another company record – up from 21.9% of total net sales in the second quarter of FY 2021.

Perhaps the most impressive stat: On a two-year basis, domestic commercial sales are up a whopping 46%.

During the company’s March 1 conference call, AutoZone CEO Bill Rhodes noted that that the company doesn’t have good visibility into industry data that would quantify how much AutoZone has grown its DIFM market share in recent years. However, he acknowledged that “we are quite comfortable that we’re growing share exponentially” versus the overall aftermarket.

On several occasions, Rhodes made a point to emphasize that AutoZone’s recent price cuts have not been the primary catalyst for its accelerated growth in DIFM sales.

“They are an element, not the element of our growth,” Rhodes said. “About four years ago, we embarked on a new strategy in commercial, and we looked at all elements of our offerings. We changed the assortment methodology in every store in the United States. Every store has a different product assortment that leans further into the commercial business today than it did four years ago.

“We also said, ‘How are we going to get significant increase in local-market availability? And we came up with this concept called a megahub store.”

AutoZone’s megahub stores typically stock around 100,000 SKUs, “and drive tremendous sales lift inside the store box as well as serve as an expanded assortment source for other stores,” CFO Jamere Jackson explained during the call.

As of the end of its fiscal second quarter, AutoZone had 64 megahub stores, and Jackson said the company plans to open 14 more megahub locations throughout the rest of its fiscal 2022.

“The expansion of coverage and parts availability continues to deliver a meaningful sales lift to both our commercial and DIY business,” Jackson said. “And we are testing greater density of megahubs to drive even stronger sales results. What we’re learning is that not only are these assets performing well individually, but the fulfillment capability for the surrounding AutoZone stores gives our customers access to thousands of additional parts and lifts the entire network.”

AutoZone executives have stated publicly that the goal is to establish at least 110 meghahub locations, but Rhodes said that number could end up being closer to 200.

“One of the things about the mega hubs: Every time we measure them, they do better than our projections – period. Every single time,” Rhodes added.  

Regarding the DIFM sales growth, Rhodes also pointed to improvements in the effectiveness of AutoZone’s front-line sales personnel and delivery drivers, and technology upgrades that make AutoZone “easier to do business with.”

“We’ve taken our sales force – which was relatively immature and, frankly, brand new a decade ago – and as they mature and develop tenure, they’re getting more professional and better at their sales techniques.

“We’ve deployed the single-largest technology endeavor of the company’s history in the commercial business. We’ve enhanced how we interact with our customers digitally. We’ve also rolled out handheld devices to all stores and all drivers, so that when they’re picking the products, we make sure we have the right products, and when we deliver the products, we can understand delivery times. We’re driving our delivery times down about 15% so far, and that’s nowhere near our goal. So we’re improving our service on that front.”

He also pointed to the Duralast battery brand, “which continues to become stronger and stronger across the board.”

Regarding the pricing element of the company’s DIFM strategy, Rhodes noted that AutoZone traditionally has been “premium-priced” compared to its competitors, “because our service offering is “premium-priced.”

“I’d like to address the subject of pricing, and if AutoZone’s pricing disciplines or philosophies have changed from past practices,” Rhodes said during his prepared remarks. “The short answer is a resounding ‘no.’

“While we initiated a retail pricing adjustment last year in Q1, and further adjusted some commercial pricing in quarters 2 through 4, these moves were done to be price-competitive, but with other channels – not with our direct competitors. Specifically, in the retail business, we reduced our premiums to mass, particularly on highly visible commodity products.

“Regarding the more significant change in commercial. Our prices have always, always been meaningfully higher than our WD competitors, as our service level is superior. Our pricing changes over the last year or so have been to narrow – I emphasize narrow – but not eliminate that gap.”

Rhodes asserted that AutoZone’s pricing adjustments have “narrowed that premium by roughly half.”

“While this has created some consternation in the investment community, we think our results have shown that this was a prudent and productive decision,” Rhodes said. “We continue to see our industry as very rational when it comes to pricing strategies. And I want to be clear – crystal clear. I don’t want anyone to conclude that our growth in commercial is solely due to pricing.”

The post

link hidden, please login to view
appeared first on
link hidden, please login to view
.

link hidden, please login to view

Link to comment
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.
Note: Your post will require moderator approval before it will be visible.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

 Share

  • Similar Topics

    • 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
      link hidden, please login to view. The post
      link hidden, please login to view appeared first on link hidden, please login to view.
      link hidden, please login to view
    • 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.”
      The post
      link hidden, please login to view appeared first on link hidden, please login to view.
      link hidden, please login to view
    • By Advance Auto Parts
      ONLINE ONLY: Save 15% OFF on your Order! Use Code SAVE15

      link hidden, please login to view Valid through May 1st, 2022 at 11:59pm ET. 
      link hidden, please login to view Promo Codes At Your One-Stop Automotive Parts Store
      Keeping a car up and running can be expensive, even when you’re buying and installing the new parts yourself. But, with an Advance Auto Parts coupon code, you’ll be able to save more on the parts you need to keep your car on the road. Advance Auto Parts is the leader in automotive parts and we offer some of the best prices on everything from lawn and garden batteries to brakes. And, with our exclusive Advance Auto Parts coupons and discount codes, your savings will be even more substantial. Just browse our latest Advance Auto Parts promo codes above to find the discount or offer that you can use. Then, just apply your promo code when prompted during checkout to see just how much you’ll save. Take advantage of Advance Auto Parts discounts today so you can keep your engine purring for less.
    • 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. 
      The post
      link hidden, please login to view appeared first on link hidden, please login to view.
      link hidden, please login to view

    • DIY like a pro! Shop from over 1,000,000 Repair Manuals at eManualOnline.com! As low as $14.99 per manual. Shop now.


      DIY like a pro! Shop from over 1,000,000 Repair Manuals at eManualOnline.com! As low as $14.99 per manual. Shop now.


      DIY like a pro! Shop from over 1,000,000 Repair Manuals at eManualOnline.com! As low as $14.99 per manual. Shop now.

    • 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.”
      The post
      link hidden, please login to view appeared first on link hidden, please login to view.
      link hidden, please login to view
×
  • Create New...