Aarons 2000 Annual Report Download - page 7

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Aaron’s Sales & Lease Ownership division is accelerating its expansion across the nation, opening
stores at the rate of about one every four days in 2000—propelled by the highly successful “Dream
Products” marketing and sponsorship of nascar championship racing. A major development late
in the year opened the door to faster than expected store openings in 2001 when the Company acquired
nearly 30 store locations formerly operated by one of the nation’s major furniture retailers.
The number of Aaron’s Sales & Lease Ownership stores increased during the year from 368 to 456, a
net gain of 88 stores and a 24% increase, including both Company-operated and franchised stores and 10
stores acquired in Puerto Rico.
The record increase in store count confirms the appeal of the Aaron’s concept for providing quality
merchandise at competitive prices to a large market of consumers which neither conventional retailers
nor rent-to-own stores serve adequately. Aaron’s niche is the higher end of the market comprising an
estimated 30% of the households in the United States. The market reached by Aaron’s is a combination
of rental, lease ownership and retail credit customers.
Driving Aaron’s rapid expansion is its “Dream Products” program. This targets the high end of the
market with “dream” products such as large-screen televisions,
home theater systems, leather upholstery, stainless steel
refrigerators and top name brand washers and dryers.
Aaron’s Sales & Lease Ownership expanded its relationship
with nascar, which reaches the prime audience for Aaron’s
products. The initial step was the title sponsorship of the nascar
Busch Grand National Car Race at the Atlanta Motor Speedway
—the nationally televised “Aaron’s 312,” named for Aaron’s three
ways to obtain merchandise and its unique 12-month plan. The
next step was a limited sponsorship for driver Michael Waltrip’s
#99 Aaron’s Dream Machine in the Busch Grand National Series.
The final step was a sponsorship for driver Johnny Benson’s #10
Aaron’s Dream Machine for the last half of the 2000 nascar
Winston Cup Series. The market response to the nascar
promotions has been tremendous. Sponsorship of Atlanta
Braves games and other sports events also reach this market.
Aaron’s moved up its timetable for store openings with
the acquisition of 26 store locations in an auction of facilities
formerly operated by a large national furniture retailer. The most
strategically advantageous locations were selected in markets
where the Company already had a strong presence, which is
expected to result in an extremely high level of synergy between
existing stores and acquired stores. The customer base of the
acquired stores closely fits the Aaron’s customer profile.
In the first move outside the U.S. mainland, Aaron’s acquired
a privately owned chain of 10 rental purchase stores in Puerto
Rico. The island commonwealth offers the opportunity for
immediate expansion, and the Company plans to open at least
five more stores beginning this year.
Aaron’s has targeted a larger share of the growing market
for personal computers, entering into a strategic alliance with
CompUSA, a leading computer manufacturer. Aaron’s stores
last year began selling two of the most popular PCs made by
CompUSA and a more powerful Hewlett Packard model. The
new lines met strong response from consumers in the rental
purchase market, confirming the demand for personal computers
in this sector.
The strategic alliance brings two important competitive
advantages. First, Aaron’s Sales & Lease Ownership buys directly
from the manufacturer, reducing costs; and second, the Company
utilizes the volume purchasing power of its strategic partner to
lower costs on the Hewlett Packard personal computer. The
result is lower pricing for Aaron’s customers. A two-year,
in-home warranty is provided by Aaron’s, while CompUSA
offers technical support and customer service.
The move into the personal computer market required
Aaron’s to redesign the interiors of its stores to expand the
Aaron’s Sales & Lease Ownership
Accelerating Growth
Furniture 35%
Appliances
& Electronics 57%
Computers 6%
Other 2%
Sales & Lease Ownership
Rental Revenues
198*
282*
318*
’96 ’97 ’98 ’99 ’00
$500,000
400,000
300,000
200,000
100,000
0
($ in 000s)
Franchise Revenues
Company-Operated
Revenues
*Number of Stores
368*
456*
Aaron’s Sales & Lease
Ownership Systemwide
Revenue Growth And
Store Count