Advance Auto Parts 2002 Annual Report Download - page 7

APAL was
designed
to keep our
customers
satisfied and
that’s what
being ready
in Advance is
all about.
our review process we’ll see more
benefits: optimum pricing, enhanced
in-store merchandising strategies,
focused promotional activity, and
better inventory allocations to meet
our customer needs.
We’ve also developed financial
performance measures for these
categories and are on track for
improvements in contribution mar-
gins for each of them. Through 2002,
we reviewed 20% of our product cat-
egories, representing approximately
50% of our sales. By mid-year 2003,
we anticipate having over 50% of
our product categories complete.
Understanding the customer is key
to the success of category manage-
ment. Our customers know that we
are the best place to buy parts, chem-
icals, and accessories and we’re
ready in Advance to keep it that way.
We’re ready with a private label oil and
antifreeze program. In 2002, we set a goal to
build an oil and antifreeze private label pro-
gram that would reflect the pride all our team
members feel about the name Advance Auto
Parts. For us, that means delivering quality, at a
value price, to meet the needs of our price-
sensitive customers.
We launched our private label oil program in
2002, with the antifreeze program following in
the first quarter of 2003. We launched this pro-
gram with two things in mind:
1. The quality had to be worthy of our name
and be as good as the leading national brand.
2. The price needed to represent a signifi-
cant value.
Private label is usually just concerned with
price; but because these products carry our
name, they have to represent quality as well.
We want our Team Members to sell this product
with pride.
As we monitor the results of this program, we’re
ready in Advance for other opportunities that
will enhance the brand of “Advance Auto Parts.”
We’re ready with a new advertising campaign.
In February, 2003, we launched our new adver-
tising campaign, "We’re ready in Advance."
We’re very proud of this campaign, so proud that
we’re using it as the theme for this annual report.
Our advertising campaign helps Advance Auto
Parts stand out in the customer’s mind. They’ll
see that we’re both a source for brand name auto
parts at low prices, and a resource for expert
advice and useful tips to help keep their vehicles
running smoothly. Eye-catching television and
attention-grabbing radio ads will drive sales and
build a long-lasting, positive image of Advance
Auto Parts as the place to buy auto parts.
Our goal is to be smart and strategic in how we
spend our advertising dollars. This year we’ll get
the most out of our extensive market coverage by
running our TV and radio advertising on nation-
al networks. It’s the best way to reach the most
people, and get them into our stores. And by
running additional local advertising in selected
markets, we’ll maximize our cov-
erage and promote sales with key
audiences including the significant
Hispanic and urban markets.
Whether on television, on the
radio, or in print, we want to make
our message clear:
We’re ready with prices that
can’t be beat.
We’re ready with the right
parts right now.
We’re ready with people who
know their stuff.
We’re ready with brands you
know and trust.
We’re ready with a clean,
well-run store.
We’re ready with a smile
and a helpful hand.
We’re ready to back it up
with a guarantee.
In short, we’re able to serve our
customer’s every need because
We’re ready in Advance!
We’re ready in Advance Discount Auto Parts –
it takes a winning team. On November 28,
2001, we acquired the Discount Auto Parts
chain and its 671 stores in Florida, Georgia,
Louisiana, Mississippi, Alabama, and South
Carolina. “2002 was a year of business unusu-
al, not business as usual,” said Kurt
Schumacher, our Senior Vice President of
Store Operations – Florida, “because integrat-
ing a chain that size takes a monumental effort
from the whole team. And our team stepped up
to the plate and hit a grand slam. We’re all
proud of what they accomplished.”
This is what we achieved through the
intregration of Discount Auto Parts:
• The greatest retention rate of our Team
Members we have ever experienced
• Comparable store sales gain of 4.7%,
compared to 2.4% in 2001
•An above-budgeted contribution to
operating profits
• The integration of all stores outside
the Florida market including converting
the merchandise, systems, and the physical
store. These stores generated double-digit
gains in comparable stores sales for the year
• Closing 109 stores that overlapped with
existing Advance Auto Parts stores and
recaptured, as planned, 40% of sales at our
continued on page 14
12 13
We offer a good,
better, best
product alternative
for many parts
applications to
meet customers
needs and budgets.
To help our customers
make smart decisions,
our Team Members can
bring up information on
the product with just a
click. The description of
the product’s features
and benefits will help our
customers make the right
decision based on their
driving requirements.
Not only can we retrieve information on products,
we can show our customers an advanced graphic
of the product. The visuals come in handy when a
customer may not know the name of the part. For
example, with an exhaust system the customer may
not know the difference between an exhaust pipe
and a crossover pipe, or between a muffler and a
resonator. The graphics can also be a helpful tool in
determining the position of the needed part on the
vehicle. This enhanced search tool helps us sell the
right product and reduce unnecessary returns.
But we don’t stop with
just finding the right
part. With one keystroke
we can display all the
items needed to com-
plete the repair project
successfully. We know
there’s nothing worse
than starting a repair job
and realizing that you
forgot something.
Jonathan Jennings, Store Manager, District Heights
Kevin Bethell, Division Manager, right
with Team Member, Iris Shaw.
Gina Baylor, Store Manager, Takoma Park
Countdown, Trak Auto
From start to finish it took 100 days to integrate 57 Trak Auto stores into Advance Auto
Parts stores. That’s an average of less than two days per store.
How did we do it? It took a coordinated plan, a team effort, and hard work. Once financial
terms and conditions were agreed upon, we converted stores at the amazing rate of
approximately five per week. Each conversion went far beyond the physical building. Most
of our focus was on the heart of our operations – our store Team Members, since most
were new to the Advance family. Under the leadership of Ken Wirth, our Senior Vice
President of Store Operations, Northeast and Len Schilz, our Regional Vice President,
Team Members were trained on our products and systems. And we spent a lot of time
helping them understand our deep commitment to customer satisfaction.
"Trak Auto was a terrific tuck-in opportunity for us," remarked Jim Wade, President and
Chief Financial Officer of Advance Auto Parts. "The stores were in great locations and had
a strong customer base. Their team was ready to serve their customers and we were ready
to give the team everything they needed to serve even more – expanded inventory selec-
tion, competitive prices, training, and state-of-the art systems."
The respect went both ways. "We could not have handed our operations over to a more
experienced group of professionals," said Ray Moore, former Vice President of Trak Auto.
"I know that the Advance Auto Parts team will take good care of our customers and our
Team Members for many years to come."
Most of the stores we acquired were in the under-served Washington, D.C. market. This
was an area we had surrounded, but had not yet penetrated. We now have the largest num-
ber of stores in the market which are producing strong sales gains of over 30%.
Opportunities like the Trak Auto acquisition don’t come along every day. However, with
further consolidation in the automotive aftermarket, we’re ready in Advance for similar
tuck-in acquisition opportunities in the future.
TRAK’S
100
DAYS
We’re ready with APAL!
before
after
Information at our fingertips.
With more than 31,000 types of
vehicles needing parts, it isn’t
easy to find a specific part unless
you have APAL – Advance Parts
and Accessories Look-Up. This
state-of-the-art electronic catalog
and POS system is packed with a
parts library, technical information
and product graphics. It puts all
the information our Team
Members need at their fingertips
so they can get our customers
what they want and need.
Why Platinum Pro®
Spark Plugs?
Platinum is one of the
most durable metals
used in spark plug tips
today.
Due to its durability, it
virtually reduces all gap
erosion, which will give
you better performance
and the benefits of:
Quicker starts, fewer misfires, faster accelera-
tion and smoother idle!
Jeffrey T. Smith, Division Manager
We’re ready with a
winning strategy!
When customers think of Advance Auto Parts, the first thoughts should be
positive—great parts, great people, great prices. And these positive images
should last. To help build this good feeling, capitalize on our strong reputa-
tion, and introduce a new audience to Advance Auto Parts, we got busy, and
we got creative. The advertising and branding you’ll see during 2003 are
designed to build brand awareness and convince consumers that Advance
Auto Parts is the first and only place to shop.