Advance Auto Parts 2003 Annual Report Download - page 8

Page 6
Managing Our Categories
Meeting our customers’ demand for the best selection of value-priced
automotive parts and products is at the heart of our category management
initiative, which we launched in 2002. Partnering with our vendors, we
analyzed consumer data to identify the demand levels for each of our parts
and products. We then adjusted our merchandise mix to better meet cus-
tomer demands and developed more targeted merchandising.
Our category management program has already yielded important benefits
for the Company in the form of higher sales, reduced returns and warranty
expenses, enhanced margins, and more
productive inventory utilization. In
2003, our gross margin improved 116
basis points to 45.9%, mostly due to
category management. In 2004, cate-
gory management will drive our sales
and gross margins as we continually
find opportunities to meet our cus-
tomers’ needs.
Offering Customers
a Choice
At Advance Auto Parts, our goal is to
offer a wide selection of high-quality,
high-value products. One way we do
this is through our Private Label brand,
which provides quality that is compara-
ble to the leading national brand at a value price. Our name on each prod-
uct represents the ideals Advance was built on—Quality, Value, and Trust.
Our store brands are a source of great pride for our Team Members, both
for their exceptional quality and for their ability to meet our customers’
needs. We are committed to store brand development because that is what
our customers want, and the positive feedback we have received tells us
our hard work is paying off.
In 2003, we rolled out our Private Label antifreeze, chemicals, freon, oil fil-
ters, and wash and wax programs. In 2004, we will roll out expanded
chemical, transmission fluid, and wash and wax programs.
Gaining Traction at the Point of Sale
Our leading edge APAL system quite literally places all the information our
Team Members need to deliver excellent customer service right at their fin-
gertips. APAL, which stands for Advance Parts and Accessories Look-Up,
is a state-of-the-art electronic catalog and point-of-sale system that
includes technical information, features and benefits, and product graphics
for the parts that we carry.
In addition, APAL suggests “good, better, best” product alternatives so cus-
tomers can weigh the tradeoffs between quality and cost and select the
product that most meets their needs. And, to
ensure that customers have everything they
need to complete a repair project, Team
Members can generate a list of related items.
At year-end 2003, we had introduced APAL
in 2,166 stores, or 87% of our chain.
Already, it has produced higher average
sales and lower returns, while increasing
customer confidence in our Team Members
and driving repeat business. We expect to
complete the APAL rollout during the sec-
ond quarter of 2004.
Marketing to
Professional Installers
Although serving the do-it-yourself cus-
tomer is our primary business, we continue
to grow our sales to professional installers. In fact, the qualities that make
our do-it-yourself approach so compelling—our knowledgeable sales
staff, our broad selection of quality parts, and our sophisticated supply
chain that guarantees fast deliveries—make serving the professional
installer a natural extension of our business.
Our commercial sales in comparable stores rose 7.2% in 2003. Currently,
64% of our stores have a commercial delivery program and as we move
into 2004, we see tremendous opportunities to increase our penetration of
the commercial segment, especially in the Advance Discount Auto Parts
stores in the Florida market.
Building Momentum through Enhanced Merchandising and Technology
Page 6 Photo: Pictured from left to right:
1. Herman Word, Jr., Manager, Store #2610 2. Barry Stacy, customer
Page 7 Photo: Pictured from left to right:
1. Jeff Hobson, Director of Store Brands 2. Ricardo Cuesta, Assistant Manager in Training, Store #2610