Advance Auto Parts 2006 Annual Report Download - page 30

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technologically advanced material handling equipment, significantly reduces warehouse and distribution costs, while
improving efficiency. This equipment includes carousels, “pick-to light” systems, robotic picking, radio frequency
technology, voice technology and automated sorting systems. Through the continued implementation of our supply
chain initiatives we expect to further increase the efficient utilization of our distribution capacity. We believe our
current capacity will allow us to support in excess of 3,400 stores. Subsequent to December 30, 2006, the Company
announced its plan to build a new distribution center in Indiana scheduled to open in mid-2008.
We currently offer over 58,000 SKUs to substantially support all of our retail stores via our 13 stand-alone
PDQ® warehouses and/or our eight distribution centers (all of which stock PDQ® items). Stores have visibility to
inventory in their respective facilities and can place orders to these facilities, or as an alternative, through an online
ordering system to virtually any of the other facilities. Ordered parts are delivered to substantially all stores on a
same day or next day basis through our dedicated PDQ® trucking fleet and third party carriers. Store inventories are
replenished from our eight distribution centers. In addition, we operate a PDQ® warehouse that stocks over 50,000
incremental SKUs of harder-to-find automotive parts and accessories. This facility is known as the "Master PDQ®"
warehouse and utilizes existing PDQ® distribution infrastructure and/or third party arrangements to provide next day
service to substantially all of our stores.
Advertising
We have an extensive advertising program designed to communicate our merchandise offerings, product
assortment, competitive prices, free services and commitment to customer service. The program is focused on
establishing Advance Auto Parts as the solution for a customer's automotive needs. We utilize a mix of media that
reinforces our brand image, including television, radio, print, promotional signage and outdoor media, plus our
proprietary in-store television network and internet site.
Our advertising plan is a brand-building program built around television and radio advertising. The plan is
supported by print and in-store signage. Our television advertising is a combination of national and regional media
in both sports and entertainment programming. Radio advertising, which is used as a supplementary medium,
generally airs during peak drive times. We also sponsor sporting events, racing teams and other events at all levels in
a grass-roots effort to positively impact individual communities, including Hispanic and other ethnic communities,
to create awareness and drive traffic for our stores.
Since early 2003, we supported our new advertising campaign, “We’re ready in Advance” throughout all of our
media. We believe this advertising campaign differentiates Advance Auto Parts in the customer’s mind by
positioning us as both a source for brand name auto parts and accessories at low prices and as a resource for expert
advice and useful tips to help customers keep their vehicles running smoothly. The campaign includes creative and
compelling television and radio commercials designed to drive sales and build an enduring, positive image of
Advance Auto Parts as a special place to shop.
Since 2004, we have built upon the campaign through an integrated consumer education program. This program
is intended to build our image as not only the source for product, but also the best resource for vehicle maintenance
information. Our free brochure kiosk displaying "We're ready with answers" and our free monthly video clinic
broadcasts on Advance TV, our exclusive in-store how-to network, are just two elements of this growing program.
We believe we will differentiate our stores from our competitors' by providing our customers valuable information
regarding "why-to" and "how-to" perform regular maintenance on their vehicles, in order to enhance their vehicles'
performance, reliability, safety and appearance. Our goal with this initiative is to continue our long-term brand
building success, increase customer loyalty and expand our customer base.
AI Segment
We acquired AI in September 2005. The acquisition, which included 61 stores throughout New England and
New York, a distribution center and AI’s wholesale distribution business, complements our growing presence in the
DIFM market in the Northeast.
AI’s business primarily serves the commercial market from its store locations. In addition, its North American
Sales Division services warehouse distributors and jobbers throughout North America. We believe AI provides a
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