AutoZone 2010 Annual Report Download - page 4

the last two years, we have remained committed to our game
plan of increasing the number of Commercial sales staff, which
reinforces our belief that more intense personal focus on existing
account management will drive continued results.
Also, we continue to see opportunities to leverage technology
to improve execution and to grow sales. During 2010 we
introduced, and ultimately implemented during the fourth fiscal
quarter, our Commercial Z-net system to allow a more seamless
shopping experience for our professional customers. With this
new technology, we have significantly simplified and enhanced
the systems, which, in turn, allows AutoZoners to provide higher
quality service to our customers. This system helps set the stage
for us to more effectively utilize all store AutoZoners as One Team
focused on giving exceptional service.
While our Commercial sales increased more than 13% in
fiscal 2010, with only an estimated 1.5% market share in the
Commercial sales category*, we believe we have tremendous
opportunities for growth in this sector for the foreseeable future.
Mexico
We continued to aggressively expand our store count in Mexico
by adding 50 stores in 2010, ending the year with 238 stores
across all 31 Mexican states. Over the last two years, the Mexican
economy has been challenged, and the security situation has
worsened. Both of these events have presented challenges to our
business. However, our team in Mexico has focused relentlessly
on providing great service and a compelling value proposition
to our Mexico customers. We have also managed our expense
structure effectively and have focused on purchasing the majority
of our products in-country to mitigate any risks associated
with the fluctuating Mexican Peso. We are comfortable with
our strategy to manage our Mexico business for the long run,
while minimizing foreign currency risk. We remain committed to
growing this business prudently and profitably as we continue
with our store expansion plans.
ALLDATA
With over 75,000 repair facilities subscribing to ALLDATA today,
our automotive diagnostic and collision repair software products
are setting the pace for the industry. We continue to be excited
about ALLDATA’s expansion opportunities for 2011, and we
believe our penetration of business in the fast-growing collision
subscription industry will continue to add to our strong results.
We believe that ALLDATA will continue to be a growth vehicle for
AutoZone for years to come.
U.S. Retail
As the country’s largest retailer of automotive aftermarket products,
we look forward to the year ahead. With over 4,300 stores across
the United States and Puerto Rico, our Retail initiatives continue to
be more about evolution than revolution. As the economy remained
challenged in 2010, our goals remained similar to the previous
year: (1) Improve Customer Service by relentlessly hiring, retaining,
and training our AutoZoners; (2) Continually refine our product
assortment; and (3) Deploy inventory more effectively across our
stores, with specific emphasis on utilizing our Hub network further.
We believe we made significant progress in each of these areas
in 2010 and believe those efforts contributed to our strong
performance.
As our business strengthened, we elected to be even more
aggressive in these areas than we had initially planned. We
aggressively invested in improving our merchandise assortment,
enhancing our Hub store network, and training our AutoZoners.
For example, as we began fiscal 2010, our plan was to continue
our orderly pace of rolling out our new “Hub store operating
model”. This enhanced operating model substantially increases
the selection of inventory available in the local market and also
significantly increases the frequency of delivery to the other stores
in the area. The Hub model also allows us to more effectively
deploy inventory across individual markets in order to help improve
future inventory turnover. Two years ago, we began converting our
Hub stores to this new model and by the end of fiscal 2009, we
had converted 60 of our existing 143 locations. This year, as our
business strengthened and we were convinced the new model
was delivering substantial benefits, we decided to complete the
remaining 83 locations during fiscal 2010 — well ahead of our
previous plans. We believe this increased parts availability and the
more frequent deliveries enhance our offering to both our Retail
and Commercial customers.
U.S. Commercial
We continue to be excited by our growth opportunities in Commercial.
During 2010, our Commercial sales growth increased sequentially
each quarter over the comparable 2009 quarters. We experienced
sales growth across the country and from both existing and new
customers. Currently, approximately 2,400 of our domestic stores
include our Commercial program offering. Our focus remains on
developing and delivering a differentiated value proposition to our
customers. From adding late model parts coverage, to enhancing
our Hub store model, to delivering to our customers when
promised, we continue to improve our overall proposition. Over
Why we’re looking forward to 2011
* Based on 2011 AAIA Factbook
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