CarMax 2002 Annual Report Download - page 23

21 CIRCUIT CITY STORES, INC. ANNUAL REPORT 2002
CarMax sales consultants take our
customers through the entire sales
process, from the test drive through
financing to delivery. A sales
consultant is paid a flat, dollar
commission on each vehicle sold, so
his or her only concern is helping
customers find the cars that are
right for them.
GROWTH
OPPORTUNITY
increase its understanding of how best to
store new large markets before deciding to
add them to the growth plan.
A mid-sized market generally has 1 mil-
lion to 2.5 million people in its television
market area. Our experience has shown that
CarMax can profitably enter these markets
with one superstore. The real estate selec-
tion is not complicated; generally commu-
nities of this size have one or two retail
corridors that could provide the optimal
location. And, consumer awareness builds
quickly because a new CarMax superstore
stands out in a mid-sized market. CarMax
has identified more than 30 mid-sized mar-
kets for potential expansion.
CarMax also has identified approxi-
mately 10 opportunities to add satellite
superstores in its existing markets. A satellite
superstore offers the same consumer offer as
a standard-sized superstore. Because recondi-
tioning is handled by a nearby standard-
sized superstore, a satellite superstore can be
located on one-third to one-half the acreage
usually required for a CarMax location.
Satellite superstores are ideal for high-cost,
high-traffic urban areas where land often is
not available in the large parcels necessary to
support a standard superstore’s recondition-
ing operation. CarMax also will test adding
satellite superstores to its more mature mid-
sized markets to profitably increase share in
these markets.
Our experience with all of CarMax’s
mid-sized market and satellite superstores
gives us confidence that their sales and prof-
itability will build quickly. With a superior
consumer offer, continuous enhancement
to its proprietary operating systems and
processes, and the contributions of CarMax
Associates, CarMax has begun an expansion
phase that should bring additional rewards
for CarMax Associates and shareholders.
brought a process-engineering approach to
the business. By carefully analyzing every
step in the complex weave of reconditioning
requirements, CarMax has organized the
steps in a factory-like process, optimizing
efficiency and reducing reconditioning time
by 40 percent since 1999.
Underpinning all operating methods and
processes are CarMax’s extensive, proprietary
management information systems. As business
operations have evolved, CarMax also has
enhanced these systems, mirroring operating
changes with supporting system changes.
CarMax Associates
CarMax’s consumer offer, processes and
systems are critical to its operation, but
CarMax Associates are the backbone of the
business. Their enthusiasm, dedication,
intelligence and hard work have generated
CarMax’s success, and they are the keys to its
future. CarMax is dedicated to providing a
great place to work and competitive com-
pensation plans as well as assuring that
Associates have the training and the tools
they need. CarMax also recognizes Associate
contributions, both individual and team, at
every opportunity.
Growth
On March 26, 2001, we announced a five-
year growth plan. CarMax has begun execut-
ing that plan, entering the Greensboro,
N.C., market with a standard-sized used-car
superstore and opening a satellite superstore
in the greater Chicago market in February
2002. Over the next four years, CarMax
plans to open 22 to 30 used-car superstores,
focusing on new mid-sized markets and on
satellite superstores in existing markets. We
believe that growing in these markets pro-
vides CarMax with the lowest risk and high-
est return opportunity possible during the
next four years. It also permits CarMax to