CarMax 2003 Annual Report Download - page 10

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8CARMAX 2003
Our ability to execute our consumer
offer depends on our proprietary
processes and systems. They are
our “secret sauce.”
Information Systems
■We recognized at the very beginning of CarMax’s
concept development that management information
systems would be critical to success in the complex
used car retailing business.
■Our systems capture data on every aspect of our business.
●Every vehicle purchased for retail is bar-coded
and tracked through its CarMax life from purchase
through reconditioning through test drives and
ultimate sale.We also capture data on vehicles
we wholesale which helps us track market
pricing changes.
●In addition, we collect data on such activity as:
◆Customer visits.
◆Sales consultant/customer engagements.
◆Appraisals.
◆Extended service plan penetration.
◆Finance penetration.
■How we use this information to enhance our
processes and systems is what is most important.
■Our systems are a key competitive advantage.
Their development has occurred over our ten-year
history, and we are dedicated to their continuous
improvement to maintain our competitive edge.
Purchasing and Inventory
Management
■We’ve built a team of more than 400 skilled buyers during the last 10 years.
They will appraise approximately 1 million customer cars in fiscal 2004 and buy
approximately 250,000.
■The information we collect on every car we appraise, buy, recondition and sell
permits us to refine our complex inventory and pricing models.
■Our inventory management team determines core inventory targeted individually
to the buying patterns in each store’s trade area, as well as optimal discretionary
purchases for each store.
■Through our inventory and pricing process we work to optimize inventory turns,
which helps maintain gross margin dollars per vehicle in a market that is subject
to price volatility, as well as the ongoing depreciation that is an inherent charac-
teristic of used cars.
Consumer
Offer
Purchasing/
Inventory
Management
Reconditioning Finance
Originations
Information Systems
Consumer
Offer
Purchasing/
Inventory
Management
Reconditioning Finance
Originations
Information Systems
3PROPRIETARY PROCESSES AND SYSTEMS
PROPRIETARY PROCESSES AND SYSTEMS