CarMax 2012 Annual Report Download - page 16

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operations, such as inventory management, pricing, vehicle transfers, wholesale auctions and sales consultant
productivity. In addition, our store system provides a direct link to our proprietary credit processing information
system to facilitate the credit review and approval process of our in-house financing and third party providers.
Our proprietary inventory management and pricing system is centralized and allows us to buy the mix of makes,
models, age, mileage and price points tailored to customer buying preferences at each superstore. This system also
generates recommended initial retail price points, as well as retail price markdowns for specific vehicles based on
complex algorithms that take into account factors including sales history, consumer interest and seasonal patterns.
We believe this systematic approach to vehicle pricing allows us to optimize inventory turns, which minimizes the
depreciation risk inherent in used cars and helps us to achieve our targeted gross profit dollars per unit.
In addition to inventory management, our Electronic Repair Order system (“ERO”) is used to sequence
reconditioning procedures. ERO provides information that helps increase quality and reduce costs, which further
enhances our customer service and profitability.
Through our centralized systems, we are able to quickly integrate new stores into our store network. We continue to
enhance and refine our information systems, which we believe to be a core competitive advantage. The design of
our information systems incorporates off-site backups, redundant processing and other measures to reduce the risk
of significant data loss in the event of an emergency or disaster.
Associates
On February 29, 2012, we had a total of 16,460 full- and part-time associates, including 12,394 hourly and salaried
associates and 4,066 sales associates, who worked on a commission basis. We employ additional associates during
peak selling seasons. As of February 29, 2012, our location general managers averaged more than nine years of
CarMax experience, in addition to prior retail management experience. We staff each newly opened store with
associates who have extensive CarMax training.
We believe we have created a unique corporate culture and maintain good employee relations. No associate is
subject to a collective bargaining agreement. We focus on providing our associates with the information and
resources they need to offer exceptional customer service. We reward associates whose behavior exemplifies our
culture, and we believe that our favorable working conditions and compensation programs allow us to attract and
retain highly qualified individuals. We have been recognized for the success of our efforts by a number of external
organizations.
Training. To further support our emphasis on attracting, developing and retaining qualified associates, we have
made a commitment to providing exceptional training programs. Store associates receive many hours of structured,
self-paced training that introduces them to company policies and their specific job responsibilities through KMX
University (“KMXU”) – our intranet-based, on-premises learning management system. KMXU is comprised of
customized applications hosted within a learning management system that allow us to author, deliver and track
training events and to measure associate competency after training. KMXU also provides a variety of learning
activities and collaborative discussions delivered through an integrated virtual classroom system. Most new store
associates are also assigned mentors who provide on-the-job guidance and support.
We also provide comprehensive, facilitator-led classroom training courses at the associate and manager levels. All
sales consultants go through a four-phase on-boarding process in which they are partnered with a mentor, combining
self-paced online training with shadowing and role-playing. Our professional selling skills training provides sales
associates the opportunity to learn and practice customer-oriented selling techniques. This online training program
contains modules on a variety of skill sets, including building confidence, connecting with the customer, and
listening and persuasion techniques. We also have a call recording and review program to provide constructive
feedback to associates on how to improve their interactions with customers. Buyers-in-training undergo a
6- to 18-month apprenticeship under the supervision of experienced buyers, and they generally will assist with the
appraisal of more than 1,000 cars before making their first independent purchase. Business office associates
undergo a 3- to 6-month, four-phase on-the-job certification process in order to be fully cross-trained in all
functional areas of the business office. All business office associates and managers also receive regular training
through facilitated competency-based training courses. We utilize a mix of internal and external technical training
programs in an effort to provide a stable future supply of qualified technicians. The technicians attend in-house and
vendor-sponsored training programs designed to develop their skills in performing repairs on the diverse makes and
models of vehicles we sell. Technicians at our new car franchises also attend manufacturer-sponsored training
programs to stay abreast of current diagnostic, repair and maintenance techniques for those manufacturers’ vehicles.