Napa Auto Parts 2005 Annual Report Download - page 9

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To effectively compete in the wholesale market, we have
developed a vast array of program offerings. Programs for
NAPA AutoCare Centers, one of the nation’s largest independent
automotive service and repair networks, provide business
tools and support that help independent automotive service
owners promote and grow their businesses. This network
has expanded to include Collision and Truck Centers and has
the potential for growth for many years to come. The Major
Accounts Program supports the repair and maintenance
services offered by large companies and fleets such as AAA,
CarMax, Firestone and the United States Postal Service,
among others. Integrated Business Solutions (IBS), another
program for large customers, is a sophisticated inventory
management service that effectively handles the inventory
procurement and stocking requirements for these customers.
We are also very focused on the specialty markets component
of the wholesale market and we continue to invest in trained
personnel, tailored inventory and aggressive promotion. Niche
markets offering growth potential for us include heavy duty,
paint, body & equipment, farm and marine, and tools &
equipment. We made progress in each of these areas in 2005.
For example, we have increased the number of stores with a
heavy duty product offering to more than 2,500, and we see
this growing further over the next few years.
Technology and connectivity are elements of our business that
are important in serving all customers. Through our consistent
roll-out of new and improved technology, retail and wholesale
customers may conduct business with NAPA and NAPA AUTO
PARTS stores in a streamlined and efficient manner. For example,
our updated electronic catalog, PartsProII, has more informa-
tion than ever before, enabling more efficient customer service
and add-on sales opportunities. Our wide area network (WAN)
connects thousands of stores, creating local access to a
national supply of more than 300,000 quality parts. Internet
based NAPA systems include applications for our retail
customers such as NAPAONLINE.com and wholesale applica-
tions such as NAPA PROLink and NAPA WebConnect CRM.
These two systems connect repair facilities upstream to their
primary NAPAAUTO PARTS store and downstream to their
customers, respectively.
To effectively compete in the retail market, we are focused
on initiatives such as improved NAPA AUTO PARTS store
merchandising and in-store service and facility upgrades.
Creating a positive store experience is important to us and
essential to enhancing our customer relationships. Ensuring
effective and consistent planograms, competitive retail pricing,
convenient retail hours, well-trained personnel and store
upgrades and resets are a few examples of the ways we are
creating an improved store experience for our customers.
These initiatives support our greatest strength – the ability
to maintain a complete and dominant product offering for
our customers. We achieve this competence by utilizing our
proprietary store inventory management system, Marketplace
Inventory Classification (MIC). MIC provides the data necessary
to accurately align each store’s inventory with its specific market.
We also continue to focus on new distribution with a strategy
of positioning our NAPA AUTO PARTS store base in market
areas where we anticipate significant growth opportunities.
In 2005, we added 55 net new stores across the U.S. and
believe we have tremendous additional opportunities. During
2006, we plan to further expand our footprint with more new
Company-owned and independently-owned stores.
The NAPA brand is widely recognized by North American con-
sumers and represents a powerful element of our competitive
strength. Our national and local advertising is designed to rein-
force continued brand awareness and to position NAPA as the
source for the highest quality automotive parts and services.
The NAPA advertising program delivers high visibility exposure
through national television, radio and print advertising, targeted
sponsorships and high-quality local advertising materials.
OPPORTUNITIES IN 2006
As we look ahead to 2006, we expect our internal initiatives
and positive industry trends to generate additional growth
for the Automotive Parts Group. Wewill continue to enhance
our service capabilities and product offerings, and take every
opportunity to further strengthen the NAPAAUTO PARTS
stores’ competitive position in retail and wholesale markets.
The successful execution of these fundamental objectives has
made the Automotive Parts Group an industry leader.Our
plans are to maintain and improve on our leadership position
in the future.
POSITIVE INDUSTRYTRENDS
➔Increase in number of total vehicles and vehicles more than 6 years old
➔Increase in number of licensed drivers
➔Increase in light trucks and SUV’s as a percentage of vehicles on the road
➔Consistent increase in miles driven on U.S. roads each year
➔Increase in the average age of cars and light trucks driven
NAPA