O'Reilly Auto Parts 2011 Annual Report Download - page 16

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believe this timely access to a broad range of products is a key competitive advantage in satisfying customer demand and generating
repeat business.
Experienced Management Team:
Our Company philosophy is to ―promote from with-in‖ and the vast majority of our senior management, district managers and store
managers have been promoted from with-in the Company. We augment this promote from with-in philosophy by pursuing strategic
hires with a strong emphasis on automotive aftermarket experience. We have a strong management team comprised of senior
management with 148 professionals who average 17 years of service; 266 corporate managers who average 13 years of service; and
355 district managers who average 12 years of service. Our management team has demonstrated the consistent ability to successfully
execute our business plan and growth strategy by generating nineteen consecutive years of record revenues and earnings and positive
comparable store sales results since becoming a public company in April of 1993.
Growth Strategy
Aggressively Open New Stores:
We intend to continue to consolidate the fragmented automotive aftermarket. We plan to open approximately 180 new stores in 2012
increasing our penetration in existing markets and expanding into new, contiguous markets. The sites for these new stores have been
identified, and to date, we have not experienced significant difficulties in locating suitable sites for construction of new stores or
identifying suitable acquisition targets for conversion to O'Reilly stores. We typically open new stores either by (i) constructing a new
facility or renovating an existing one on property we purchase or lease and stocking the new store with fixtures and inventory, (ii)
acquiring an independently owned auto parts store, typically by the purchase of substantially all of the inventory and other assets
(other than realty) of such store, or (iii) purchasing multi-store chains. New store sites are strategically located in clusters within
geographic areas that complement our distribution network in order to achieve economies of scale in management, advertising and
distribution. Other key factors we consider in the site selection process include population density and growth patterns, demographic
lifestyle segmentation, age and per capita income, vehicle traffic counts, number and type of existing automotive repair facilities,
competing auto parts stores within a pre-determined radius, and the operational strength of such competitors.
We target both small and large markets for expansion of our store network. While we have faced, and expect to continue to face,
aggressive competition in the more densely populated markets, we believe we have competed effectively, and are well positioned to
continue to compete effectively, in such markets and to achieve our goal of continued sales/profit growth within these markets. We
also believe that with our dual market strategy, we are better able to operate stores in less densely populated areas, which would not
otherwise support a national chain store selling primarily to the retail automotive aftermarket. Consequently, we continue to pursue
opening new stores in less densely populated market areas as part of our growth strategy.
Grow Sales in Existing Stores:
Profitable same store sales growth is also an important part of our growth strategy. To achieve improved sales and profitability at
existing O'Reilly stores, we continually strive to improve the service provided to our customers. We believe that while competitive
pricing is an essential component of successful growth in the automotive aftermarket business, it is customer satisfaction, whether of
the DIY consumer or professional service provider, resulting from superior customer service that generates increased sales and
profitability.
Selectively Pursue Strategic Acquisitions:
Although the automotive aftermarket industry is still highly fragmented, we believe the ability of national retail chains, such as
ourselves, to operate more efficiently than smaller independent operators or mass merchandisers will result in continued industry
consolidation. Thus, our intention is to continue to selectively pursue acquisition targets that will strengthen our position as a leading
automotive aftermarket parts supplier in existing markets and provide a springboard into new markets.
Continually Enhance Store Design and Location:
Our current prototype store design features enhancements such as optimized square footage, higher ceilings, more convenient interior
store layouts, improved in-store signage, brighter lighting, increased parking availability and dedicated counters to serve professional
service providers, each designed to increase sales and operating efficiencies and enhance customer service. We continually update the
location and condition of our store network through systematic renovation and relocation of our existing stores to enhance store
performance. We believe that our ability to consistently achieve growth in same store sales is due in part to our commitment to
maintaining an attractive store network, which is strategically located to best serve our customers.
Grow Professional Relationships with Professional Service Providers in the Western United States:
In order to implement our proven dual market strategy throughout the acquired CSK store network and grow our share of the
professional service provider market in those areas, we have added four additional DCs to the Western markets since the CSK
acquisition. Our strategically located DCs provide converted CSK stores with same-day or overnight delivery access to an average of
123,000 SKUs and give these stores an important tool to provide industry-leading customer service to the professional service
provider, as well as the DIY customer. In addition, our Professional Parts People receive ongoing training on our product lines,
FORM 10-K