O'Reilly Auto Parts 2011 Annual Report Download - page 21

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selection of SKUs on a same-day basis. Our Hub stores average approximately 3,000 square feet more than our typical stores and
carry an average of 18,000 SKUs more than our typical stores.
Products and Purchasing
Our stores offer DIY and professional service provider customers a wide selection of brand name and private label products for
domestic and imported automobiles, vans and trucks. Our merchandise generally consists of nationally recognized, well-advertised,
premium name brand products such as AC Delco, Armor All, Bosch, BWD, Cardone, Castrol, Gates Rubber, Monroe, Moog,
Pennzoil, Prestone, Quaker State, STP, Turtle Wax, Valvoline, Wagner, and Wix. In addition to name brand products, our stores carry
a wide variety of high-quality private label products under our BestTest®, BrakeBest®, Master Pro®, Micro-Gard®, Murray®,
Omnispark®, O’Reilly Auto Parts®, Power Torque®, Super Start®, and Ultima® proprietary name brands. Our private label
products are produced by nationally recognized manufacturers and meet or exceed original equipment manufacturer specifications and
provide a great combination of quality and value – a characteristic important to our DIY customers. We have added O’Reilly branded
chemicals and commodities as well as proprietary private label products to all acquired CSK stores. These stores have also undergone
hard-part resets, which significantly increased their hard-part SKU offering, giving our customers in all stores a good, better, and best
product offering.
We have no long-term contractual purchase commitments with any of our vendors, nor have we experienced difficulty in obtaining
satisfactory alternative supply sources for automotive parts. We believe that alternative supply sources exist at substantially similar
costs, for substantially all of the automotive products that we sell. It is our policy to take advantage of payment and seasonal
purchasing discounts offered by our vendors and to utilize extended dating terms available from vendors. During 2011, we entered
into various programs and arrangements with certain vendors that provided for extended dating and payment terms for inventory
purchases. As a whole, we consider our relationships with our vendors to be very good.
We purchase automotive products in substantial quantities from over 500 vendors, the five largest of which accounted for
approximately 21% of our total purchases in 2011. Our largest vendor in 2011 accounted for approximately 6% of our total purchases
and the next four largest vendors each accounted for approximately 3% to 6% of such purchases.
Marketing
Marketing to the DIY Customer:
We use an integrated marketing program, which includes television, radio, direct mail and newspaper distribution, in-store and online
promotions, and sports and event sponsorships to aggressively attract DIY customers. The marketing strategy we employ is highly
effective and has led to a measurable increase in awareness of the O’Reilly Brand across our geographic footprint. We utilize a
combination of brand and product/price messaging to drive retail traffic and purchases, which frequently coincide with key sales
events. We continued to co-brand all forms of advertising in the markets containing acquired CSK stores during the first half of 2011.
This manner of advertising and marketing was essential to not only build awareness of the O’Reilly Brand in those markets, but to
also allow for a smoother transition throughout the entire rebranding process. Store signage of all acquired CSK stores was changed
to the O’Reilly Brand during 2011, at which time co-branding ended and all forms of advertising promoted the O’Reilly Brand in all
our markets.
To stimulate sales among racing enthusiasts, who we believe individually spend more on automotive products than the general public,
we sponsored multiple nationally-televised races and over 1,500 grassroots, local, and regional motorsports events throughout 38
states during 2011. We maintained our partnership with the National Association for Stock Car Racing (―NASCAR‖) as the Official
Auto Parts Store of NASCAR and were the title sponsor of five National Hot Rod Association (―NHRA‖) races from Pomona,
California to Charlotte, North Carolina.
During the fall and winter months, we strategically sponsor National Collegiate Athletic Association (―NCAA‖) basketball and the
National Football League (―NFL‖). Our relationships with over 50 NCAA teams and tournaments have resulted in prominently-
displayed O’Reilly logos on TV-visible scoring table signs throughout the season.
Through an expanded use of Spanish language radio, print, and outdoor, as well as sponsorships of over 45 local and regional festivals
and events, we demonstrated our commitment to increasing marketing efforts that are targeted toward the Hispanic auto parts
consumer.
In 2011, we continued our dedicated problem/solution communication strategy, which encourages vehicle owners to perform regular
maintenance as a way to save money and protect their automotive investment over the long-term. This highly relevant message
resonates with consumers and establishes O’Reilly as their source for the parts they need and excellent customer service.
Marketing to the Professional Service Provider Customer:
We have over 460 full-time O’Reilly sales representatives strategically located across our market areas as part of our First Call ®
program. Each sales representative is dedicated solely to calling upon, selling to and servicing our professional service provider
FORM 10-K