O'Reilly Auto Parts 2011 Annual Report Download - page 22

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customers. Targeted marketing materials such as flyers, quick reference guides and catalogs are produced and distributed on a regular
basis to professional service providers, paint and body shops and fleet customers. Our industry-leading First Call program enables our
sales representatives, district managers, and store managers to provide excellent customer service to each of our professional service
provider accounts by providing the products and services identified below:
broad selection of merchandise at competitive prices
dedicated Installer Service Specialists in our stores
multiple, daily deliveries from our stores
same-day or overnight access to an average of 123,000 SKUs through five-night-a-week store inventory replenishments
separate service counter and phone line in our stores dedicated exclusively to service professional service providers
trade credit for qualified accounts
First Call Online, a dedicated Internet based catalog and ordering system designed to connect professional service providers
directly to our inventory system
training and seminars covering topics of interest, such as technical updates, safety and general business management
access to a comprehensive inventory of products and equipment needed to operate and maintain their shop
Certified Auto Repair Center Program, a program that provides professional service providers with business tools they can utilize
to profitably grow and market their shops
Marketing to the Independently Owned Parts Store:
Along with the daily operation and management of the DCs and the distribution of automotive products to our stores, Ozark
Automotive Distributors, Inc., our wholly owned subsidiary (―Ozark‖), also sells automotive products directly to independently owned
parts stores (―jobber stores‖) throughout our trade areas. These jobber stores are generally located in areas not directly serviced by an
O'Reilly store. Ozark administers a dedicated and distinct marketing program specifically targeted to jobber stores.
Approximately 190 jobber stores currently purchase automotive products from Ozark and participate in our Parts City Auto Parts
program, our proprietary jobber service program. As a participant in these programs, a jobber store, which meets certain financial and
operational standards, is permitted to indicate its Parts City Auto Parts membership through the display of the respective logo that is
owned by Ozark. In return for a commitment to purchase automotive products from Ozark, we provide computer software for
business management, competitive pricing, advertising, marketing and sales assistance to Parts City Auto Parts affiliate stores.
Pricing
We believe that a competitive pricing policy is essential to successfully operate in the automotive aftermarket business. Product
pricing is generally established to compete with the pricing policies of competitors in the market area served by each store. Most
automotive products that we sell are priced based upon a combination of competitor price comparisons and internal gross margin
targets and are generally sold at a discount to the manufacturer’s suggested retail price with additional savings offered through volume
discounts and special promotional pricing. Consistent with our low price guarantee, each of our stores will match any verifiable price
on any in-stock product of the same or comparable quality offered by our competitors in the same market area.
We have repositioned the product offering and pricing in all acquired CSK stores to an every-day low price strategy to ensure we are
competitive in every market in which we operate. We believe competitive pricing is needed to grow our market share and maintain a
customer’s repeat business, and we believe strongly that this strategy is more sustainable, requires less promotional spending and will
produce better results than CSK’s historical promotional-based, high/low pricing strategy.
Customer Payments and Returns Policy
Our stores accept cash, checks, debit and credit cards. We also grant credit to many professional service provider customers who meet
our pre-established credit requirements. Some of the factors considered in our pre-established credit requirements include customer
creditworthiness, past transaction history with the customer, current economic and industry trends and changes in customer payment
terms. No customer accounted for ten percent or more of our consolidated net sales, nor do we have any dependence on any single
customer.
We accept product returns for new products, core products and warranty/defective products.
INDUSTRY ENVIRONMENT
The automotive aftermarket industry includes all products and services purchased for light- and heavy-duty vehicles after the original
sale. The total size of the automotive aftermarket is estimated to be $215 billion, according to the Automotive Aftermarket Industry
Association (―AAIA‖). This market is made up of four segments – labor share of professional service provider sales, auto parts share
of professional service provider sales, DIY sales and tire sales. O’Reilly’s addressable market within this industry includes the auto
parts share of professional service provider sales and DIY sales. We do not sell tires or perform automotive repairs or installations.
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FORM 10-K