O'Reilly Auto Parts 2015 Annual Report Download - page 11

FORM 10-K
3
OUR BUSINESS
Our goal is to continue to achieve growth in sales and profitability by capitalizing on our competitive advantages and executing our
growth strategy. We remain confident in our ability to continue to gain market share in our existing markets and grow our business in
new markets by focusing on our dual market strategy and the core O'Reilly values, including superior customer service and expense
control. Our intent is to be the dominant auto parts provider in all the markets we serve, by providing a higher level of customer service
and a better value position than our competitors to both DIY and professional service provider customers.
Competitive Advantages
We believe our effective dual market strategy, superior customer service, technically proficient store personnel, strategic distribution
network and experienced management team make up our key competitive advantages, which cannot be easily duplicated.
Proven Ability to Execute Our Dual Market Strategy:
For more than 35 years, we have established a track record of effectively serving, at a high level, both DIY and professional service
provider customers. We believe our proven ability to effectively execute a dual market strategy is a unique competitive advantage. The
execution of this strategy enables us to better compete by targeting a larger base of consumers of automotive aftermarket parts, capitalizing
on our existing retail and distribution infrastructure, operating profitably in both large markets and less densely populated geographic
areas that typically attract fewer competitors, and enhancing service levels offered to DIY customers through the offering of a broad
inventory and the extensive product knowledge required by professional service providers.
In 2015, we derived approximately 58% of our sales from our DIY customers and approximately 42% of our sales from our professional
service provider customers. Historically, we have increased our sales to professional service provider customers at a faster pace than the
increase in our sales to DIY customers due to the more fragmented nature of the professional service provider business, which offers a
greater opportunity for consolidation. We believe we will continue to have a competitive advantage on the professional service provider
portion of our business, due to our systems, knowledge and experience serving the professional service provider side of the automotive
aftermarket, supported by our approximately 700 full-time sales staff dedicated solely to calling upon and servicing the professional
service provider customer. We will also continue to expand and enhance the level of offerings focused on growing our DIY business and
will continue to execute our proven dual market strategy in both existing and new markets.
Superior Customer Service:
We seek to provide our customers with an efficient and pleasant in-store experience by maintaining attractive stores in convenient locations
with a wide selection of automotive products. We believe that the satisfaction of DIY and professional service provider customers is
substantially dependent upon our ability to provide, in a timely fashion, the specific automotive products needed to complete their repairs.
Accordingly, each O'Reilly store carries, or has same or next day availability to, a broad selection of automotive products designed to
cover a wide range of vehicle applications. We continuously refine the inventory levels and assortments carried in each of our stores and
within our network, based in large part on the sales movement tracked by our inventory control system, market vehicle registration data,
failure rates and management's assessment of the changes and trends in the marketplace. We have no material backorders for the products
we sell.
We seek to attract new DIY and professional service provider customers and to retain existing customers by offering superior customer
service, the key elements of which are identified below:
• superior in-store service through highly-motivated, technically-proficient store personnel ("Professional Parts People");
• an extensive selection and availability of products;
• attractive stores in convenient locations;
• competitive pricing, supported by a good, better, best product assortment designed to meet all of our customers' quality and
value preferences; and
• a robust point-of-sale system integrated with our proprietary electronic catalog, which contains a wide variety of product images,
schematics and technical specifications, equips our Team Members with highly effective tools to source products in our extensive
supply network.
Technically Proficient Professional Parts People:
Our highly-motivated, technically-proficient Professional Parts People provide us with a significant competitive advantage, particularly
over less specialized retail operators. We require our Professional Parts People to undergo extensive and ongoing training and to be
knowledgeable, particularly with respect to hard part repairs, in order to better serve the technically-oriented professional service provider
customers with whom they interact on a daily basis. Such technical proficiency also enhances the customer service we provide to our
DIY customers who value the expert assistance provided by our Professional Parts People.