Pep Boys 2007 Annual Report Download - page 50

electronic, and performance accessories; and a limited amount of select non-automotive merchandise
that appeals to automotive ‘‘Do-It-Yourself’’ customers, such as generators, power tools, personal
transportation products, and canopies.
In addition to offering a wide variety of high quality name brand products, the Company sells an
array of high quality products under various private label names. The Company sells tires under the
names CORNELL, FUTURA and DEFINITY; and batteries under the name PROSTART. The
Company also sells wheel covers under the name FUTURA; water pumps and cooling system parts
under the name PROCOOL; air filters, anti-freeze, chemicals, cv axles, lubricants, oil, oil filters, oil
treatments, transmission fluids and wiper blades under the name PROLINE and ALLEGHENY;
alternators, battery booster packs and starters under the name PROSTART; power steering hoses and
power steering pumps under the name PROSTEER; brakes under the name PROSTOP; brakes,
starters and ignition under the name VALUEGRADE; paints under the name VARSITY; and
electronics under the name SPX Audio. All products sold by the Company under various private label
names accounted for approximately 27% of the Company’s merchandise sales in fiscal 2007, and
approximately 24% and 22% in fiscal 2006 and 2005.
The Company has service bays in 553 of its 562 locations. Each service department has the ability
to perform most types of automotive repair and maintenance service (except body work).
The Company’s commercial automotive parts delivery program, branded PEP EXPRESS PARTS,
is designed to increase the Company’s market share with the professional installer and to leverage its
inventory investment. The program satisfies the installed merchandise customer by taking advantage of
the breadth and quality of its parts inventory as well as its experience supplying its own service bays
and mechanics. As of February 2, 2008, approximately 72%, or 404, of the Company’s stores provided
commercial parts delivery.
The Company has a point-of-sale system in all of its stores, which gathers sales and inventory data
by stock-keeping unit from each store on a daily basis. This information is then used by the Company
to help formulate its pricing, inventory, marketing and merchandising strategies. The Company has an
electronic parts catalog and an electronic commercial invoicing system in all of its stores. The Company
has an electronic work order system in all of its service centers. This system creates a service history for
each vehicle, provides customers with a comprehensive sales document and enables the Company to
maintain a service customer database.
The Company primarily uses an ‘‘Everyday Low Price’’ (EDLP) strategy in establishing its selling
prices. Management believes that EDLP provides better value to its customers on a day-to-day basis,
helps level customer demand and allows more efficient management of inventories. On a weekly basis,
the Company employs a promotional pricing strategy on select items to drive increased customer traffic.
The Company uses various forms of advertising to promote its product and service offerings, its
service and repair capabilities and its commitment to customer service and satisfaction. The Company
is committed to an effective promotional schedule with a circular program, extra-effort promotions
supported by Run of Paper (ROP) and radio and television advertising during highly seasonal times of
the year, including sponsoring a major NASCAR event, and various in-store promotions.
The Company maintains a website located at www.pepboys.com. Pepboys.com is a multifaceted
tool for connecting with existing and potential customers. It serves as an important portal to our
Company, allowing consumers the freedom and convenience to access more information about the
organization, our stores and our parts, accessories, tire and service offerings online. The site helps to
establish Pep Boys as an automotive authority by providing consumers with general and seasonal car
care tips, do-it-yourself vehicle maintenance and light repair guidance and safe driving pointers.
Exclusive online coupons give site visitors who share with us their e-mail addresses access to special
discounts on products and services at their local Pep Boys.
4
10-K