Pep Boys 2008 Annual Report Download - page 67

BUSINESS STRATEGY
Our vision for Pep Boys is to take what we believe to be our industry-leading position in
automotive services and accessories and become the automotive solutions provider of choice for the
value-oriented customer. Our brand positioning—‘‘Pep Boys Does Everything. For Less.’’ is designed to
convey to the consumer the breadth of the automotive services and merchandise that we offer and our
value proposition. We will lead with our service business and grow through service spokes. We will
create a differentiated retail experience by creating the automotive superstore. We will leverage our
supercenters and service spokes to provide a complete offering for our commercial customers.
To achieve this vision, our business strategy focuses on four key areas; operational execution,
merchandise assortment, marketing programs and store growth.
•Operational Execution. In a highly competitive marketplace, we strive for operational excellence
in order to provide a differentiated customer experience. We are investing in our associates
through the development of incentive-based compensation programs, ‘‘best-in-class’’ store
operating standards and procedures and sales training programs, all of which are designed to
improve customer service and sales.
•Merchandise Assortment. We spent much of 2008 clearing non-core inventory, updating our hard
parts assortments and re-merchandising our stores as evidence of our commitment to carry the
broadest assortment of automotive aftermarket merchandise available for service, retail and
commercial consumers.
•Marketing Programs. Taking our learnings from extensive testing conducted in 2008, we have
developed a specific tailored marketing plan for each of our markets to maximize our reach and
efficiencies. The cornerstone of our 2009 marketing program is TV and radio promotions,
scheduled around traditional shopping holidays, that focus on the most frequently needed
services—tires, oil changes and brakes. These promotions will be supplemented by extensive
direct marketing and grass-roots campaigns and occasional print campaigns.
•Store Growth. Our store plans are centered on a ‘‘hub and spoke’’ model, which calls for adding
smaller neighborhood service shops to our existing SUPERCENTER store base in order to
further leverage our existing inventories, distribution network, operations infrastructure and
advertising spend. We are targeting 30 new spokes per year with a range of 20 to 40.
STORE IMPROVEMENTS
In fiscal year 2008, the Company’s capital expenditures totaled $151,883,000. Of this amount,
$117,121,000 was used to purchase 29 properties that were previously leased under a master operating
lease. The balance of the capital expenditures of $34,762,000 was used for remodeling stores and for
other store and corporate improvements. During fiscal year 2008, the Company did not open or close
any stores. Our fiscal year 2009 capital expenditures are expected to be approximately $50,000,000
which includes the addition of 20 to 40 service only ‘‘spoke’’ shops and the general improvement of our
existing stores. These expenditures are expected to be funded from net cash generated from operating
activities and the Company’s existing line of credit.
SERVICES AND PRODUCTS
The Company operates 5,845 service bays in 553 of its 562 locations. Each service location
performs a full range of automotive repair and maintenance service (except body work) and installs
tires, hard parts and accessories.
Each Pep Boys SUPERCENTER and PEP BOYS EXPRESS store carries a similar product line,
with variations based on the number and type of cars in the markets where the store is located. A full
3