Pep Boys 2010 Annual Report Download - page 61

Download and view the complete annual report

Please find page 61 of the 2010 Pep Boys annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 160

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152
  • 153
  • 154
  • 155
  • 156
  • 157
  • 158
  • 159
  • 160

decreasing availability of diagnostic equipment and know-how. In addition, while this needs-based
industry has a dedicated DIY customer base, the number of consumers who would prefer to have a
professional fix their vehicle fluctuates with economic cycles. The drop in disposable income during the
most recent recession forced some former DIFM consumers to work on their own vehicles. Weak labor
and credit markets, depressed new vehicles sales and the increasing average length of vehicle ownership
compounded this trend. The broader economic recovery is expected to increase disposable income,
which will likely result in the reversal of this recent trend.
We expect the shift away from DIY and toward DIFM to increase as the economy recovers, and
continue for the foreseeable future. In anticipation of the change in consumer behavior we have
adopted a long-term strategy of leading with our automotive service offerings and aggressively
expanding our commercial business, while maintaining our DIY customer base through our innovative
marketing programs in order to capitalize on the forecasted long-term growth of the DIFM industry
and decline of the DIY business.
BUSINESS STRATEGY
Our vision for Pep Boys is to take our industry-leading position in automotive services and
accessories and to be 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 customers
the breadth of the automotive services and merchandise that we offer and our value proposition. The
four strategies to achieve our vision are to: (i) Earn the trust of our customers every day, (ii) Lead with
our service business and grow through our Service & Tire Centers, (iii) Establish a differentiated DIY
experience by leveraging our Automotive Superstore and (iv) Leverage our Automotive Superstore to
provide the most complete offering for our commercial customers.
Earn the TRUST of our Customers every day. We do this by delivering a customer experience
that is based on Speed, Expertise, Respect and Value. We start with our associates and our goal to be
the preferred employer in our industry by focusing on associate hiring practices, training and
development, and rewarding associate performance through performance-based compensation plans. In
our stores, we strive to continuously improve the customer experience by providing better looking and
easier to shop stores and more consistent execution of our simplified and streamlined operations. We
have developed a specific tailored marketing plan for each of our markets to maximize our reach and
efficiencies. These marketing programs focus on TV and radio promotions scheduled around traditional
shopping holidays that focus on the most frequently needed services. These promotions are
supplemented by extensive direct marketing and grass-roots campaigns and occasional print campaigns.
We have a rewards program that benefits customers whether they choose to do it themselves or have us
do it for them and helps to drive customer count increases and repeat business through discounted
towing, free services and rewards points for purchases.
Lead with our Service business and grow through our Service & Tire Centers. We do this by
being a full service—tire, maintenance and repair—shop that DOES EVERYTHING. FOR LESS. Our
full service capabilities, ASE (Automotive Service Excellence) certified technicians and continuous
investment in training and equipment allow customers to rely on us for all of their automotive service
and maintenance needs. We can provide these services at highly-competitive prices because our size
and business model allow us to buy quality parts at lower prices and pass those savings onto our
customers. We believe that offering a broad assortment of private label and branded tires at
competitive prices provides a competitive advantage to the Company since DIY competitors do not sell
tires and related services. In order to further leverage our tire business, we are in the process of
introducing a new interactive web application which allows customers to shop for the tire that best fits
their needs and simultaneously schedule installation services at one of our stores.
3