Pep Boys 2010 Annual Report Download - page 63

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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 DEFINITY, FUTURA↧ and CORNELL↧, 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, wheel rims and wiper blades under the name PROLINE↧; alternators,
battery booster packs, alkaline type batteries and starters under the name PROSTART↧; power steering
hoses, chassis parts and power steering pumps under the name PROSTEER↧; brakes under the name
PROSTOP↧ and brakes, batteries, starters, and ignitions under the name VALUEGRADE. All
products sold by the Company under various private label names were approximately 31% of the
Company’s merchandise sales in fiscal 2010 and 2009, and 28% in fiscal 2008.
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
inventory investment. The program satisfies the commercial customer’s automotive inventory needs by
taking advantage of the breadth and quality of the Company’s parts inventory as well as its experience
supplying its own service bays and mechanics. As of January 29, 2011, approximately 80% or 454 of the
Company’s 568 Supercenters and Pep Express stores provided commercial parts delivery as compared
to approximately 80% or 451 stores at the end of fiscal 2009.
In 2009, the Company began a 20-store pilot program designed to fulfill the Company’s goal to be
the automotive solutions provider of choice for mobile electronics and installation services. The
Company re-organized its automotive audio product lines to include radios, speakers, amplifiers,
remote starters and alarm systems from the most popular brands. The key to this program is the
addition of expert sales and installation technicians to service our customers’ needs. As of January 29,
2011, the installation program was available at 110 stores and the Company expects to double the
number of stores offering this service in fiscal 2011. We also added five new Speed Shops to existing
Supercenters during fiscal 2010, bringing our total number of Speed Shops to seven. Speed Shops
create a differentiated retail experience for automotive enthusiasts by stocking high-performance and
specialty products.
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 that allows our employees to efficiently look up the parts that our customers
need and to provide complete job solutions, advice and information for customer vehicles. 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 periodic basis,
the Company employs a promotional pricing strategy on select items and service offers to drive
increased customer traffic.
We believe that targeted advertising and promotions play important roles in succeeding in today’s
environment. We are constantly working to understand our customers’ wants and needs so that we can
build long-lasting, loyal relationships. We utilize promotions, advertising, and loyalty card programs to
promote our service and repair capabilities, merchandise offerings and our commitment to customer
service and satisfaction. The Company is committed to an effective promotional schedule with TV and
radio promotions that focus on the most frequently needed services and are scheduled around periods
of time when automotive repair and preventative maintenance are top of mind and relevant to our
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