Pep Boys 2010 Annual Report Download - page 64

customers. These promotions will be supplemented by extensive direct marketing and grass-roots
campaigns and occasional print campaigns. Finally, we utilize in-store signage, creative product
placement and promotions to help educate customers about products that fit their needs.
The Company maintains a web site located at www.pepboys.com. It serves as a portal to our
Company, allowing consumers the freedom and convenience to access more information about the
organization, our stores and our service, tires, parts and accessories offerings. Consumers can
schedule a service appointment on our web site with our eServe application, as well as keep track of all
their maintenance and service records electronically through our online Glovebox application. The site
also provides consumers with general and seasonal car care tips, do-it-yourself vehicle maintenance and
light repair guidance, and safe driving pointers. Exclusive online coupons are available to site visitors
who register their e-mail addresses with us. These coupons cover special discounts on services and
products at Pep Boys.
STORE OPERATIONS AND MANAGEMENT
Most Pep Boys stores are open seven days a week. Each Supercenter has a Retail Manager and
Service Manager (Service & Tire Centers only have a Service Manager while Pep Express stores only
have a Retail Manager) who report to geographic-specific Area Directors and Division Vice Presidents.
The Division Vice Presidents report to the Executive Vice President of Stores who in turn reports to
the President and Chief Executive Officer. As of January 29, 2011, a Retail Manager’s and a Service
Manager’s average length of service with the Company is approximately 8.6 and 5.5 years, respectively.
Supervision and control over individual stores is facilitated by Area Directors and Divisional Vice
Presidents making regular visits to stores and utilizing the Company’s computer system and operational
handbooks. All of the Company’s advertising, accounting, purchasing, information technology, and most
of its administrative functions are conducted at its corporate headquarters in Philadelphia,
Pennsylvania. Certain administrative functions for the Company’s regional operations are performed at
various regional offices of the Company. See ‘‘Item 2 Properties.’’
INVENTORY CONTROL AND DISTRIBUTION
Most of the Company’s merchandise is distributed to its stores from its warehouses by dedicated
and contract carriers. Target levels of inventory for each product are established for each warehouse
and store based upon prior shipment history, sales trends and seasonal demand. Inventory on hand is
compared to the target levels on a weekly basis at each warehouse, potentially triggering re-ordering of
merchandise from suppliers. In addition, each Pep Boys store has an automated inventory
replenishment system that orders additional inventory, generally from a warehouse, when a store’s
inventory on-hand falls below the target levels. Recently, we consolidated certain of our slow-moving
hard parts inventory that had previously been stocked at each of our five warehouses into our centrally-
located Indianapolis warehouse that can service each of our stores with overnight delivery of these
parts, when necessary.
The Company also operates certain of its Supercenters as Superhubs, which have a larger
assortment of auto parts than our normal Supercenter. Implementation of the Superhub concept
enabled local expansion of our auto parts product assortment in a cost effective manner. We are now
able to satisfy customer needs for slow-moving auto parts by carrying limited amounts of this product at
Superhub locations. These Superhubs then deliver this product to requesting Supercenters to fulfill
customer demand. Superhubs are generally replenished from distribution centers multiple times per
week. As of January 29, 2011, the Company operated 19 Superhubs within existing Supercenters, with
plans to convert an additional 24 Superhubs in fiscal 2011.
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