Pep Boys 2012 Annual Report Download - page 46

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Implementation of the Superhub concept enables 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 February 2, 2013, we operated 45 Superhubs
within existing Supercenters, with plans to convert an additional 15 Superhubs in fiscal 2013. These
Superhubs, including our additional conversions in 2013, will provide approximately 500 of our stores
with an expanded auto parts assortment.
SUPPLIERS
During fiscal 2012, our ten largest suppliers accounted for approximately 51% of the merchandise
purchased. Only one of our suppliers accounted for more than 10% of our purchases. We have one
long-term contract under which we are required to purchase merchandise. We believe that the
relationships that we have established with our suppliers are generally good.
In the past, we have not experienced difficulty in obtaining satisfactory sources of supply and we
believe that adequate alternative sources of supply exist, at similar cost, for the types of merchandise
sold in our stores.
COMPETITION
We operate in a highly competitive environment. We encounter competition from national and
regional chains, automotive dealerships and from local independent service providers and merchants.
Our competitors include general, full range, discount department stores which carry automotive parts
and accessories and/or have automotive service centers, as well as specialized automotive retailers.
Generally, the specialized automotive retailers focus on either DIFM or DIY. We believe that our
operation in both DIFM and DIY positively differentiates us from most of our competitors. However,
certain competitors are larger in terms of sales volume and/or number of stores. Therefore, these
competitors have access to greater capital and management resources and have been operating longer
or have more stores in particular geographic areas. The principal methods of competition in our
industry include store location, customer service, product offerings, quality and price.
REGULATION
We are subject to various federal, state and local laws and governmental regulations relating to the
operation of our business, including those governing the handling, storage and disposal of hazardous
substances contained in the products that we sell and use in our service bays, the recycling of batteries,
tires and used lubricants, the sale of small engine merchandise and the ownership and operation of real
property.
EMPLOYEES
At February 2, 2013, the Company employed 19,441 persons as follows:
Description Full-time % Part-time % Total %
Retail ................................. 3,947 28.4 3,488 62.8 7,435 38.2
Service center ........................... 8,599 61.9 1,954 35.2 10,553 54.3
Store total .............................. 12,546 90.3 5,442 98.0 17,988 92.5
Warehouses ............................. 525 3.8 107 1.9 632 3.3
Offices ................................ 815 5.9 6 0.1 821 4.2
Total employees .......................... 13,886 100.0 5,555 100.0 19,441 100.0
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