Pep Boys 2013 Annual Report Download - page 3

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The Road Ahead Transformation. We started with one store in Tampa at the end of 2012 and, during the fourth
quarter of 2013, we completed the remainder of our stores in the Tampa market. During the first half of 2015, we
will complete our stores in the Bay Area of Northern California, most of the New England area and the Charlotte
market. Our objective is to be the best alternative to the dealer. We already have the service capability in terms of
technicians, equipment and range of services. These changes bring our stores to dealer level in terms of customer
experience as well. When you experience one of these new stores you will clearly see our vision for Pep Boys to be
the best alternative to the dealer, and also how we can use our retail business to drive our service business with
unique, free, professional installation services for retail shoppers and an awesome shopping experience. Our age old
problem has been the disconnect between the expectations of service customers, especially the more attractive
segments of the service market, and traditional DIYers. Our redesigned Supercenter caters to our target customer
segments. The experience that these customers desire and that we can provide is more consistent with being the best
alternative to the dealer. While the cost of the store changeover is extensive, the sales lift we are experiencing
provides an attractive financial return ... and it expands our customer funnel to draw in new customers well past tire
deals and oil changes.
Another important element of The Road Ahead is our merchandising. On one side of the store is our Speed Shop.
Speed Shops are for the true DIY enthusiast and connect with our DIY Proud customer segment. The other side of
the store caters to our Appearance Matters and our three distinct service customer segments. We still have the
dominant assortments of products to improve the interior and exterior look of your car and to personalize your
vehicle. But the visual presentation appeals to a broader audience than the traditional DIYer, and also includes more
automotive-related impulse product. Work is underway to update our assortments for our customers who love their
cars and car life-style. As we continue to dig deeper into our customer segmentation research we are identifying new
product opportunities to target these customer segments.
Digital Operations. Sales from digital operations include on-line service appointments, tire sales that are made on-
line and installed in our stores, ship-to-home sales and products that are ordered on-line and picked up in our stores.
Sales through digital operations continue to grow both in volume and as a percentage of our overall business and we
expect those trends to continue. The automotive after-market is accelerating in its move to the digital world and we
see this area as critical to our success. Much like our overall customer centric efforts, our digital content, design and
functionality are targeted to our key customer segments, who are increasingly starting their shopping on-line and
expect an effortless Omni-channel experience. There is much more in the works from dramatically expanding our
on-line assortment to increasing key on-line partnerships, to new content and functionality, all of which we look
forward to sharing with you as we hit each milestone.
We are in the midst of transforming our brand experience to create a new market model. While this transformation
encompasses changes to our store appearance, merchandising, marketing and digital experience, the most important
difference is with our associates - in how they build genuine relationships with our customers that lead to repeat sales
and completely satisfied customers. I am proud of their commitment and determination to execute our mission,
which is people taking care of people ... and their cars.
Thank you for traveling with us on The Road Ahead! Trust The Boys To Get You There!
Michael R. Odell
President & Chief Executive Officer
April 25, 2014