Pep Boys 2013 Annual Report Download - page 77

$80.0 million, which includes the planned addition of 30 Service & Tire Centers, three Supercenters,
and the conversion of 41 stores to the new ‘‘Road Ahead’’ format. These expenditures are expected to
be funded from cash on hand and net cash generated from operating activities. Additional capacity, if
needed, exists under our revolving credit facility.
SERVICES AND PRODUCTS
As of February 1, 2014, we operated a total of 7,520 service bays in 793 of our 799 locations. Each
service location performs a full range of automotive maintenance and repair services (except body
work) and installs tires, parts and accessories.
Each Pep Boys Supercenter carries a similar product line, with variations based on the number and
type of cars in the market where the store is located. A Pep Boys Service & Tire Center carries tires
and a limited selection of our products. A full complement of inventory at a typical Supercenter
includes an average of approximately 29,000 items, while Service & Tire Centers average approximately
2,000 items. Our product lines include: tires; batteries; new and remanufactured parts for domestic and
import vehicles; chemicals and maintenance items; fashion, electronic, and performance accessories;
and select non-automotive merchandise that appeals to our target customer segments.
In addition to offering a wide variety of high quality name brand products, we sell an array of high
quality products under various private label names. We sell tires under the names DEFINITY,
FUTURA↧ and CORNELL↧, and batteries under the name PROSTART↧. We also sell wheel covers
under the name FUTURA↧; air filters, anti-freeze, chemicals, cv axles, hub assemblies, lubricants, oil,
oil filters, oil treatments, transmission fluids, custom wheels 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, ignitions and chassis
under the name VALUEGRADE. All products sold by the Company under various private label names
were approximately 20% of our merchandise sales in fiscal 2013, 24% in 2012, and 26% in 2011. The
year over year decreases are the result of our introduction of additional brand name tires.
Our commercial automotive parts delivery program, branded PEP EXPRESS PARTS↧, is designed
to increase our market share with the professional installer and to leverage our inventory investment.
The program satisfies the commercial customer’s automotive inventory needs by taking advantage of
the breadth and quality of Pep Boys’ parts inventory as well as its experience supplying its own service
bays and mechanics. As of February 1, 2014, approximately 79%, or 454, of our 574 Supercenters and
Pep Express stores provided commercial parts delivery as compared to approximately 80%, or
458 stores, at the end of fiscal 2012.
We have a point-of-sale system in all of our stores, which gathers sales and inventory data by
stock-keeping unit from each store on a daily basis. This information is then used to formulate pricing,
inventory, marketing and merchandising strategies. We have an electronic parts catalog that allows our
associates to efficiently look up the parts that our customers need and to provide complete job
solutions, advice and information for customers’ vehicles. We have an electronic work order system in
all service centers. This system creates a service history for each vehicle, provides customers with a
comprehensive sales document and enables us to maintain a service customer database.
We use a competitive pricing strategy, setting prices based on market forces and then
complementing them with promotions. We believe that targeted advertising and promotions play
important roles in succeeding in today’s environment. We are constantly working to understand our
target customer segments’ needs and desires so that we can deliver outstanding customer service and
build long-lasting, loyal relationships with them. We utilize advertising, promotions and a loyalty card
program (Rewards) to convey our commitment to customer service and to promote our service and
repair capabilities and product offerings. We are committed to an effective multi-media promotional
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