Aarons 2012 Annual Report Download - page 23

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13
developed one of the largest training programs in the industry, called Aaron’s University. Aaron’s University is
designed to provide a uniform customer service experience regardless of the store’s location, or whether it is Company-
operated or franchised. Standardizing operating procedures throughout our system is a primary focus of Aaron's
University. Aaron’s national trainers provide live interactive training via webinars on a daily basis to entry level and
management level associates. The learning program is also complimented with a robust e-learning library with a
constantly growing curriculum.
In addition to the e-learning program, Aaron’s University has a management development program that offers facilities-
based training for current managers and store management caliber associates. Additionally, approximately once a
month we produce video based communications on a wide variety of topics of interest to our store personnel regarding
current Company initiatives. Our policy of primarily promoting from within boosts employee retention and underscores
our commitment to customer service and other business philosophies, allowing us to realize greater benefits from our
employee training programs.
Purchasing and Distribution
Our product mix is determined by store managers in consultation with regional managers and regional vice presidents,
based on an analysis of customer demands.
The following table shows the percentage of Company revenues for the year ended December 31, 2012, 2011 and 2010
attributable to different merchandise categories:
Merchandise Category
Percentage of
2011 Revenues
Percentage of
2010 Revenues
Electronics
36%
37%
Furniture
32%
31%
Appliances
17%
16%
Computers
12%
13%
Other
3%
3%
We purchase the majority of our merchandise directly from manufacturers, with the balance from local distributors.
One of our largest suppliers is our own Woodhaven Furniture Industries division, which supplies the majority of the
upholstered furniture and bedding we lease or sell. We have no long-term agreements for the purchase of merchandise.
Sales and lease ownership operations utilize fulfillment centers, which are on average approximately 119,000 square
feet, to control merchandise. All Company-operated sales and lease ownership stores receive merchandise directly from
our 16 operating fulfillment centers, together totaling approximately 1,900,000 square feet. Most of our continental
United States stores are within a 250-mile radius of a fulfillment center, facilitating timely shipment of products to the
stores and fast delivery of orders to customers.
We realize freight savings from truckload discounts and more efficient distribution of merchandise by using fulfillment
centers. We use our own tractor-trailers, local delivery trucks and various contract carriers to make weekly deliveries to
individual stores.
Competition
Aaron's business is highly competitive. Our largest competitor in the rent-to-own market is Rent-A-Center, Inc.
According to industry sources and our estimates, Aaron’s and Rent-A-Center, which are the two largest industry
participants, account for approximately 5,400 of the 8,600 rent-to-own stores in the United States and Canada. Our
stores compete with other national and regional rent-to-own businesses, as well as with rental stores that do not offer
their customers a purchase option. With respect to customers desiring to purchase merchandise for cash or on credit, we
also compete with retail stores. Competition is based primarily on store location, product selection and availability,
customer service and lease rates and terms.