Napa Auto Parts 2003 Annual Report Download - page 7

The Automotive Parts Group distributes to a wide range of
markets throughout North America. Wholesale Markets repre-
sent professional service and repair facilities and servicing these
customers has always been our greatest strength and continues
to be a growth area. Retail/Do-it-Yourself Markets represent
an important part of our growth strategy and we continue to
enhance our merchandising initiatives and upgrade our NAPA
AUTO PARTS stores to reach today’s consumer.
POSITIVE INDUSTRY TRENDS
The Automotive Parts Group is poised to take advantage of
several positive industry trends affecting the Wholesale and
Retail markets, including:
•Increased number of vehicles in operation and more
importantly, increased number of vehicles older than six
years, which boosts demand for aftermarket products
•Increased percent of light trucks and SUVs, and foreign cars
which drives demand for higher priced aftermarket products
•More U.S. consumers reaching driving age, expanding the
need for vehicles as well as increasing the number of miles
driven each year
GROWTH INITIATIVES
The Automotive Parts Group is focused on expanding our
reach throughout North America. In the final quarter of 2003,
we added Hawaii to our markets with the acquisition of the
privately held NAPA Hawaii business. Driven by additional
expansion opportunities and positive industry trends, we
have renewed our commitment to several growth initiatives,
including:
•New Distribution. During 2004, our goal is to add an
additional 50 new Company-owned and 50 new independent
NAPA AUTO PARTS stores. A key factor in this expansion is
NAPA’s Integrated Business Solutions (IBS), a sophisticated
level of inventory management for large customers. We will
continue to grow the number of IBS locations we service.
•NAPA AutoCare. We will expand the nation’s largest
independent automotive service and repair network by adding
1,000 new AutoCare Centers to our existing 12,500-member
base. By providing effective business tools, we will help
these independent owners promote and grow their NAPA
AutoCare Centers.
•Major Accounts. The Major Account Program assists NAPA
AUTO PARTS stores in securing preferred vendor agreements
with nationally recognized companies, such as AAA, CarMax,
Firestone, Goodyear, Nationwide Insurance, Sears, and the
United States Postal Service. Our team of stores, distribution
centers, and manufacturers is uniquely positioned to support
the repair and maintenance needs of these large companies
and fleets, and we plan to grow this important customer
segment.
•Electronic Connectivity. New and improved technologies
distinguish the Automotive Parts Group from its competitors.
NAPA Business Systems continue to make effective use of the
internet to link repair facilities to their primary NAPA AUTO
PARTS store and connect the NAPA AutoCare Center to their
customers. NAPA systems provide solutions that increase
convenience and access to more than 300,000 quality parts,
strengthen relationships with professional customers and
improve repair facility management.
•Enhanced Store Inventories. To help the NAPA AUTO PARTS
store have the right parts in stock at the right time, we have
continually updated our inventory classification capabilities.
Most recently, we have developed Marketplace Inventory
Classification (MIC), an electronic tool that can forecast fast-
moving products and better align each store's inventory with
its market.
•Advertising. The NAPA National Advertising Program is
designed to build customer and consumer awareness of our
already powerful brand and firmly establish NAPA as the
source for the highest quality auto parts and services. This
program delivers high visibility exposure through national
television, radio, and print advertising, targeted sponsorships,
and high-quality local advertising materials.
ENHANCED EXPERTISE
NAPA AUTO PARTS store personnel are highly regarded for their
understanding of the automotive parts business. We continually
develop and expand training programs to enhance this expertise.
These include:
•Online training for all employees
•New English to Spanish Translation Sales Guides for
Automotive Systems
•Technical training publications
•Support for certifications, such as ASE Parts Specialist
Certification. NAPA continues to be a leader in the aftermarket
for ASE-Certified personnel.
LOOKING AHEAD
Positive industry trends, our growth initiatives and the business
expertise developed over many years in the industry provide
significant growth opportunities in the Wholesale and Retail
automotive aftermarkets we serve. Looking ahead, the
Automotive Parts Group is prepared to reach its growth
potential in 2004 and beyond.
5
AUTOMOTIVE PARTS GROUP
53%
NET SALES BY
SEGMENT OF GPC
AUTOMOTIVE PARTS GROUP
NET SALES
in billions of dollars
99 00 01 02 03
4.16 4.25 4.34 4.48
4.09