O'Reilly Auto Parts 2009 Annual Report Download - page 23

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Our stores, on average, carry approximately 22,000 SKUs and average approximately 7,000 total square feet in size. At December 31,
2009, we had a total of approximately 24.2 million square feet in our 3,421 stores. Our stores are served primarily by the nearest
distribution center, but they also have access to the broader selection of inventory available at one of our 196 Master Inventory Stores,
which on average carry approximately 38,000 SKUs and average approximately 9,900 square feet in size. In addition to serving DIY
and professional installer customers in their markets, Master Inventory Stores also provide our other stores within the contiguous area
access to a greater selection of SKUs on a same-day basis.
We believe that our stores are ''destination stores'' generating their own traffic rather than relying on traffic created by the presence of
other stores in the immediate vicinity. Consequently, most of our stores are freestanding buildings and prominent end caps situated on
or near major traffic thoroughfares, and offer ample parking, easy customer access and proximity to our installer customers.
Store Layout. We utilize a computer-assisted ''plan-o-grammed'' store layout system to provide a uniform and consistent merchandise
presentation; however, each store’s hard-parts inventory assortment is customized to meet the specific needs of a particular market
area. Front room merchandise is arranged to provide easy customer access, maximum selling space and to prominently display high-
turnover products and accessories to customers. To ensure the best customer experience possible, we have selectively implemented
bilingual in-store signage based on the demographics in each store’s geographic area. Aisle displays and end caps are used to feature
high-demand or seasonal merchandise, new items and advertised specials.
Store Automation. To enhance store-level operations, customer service and reliability, we use IBM I-Series and X-Series computer
systems in stores that have converted to the O’Reilly systems. These systems are linked with the I-Series computers located in each of
our distribution centers. Our point-of-sale terminals provide immediate access to our electronic catalog to graphically display parts
and pricing information by make, model and year of vehicle and use bar code scanning technology to price our merchandise. This
system speeds transaction times, reduces the customer’s checkout time, ensures accuracy and provides enhanced customer service.
Moreover, our store automation systems capture detailed sales information which assists in store management, strategic planning,
inventory control and distribution efficiency. As CSK stores are converted to O’Reilly stores, IBM I-Series and X-Series computer
systems are installed in the converted store, linking the store to our distribution centers, electronic catalog and pricing information.
New Store Site Selection. In selecting sites for new stores, we seek to strategically locate store sites in clusters within geographic areas
in order to achieve economies of scale in management, advertising and distribution. Other key factors we consider in the site selection
process are bulleted below:
• population density and segmentation;
• market economic strength, retail draw and growth patterns;
• age, ethnicity and per capita income;
• number of registered vehicles;
• the number, type and sales potential of existing automotive repair facilities;
• the number of auto parts stores and other competitors within a predetermined radius and the operational strength of such
competitors; and
• physical location, size, economics and presentation of the site.
When entering new, more densely populated markets, we generally seek to initially open several stores within a short span of time in
order to maximize the effect of initial promotional programs and achieve economies of scale. After opening this initial cluster of new
stores, we seek to begin penetrating the less densely populated surrounding areas. This strategy enables us to achieve additional
distribution and advertising efficiencies in each market.
Products and Purchasing
Our stores offer DIY and professional installer customers a wide selection of brand name and private label products for domestic and
imported automobiles, vans and trucks. We do not sell tires or perform automotive repairs or installations. Our merchandise generally
consists of nationally recognized, well-advertised, premium name brand products such as AC Delco, Armor All, BWD, Cardone,
Castrol, Federal Mogul, Gates Rubber, Monroe, Moog, Pennzoil, Prestone, Quaker State, STP, Turtle Wax, Valvoline, Wagner, and
Wix. In addition to name brand products, our stores carry a wide variety of high-quality private label products under our BestTest®,
BrakeBest®, Master Pro®, Micro-Gard®, Murray and Omnispark®, O’Reilly Auto Parts®, Power Torque®, Super Start®, and
Ultima® proprietary name brands. Our private label products are produced by nationally recognized manufacturers and meet or
exceed original equipment manufacturer specifications and provide a great combination of quality and value – a characteristic
important to our DIY customers. We have added O’Reilly branded chemicals and commodities as well as proprietary private label
products to all converted and nonconverted, acquired CSK stores. These stores have also undergone hard-part resets, which
significantly increased their hard-part SKU offering, giving our customers in all stores a good, better, and best product offering.