O'Reilly Auto Parts 2013 Annual Report Download - page 11

FORM 10-K
5
OUR BUSINESS
Our goal is to continue to achieve growth in sales and profitability by capitalizing on our competitive advantages and executing our
growth strategy. We remain confident in our ability to continue to gain market share in our existing markets and grow our business in
new markets by focusing on our dual market strategy and the core O’Reilly values, including customer service and expense control. Our
intent is to be the dominant auto parts provider in all the markets we serve, by providing superior customer service and significant value
to both DIY and professional service provider customers.
Competitive Advantages
We believe our effective dual market strategy, superior customer service, technically proficient store personnel, strategic distribution
systems and experienced management team make up our key competitive advantages which cannot be easily duplicated.
Proven Ability to Execute Our Dual Market Strategy:
Over the past 30 years, we have established a track record of effectively serving, at a high level, both DIY and professional service
provider customers. We believe our proven ability to effectively execute a dual market strategy is a unique competitive advantage. The
execution of this strategy enables us to better compete by targeting a larger base of consumers of automotive aftermarket parts, capitalizing
on our existing retail and distribution infrastructure, operating profitably in both large markets and less densely populated geographic
areas that typically attract fewer competitors, and enhancing service levels offered to DIY customers through the offering of a broad
inventory and the extensive product knowledge required by professional service providers.
In 2013, we derived approximately 58% of our sales from our DIY customers and approximately 42% of our sales from our professional
service provider customers. We believe we will continue to increase our sales to professional service provider customers at a faster pace
than the increase in our sales to DIY customers due to the more fragmented nature of the professional service provider business, which
offers a greater opportunity for consolidation, the opportunities for growth in our less mature markets, and our systems, knowledge and
experience serving the professional service provider side of the automotive aftermarket, supported by 600 full-time sales staff dedicated
solely to calling upon and servicing the professional service provider customer. We believe we will continue to have a competitive
advantage on the professional service provider portion of our business over our competitors who do not have the same historical track
record of serving the professional service provider. We will also continue to expand and enhance the level of offerings focused on the
growth of our DIY business and will continue to execute our proven dual market strategy.
Superior Customer Service:
We seek to provide our customers with an efficient and pleasant in-store experience by maintaining attractive stores in convenient locations
with a wide selection of automotive products. We believe that the satisfaction of DIY and professional service provider customers is
substantially dependent upon our ability to provide, in a timely fashion, the specific automotive products requested. Accordingly, each
O'Reilly store carries a broad selection of automotive products designed to cover a wide range of vehicle applications. We continuously
refine the inventory levels and assortments carried in each of our stores, based in large part on the sales movement tracked by our inventory
control system, market vehicle registration data, failure rates and management's assessment of the changes and trends in the marketplace.
We have no material backorders for the products we sell.
We seek to attract new DIY and professional service provider customers and to retain existing customers by offering superior customer
service, the key elements of which are identified below:
 superior in-store service through highly-motivated, technically-proficient store personnel (“Professional Parts People”) using an
advanced point-of-sale system
 an extensive selection and availability of products
 attractive stores in convenient locations
 competitive pricing, supported by a good, better, best product assortment designed to meet all of our customers’ quality and value
preferences
 a robust point-of-sale system integrated with our proprietary electronic catalog, which contains a wide variety of product images,
schematics and technical specifications, and equips our Team Members with highly effective tools to source products in our extensive
supply network
Technically Proficient Professional Parts People:
Our highly-motivated, technically-proficient Professional Parts People provide us with a significant competitive advantage, particularly
over less specialized retail operators. We require our Professional Parts People to undergo extensive and ongoing training and to be
technically knowledgeable, particularly with respect to hard parts, in order to better serve the technically-oriented professional service
provider customers with whom they interact on a daily basis. Such technical proficiency also enhances the customer service we provide
to our DIY customers who value the expert assistance provided by our Professional Parts People.