O'Reilly Auto Parts 2013 Annual Report Download - page 15

FORM 10-K
9
Store Layout:
We utilize a computer-assisted store layout system to provide a uniform and consistent retail merchandise presentation and customize
our hard-parts inventory assortment 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, seasonal merchandise, new items and advertised
specials.
Store Automation:
To enhance store-level operations, customer service and reliability, we use Linux servers and IBM I-Series computer systems in our
stores. These systems are linked with the I-Series computers located in each of our DCs. Our point-of-sale system provides immediate
access to our electronic catalog, part images, schematics and pricing information by make, model and year of vehicle and uses barcode
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.
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 identified below:
 population density;
 demographics including age, ethnicity, life style and per capita income;
 market economic strength, retail draw and growth patterns;
 number, age and percent of makes and models 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;
 physical location, traffic count, size, economics and presentation of the site;
 financial review of adjacent existing locations; and
 the type and size of store that should be developed.
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. As these store clusters mature, we evaluate the need
to open additional locations in the more densely populated markets where we believe opportunities exist to expand our market share or
to improve the level of service provided in high volume areas. This strategy enables us to achieve additional distribution and advertising
efficiencies in each market.
Management Structure
Each of our stores is staffed with a store manager and one or more assistant managers, in addition to parts specialists, retail and/or installer
service specialists and other positions required to meet the specific needs of each store. Each of our 404 district managers has general
supervisory responsibility for an average of ten stores, which provides our stores with a strong amount of operational support.
Store and district managers complete a comprehensive training program to ensure each has a thorough understanding of customer service,
leadership, inventory management and store profitability, as well as all other sales and operational aspects of our business model. Store
and district managers are also required to complete a structured training program that is specific to their position, including attending a
week-long manager development program at the corporate headquarters in Springfield, Missouri. Store and district managers also receive
continuous training through online assignments, field workshops, regional meetings and our annual managers' conference.
We provide financial incentives to all store Team Members through incentive compensation programs. Under our incentive compensation
programs, base salary is augmented by incentive compensation based on individual and/or store sales and profitability. In addition, each
of our district managers participates in our stock option and bonus programs, and store managers participate in bonus programs based
on their store’s performance. We believe our incentive compensation programs significantly increase the motivation and overall
performance of our store Team Members and enhance our ability to attract and retain qualified management and other personnel.
Professional Parts People
We believe our highly trained team of Professional Parts People is essential in providing superior customer service to both DIY and
professional service provider customers. Because a significant portion of our business is from professional service provider customers,
our Professional Parts People are required to be highly technically proficient in automotive products. In addition, we have found that