O'Reilly Auto Parts 2013 Annual Report Download - page 5

distribution centers opening in 2014
which will provide us with the additional
capacity necessary to grow and to
continue to lead the industry in inventory
availability. We opened our 25th DC in
Lakeland, Florida, in January of 2014.
is DC will support our expansion into
Central and Southern Florida, and we
have been very pleased with the progress
of the stores we have added in these
markets. Our second new DC will open in
the third quarter of 2014 just outside of
Chicago, Illinois. is new DC will
provide us with a strategic advantage by
positioning more than 150,000 SKUs in
close proximity to the huge car population
in the important Chicagoland market,
while also freeing up distribution capacity
to support additional growth in several of
our existing midwestern facilities. Our
nal project to be completed in 2014 will
be the opening of a new DC just outside
of Boston, Massachusetts. is new DC
will open in the back half of 2014 and will
initially service the stores acquired in the
VIP acquisition, with signicant
additional capacity to support continued
expansion in the northeast beginning in
2015 and beyond. Constructing, stocking
and stang more than 1.1 million
additional square feet of distribution
capacity in one year is a huge
undertaking, but our distribution team
has a proven track record of bringing new
DCs online without a hitch.
Opportunistic Acquisitions e third
prong of our proven growth strategy is the
identication, acquisition, and integration
of existing auto parts chains, and the
multiple acquisition success stories in our
history set the blueprint for our activity
moving forward. e automotive
aermarket has consistently consolidated
over the past decade, but remains a very
fragmented industry with the top ten
automotive aermarket parts chains in
the U.S. accounting for less than 50%
of the total number of outlets. is
fragmentation is especially prevalent on
the professional service provider side of
the business, and we believe signicant
opportunity exists for O’Reilly to continue
to consolidate the industry. Our historical
success in opportunistic acquisitions is
directly tied to the discipline we show in
the deals we complete and the process we
undertake to integrate the acquired
chains. We constantly monitor the
support infrastructure. We support our
new market growth by opening stores in
contiguous geographic areas to our
existing distribution network, providing
the same ve-night-a-week delivery our
existing markets receive. We also
frequently support a new market area with
the addition of a hub store in the rst wave
of store openings. We only have one
chance to make a rst impression, and we
make sure we have availability to be the
best parts provider as soon as we enter a
new market.
Capturing market share in existing stores
and opening successful new stores is
highly dependent on a strong distribution
network, and we have three new
open, we aggressively identify and develop
a knowledgeable and enthusiastic team of
parts professionals to provide unsurpassed
customer service from day one. Having
distribution capacity across our chain has
allowed us to spread out our new store
growth, allowing us to be selective not
only in the sites we develop, but also, just
as importantly, in the new store teams we
build. In 2014, we will add new stores in
several existing market areas, with strong
growth in Texas and California, and in
new geographic regions, with expansion in
growth markets in Florida and the upper
Midwest. Our new stores in existing
markets are some of the strongest out of
the gate as they benet from our existing
strong brand presence and management
preferences. is program will solidify
our engagement with our customers and
help us capture a larger percentage of
their business, while also providing us
with valuable information about our
customer’s buying habits. O’Rewards is
just one example of Team O’Reilly’s
dedication to our customers and our
commitment to becoming the dominant
auto parts supplier in all of our markets.
New Store Expansion Executing our
business model and providing excellent
customer service in every one of our
stores will always be our top priority and
we have proven our ability, over the
course of our history, to add very
protable new stores without missing a
beat. Our new store growth has been
successful because we do not compromise
our proven model in order to drive unit
growth numbers. For each new store we
large breadth of inventory we oer builds
strong relationships with both our
do-it-yourself and professional service
provider customers, because we can
deliver the right part to our customers
quicker than our competitors.
We also drive growth in our existing store
base by continually enhancing the in-store
experience of our customers through
renements to our systems and new
programs to enhance the already excellent
service we provide to our customers. One
of these new programs we rolled out in
late 2013 was our O’Rewards Customer
Loyalty Program, and we are thrilled with
the initial response from our customers
to this new initiative. Our O’Rewards
program rewards our loyal customers
with rebates based on their purchases
and targeted “surprise and delight”
promotions tailored to their individual
Our state-of-the-art distribution centers stock
an average of 147,000 SKUs, average more than
380,000 operating square feet and provide same
day and five-night-a-week delivery to our stores
in the continental United States.
O’REILLY AUTOMOTIVE 2013 ANNUAL REPORT 7O’REILLY AUTOMOTIVE 2013 ANNUAL REPORT 6
DISTRIBUTION NETWORK
Our robust, regional, tiered distribution
network provides our stores with same-day
or overnight access to hard-to-find parts
not routinely stocked at the store level and
enables us to optimize product availability and
inventory levels throughout our store network.
Our three new distribution centers in Florida,
Illinois and Massachusetts, opening in 2014,
will have a combined capacity to service
more than 750 stores. These new DCs will
provide our existing stores with a more robust
same-day inventory availability and still
support our future store growth and help
drive our continued market share gains.
NAPERVILLE, ILLINOIS LAKELAND, FLORIDA
DEVENS, MASSACHUSETTS
Our proven dual market
strategy allows us to eectively
serve, at a very high level, both
do-it-yourself and professional
service provider customers. Our
Professional Parts People are
required to be highly trained
and technically procient in
automotive products to eectively
serve our customers. Our
experienced full-time
sales sta, consisting of more
than 600 Team Members
throughout our store base, are
devoted to calling on existing
and future professional service
provider customers.