The Cold War between Advance Auto and AutoZone has been waged for years. Giant parts retailer against giant parts retailer. It's been sort of an arms race to see who could build the most retail stores.
Now the war to end all wars is heating up on another front: the commercial business. With AutoZone recently announcing expansion of its commercial program, it's becoming evident that this is where the war will be won.
Here's a little secret: the commercial business is where the bloodiest war has always been fought because that's where most of the business has always been. It's never veered too far from where it's at right now, which is 85 percent of the business.
I don't know if it was part of either retailer's long-term strategy to enter the commercial business initially, but it is now. In essence, their retail successes have provided them the opportunity to play in the bigger, more profitable commercial arena.
A decade ago, both companies eased into the commercial business and made the mistake of continuing to act like a retailer rather than embrace the laborious ways of the wholesaler. But that was yesterday's growing pains. Today, AutoZone is saying it will concentrate on commercial sales in 2007. Advance made its bold strategic move for more commercial business last September when it acquired Autopart International, a Massachusetts-based chain that sells auto parts to warehouses. So as we enter the new year, 13 percent of AutoZone's business is commercial and Advance's is 20 percent. Now if one or the other could acquire CSK, which has built its commercial business to 18 percent, things could get really interesting, especially for Advance, which would suddenly become a bona fide national retailer. Having said that, though, neither is likely to make such a deal.
By and large, traditionalists don't seem that concerned about the retailers. They cling to the notion that they are more knowledgeable and savvy because the commercial market is their market. That certainly has been the case up to this point.
The winners in the commercial business will be those who will truly partner with the shops. I'm not talking about personal relationships. If you can get them, they're a bonus. Unfortunately, long standing relationships are going to continue to dissolve as competition increases. Shops want partners who will help manage their business so they can do what they do best, i.e., work on cars. For starters, this means flawless parts ordering, quick resolution to warranty claims, attractive rebate programs and assistance to help secure customers.
This kind of service will take sophistication, speed and efficiency. And now it looks like a massive infrastructure could be the tipping point.
If you're a traditionalist, now would be the time to break from tradition.
