For many of you, the extra time you have to spend in the gym to honor your New Year's resolution won't be entirely the fault of your loss of self-control during the mega-caloric holiday season. It also may be your loss of self-control during what I'm calling "the post-holiday auto parts retailers' doughnut barrage." Anyway, the retailers are definitely willing to sacrifice your waistline to get your business.
Seriously, I don't know if outside sales people from the auto parts retailers are going to show up in the morning at your business with a box of Krispy Kreme lard cakes (a.k.a. doughnuts) and a carafe of coffee, but I do know they are going to show up...again and again...like an out-of-work brother-in-law.
Want proof? Consider the epiphany that Pep Boys President and CEO Jeff Rachor had near the end of last year when he announced some big changes for the retailer.
"While the DIY part of our business will remain important, objectively, it doesn't offer the potential that we find in the DIFM environment."
Moreover, Rachor went on to say that he wants the company to lead the DIFM segment that he sees as a "growth market."
Holy high inventory, Batman, this conversion is retail blasphemy. Indeed, to liken this change of direction to religion would be tantamount of a Catholic converting to Judaism.
And like any heartfelt conversion, Pep's won't be any easy one. Rethinking parts selection, inventory levels and delivery costs alone have dissuaded many former retailers from converting. But that's the point, isn't it? They are former retailers.
Pep is not the only one to get commercial religion. Earlier last year, AutoZone and Advance Auto Parts, who both have fairly substantial commercial programs, announced that they want more commercial business. Who knows, maybe they'll wind up like the ideal O'Reilly model that I have recommended for the last two decades.
You have been the No. 1 target for wholesalers over several decades. Now, you're becoming the No. 1 target for retailers. With your supplier choices increasing, including more aggressive direct buying, it behooves you to take a step back and thoroughly assess your supplier choices. Which resellers will provide you consistently with quality parts, outstanding service and adequate — no, make that desirable — margins? The choices you make can either make or break you.
So what is the best choice(s)? It would be presumptuous for me to tell you, because each of you are in your own unique competitive situation. However, for some general direction, Capstone Financial Group offers a clue. It recently reported that both aftermarket manufacturers and retailers experienced equity losses, while distributors posted 10 percent gains.
From a retailer's point of view, that in itself is reason for Pep or anyone other retailer to become more DIFM-oriented. From your point of view, you may think buying from distributors offers more security, or you may opt to negotiate better terms with retailers who may be hungrier for your business. Either way, you're in the driver's seat, doughnut firmly in hand.
