Auto chains shift gears to wholesale as DIY sales skid; discounters leave hard parts biz to the specialists - Do-It-Yourself

Discount Store News, Sept 4, 1995 by Richard Halverson

NATIONWIDE DSN REPORT -- Discounters are exiting the auto hard parts category in droves, driven out by the downturn in the Dry segment and a greater commitment to soft lines retailing.

Auto specialty chains such as AutoZone and Pep Boys-Manny, Moe & Jack seem to be the beneficiaries, aided by a phenomenal proliferation of hard parts as well as auto parts stores that are now targeting the wholesale trade.

Recently, Venture announced that it is dropping the only parts it carries-filters and spark plugs--as it realigns its merchandising on higher-margin soft goods. In addition, motor oil, the auto department's traffic--builder, also is getting the ax.

Sam's Club has formed an automotives division, but it is seeking the suppliers' end of the aftermarket with items like motor oil by the barrel, lights and shop towels--no hard parts. Tires and batteries are as hard" as it gets at Sam's Club.

Wal-Mart is expanding on automotives, but not in parts. Instead, the retailer is concentrating on accessories, including pickup truck accessories and chemicals, while carrying only filters, spark plugs and other tune-up parts like plug wires and rotor caps.

Sears has given up the auto parts business and no longer carries even spark plugs and wires. It is down to a small number vendors of batteries, tires, oil and anti-freeze.

Because of parts proliferation, auto parts stores have to stock a broad array of hard parts, said Jim Lang, president of Lang Marketing Resources, Wyckoff, N.J. In just the past five to eight years, the parts sku count at warehouse distributors has increased more than 20%, Lang said, noting, "There's been an explosion of parts in stores."

The growth of the foreign car market was a major factor, Lang said, but another reason is that cars on U.S. highways are getting older and need more fix--it attention. The average car on the road is 8.7 years old, Lang said, a full year older than the 1990 average of 7.7 years.

The popularity of pickup trucks and off-road vehicles is leading to a growth in accessories, he said, such as headlight protective cages, grill protectors, simulated roll bars, light bars, lights and running boards.

Since the DIY base isn't growing, auto parts chains increasingly are turning their attention to semi-professional, backyard mechanics who buy parts they will install on customers' cars.

AutoZone, increasing its hard parts sku count by about 1,000 per year, now evens stocks performance parts, once the province of specialty speed shops, that specialize in customizing the performance and look of cars and trucks, Lang noted.

The number of retail auto parts stores is climbing rapidly, he said, to 11,920 in '94 from 7,650 in '84. In the same 10 years, the number of whilesale jobbers fell to 22,675 from 29,000, he said.

Chains such as Pep Boys are going after the wholesale end of the business as well as the retail end.

The establishment of its Parts USA stores, which carry only parts and accessories and provide none of the signature services of Pep Boys, shows that the chain recognizes that wholesale is an important market segment and that Pep Boys is going head to head with jobbers, Lang said.

Pep Boys opened its first parts--only Parts USA store in Houston earlier this year and will be operating 25 such units by the end of the year. The stores measure 13,000 sq. ft. and carry 22,000 skus. Pep Boys is far from abandoning its traditional format and later this year will open 50 of its conventional stores of 23,000 sq. ft., which include 11 service bays and carry about 24,000 skus. It will end the year with about 483 service stores, including six stores in a new market, Puerto Rico.

In a new store design called Concept 4, Pep Boys has picked up a key feature of the Parts USA unit, putting the parts counter in the front of the store, rather than in the rear.

Stiff competition among chains for bolt-on parts, such as starters and alternators, is the order of the day among auto parts chains, Lang said. But in internal engine parts, such as piston rings and pistons, "price is no object," he said. Instead, availability is the key, and customers will buy elsewhere before waiting for special-order arrival.

There is virtually nothing that Pep Boys doesn't carry and advertise including rack and pinion steering units and CV drive shafts, both difficult to install and carried for sale to the semi-professional and professional installer.

AutoZone carries just as broad an assortment.

In another move to develop the professional installer market, Pep Boys two years ago launched a Professional Installer catalog, mailed to almost 500,000 mechanics, and began testing parts delivery. Catalog prices are the same as store prices, and stores carry almost all of the items the catalog lists.

Northern Auto and Autoworks, chains owned by Hahn Automotives, a warehouse distributor, already have gotten into delivery and Pep Boys is about to go nationwide with delivery, Salomon Bros. said in a recent analysis of the automotives aftermarket.

The parts proliferation--and the shift to the semi-professional and installer market--puts a premium on imaginative distribution systems," said Ed Kaufman, head of Lindsay-Kaufman Co., Tenafly, N.J., an automotives aftermarket consultant. Special orders are all right for DIY customers, Kaufman said, "but professionals want it now."