Digital assets that provide visibility of delivery status, product availability and training drove double-digit comp sales growth in the professional segment for Advance Auto Parts, company executives said Tuesday (Feb. 15) during the company’s quarterly earnings call.
Advance Auto Parts, an automotive aftermarket parts provider that serves both professional installers and do-it-yourselfers (DIYers), said more auto repairs are being done by professionals, and the company is meeting the needs of this segment with a growing number of digital assets.
“Throughout 2021, our professional customers continued to navigate significant COVID-19, labor and global supply chain challenges,” Advance Auto Parts President and CEO Tom Greco said during the call. “As a result, our team stepped up to help them in a time of great need.”
Focusing on the Top 3 Needs of B2B Customers
Among the services the company delivers to professional customers are a digital platform for auto parts ordering that has recorded its highest B2B penetration ever and virtual training that offers technicians an interactive learning experience.
“We’ve been investing and improving the customer experience through a single parts look-up, technical training and digital assets to improve speed and visibility of delivery,” Greco said.
The company’s most recent survey of professional customers found that their top three needs are product availability, ease of doing business and speed of delivery. All are ranked above price, Greco noted, but at the same time, the company works to provide competitive prices too.
“There are other variables that are more important to our pro customers,” Greco said. “I speak to them all the time, whether it’s the CEOs of the company or in the garage themselves, and when you have the part and you’re able to get it to the customer quickly, that’s by far the most important variable.”
Aging Vehicles, Growing Miles Driven Boost Demand
The company’s DIY segment saw mid-single-digit comp sales growth. One new addition here is a partnership with Shell that enables members of Advance’s loyalty program to earn savings on gas at Shell stations when they purchase products from Advance.
During the call, Greco said the program is engineered so that there are no financial consequences for Advance if consumers increase their use of this offering at a time of high gas prices.
“Candidly, for us, we think it drives share of wallet in a time of rising gas prices,” Greco said.
Looking ahead to the rest of 2022, Greco said the company’s external tailwinds include an aging vehicle population that includes several million vehicles entering the sweet spot for auto repair, a gradual recovery in miles driven and the outperformance of its professional business compared to DIY. Headwinds include broad-based inflation and the lapsing of significant stimulus dollars.
“Overall, we’re very encouraged by the resiliency of our industry in 2021 and the momentum we’re building behind the disciplined execution of our strategic plan,” Greco said.
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