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How AutoZone Is Experimenting with Its Sales Channels

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AutoZone’s business segments

AutoZone’s (AZO) results are mainly divided into two business segments: retail, or DIY (do-it-yourself), and commercial, or DIFM (do-it-for-me). The DIY segment yields wider margins than DIFM. Let’s take a look how the DIY segment performed in the third fiscal quarter and other key decisions AutoZone has made recently.

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The DIY segment in fiscal Q3

The DIY segment, which covers auto part sales to customers without providing mechanics’ assistance to fit or change those vehicle parts, is a major segment for AutoZone.

In the third fiscal quarter, AutoZone discontinued aggressive promotional discounts for its ship-to-home sales, which were affecting its same-store sales. However, this impact was not significant, as the ship-to-home business makes up only a small part of the company’s business.

During AutoZone’s third-quarter conference call, CEO Bill Rhodes justified the move and said that “offering different promotional offers to customers based on how they wanted their products filled had the potential to create a channel conflict.” Therefore, AZO standardized the pricing of its products across the Internet and stores. To improve customers’ pickup-in-store experience, the company has continued to focus on providing better in-store customer services.

New store openings

During the third fiscal quarter, AZO opened 26 new US stores and relocated two stores, raising its home market store count to 5,540. Also, the company opened four new retail stores in Mexico, bringing its store count there to 536.

Based on its US store count, AutoZone is the largest auto part retailer in the country, ahead of O’Reilly Automotive (ORLY) and Advance Auto Parts (AAP). AZO’s focus on expanding its international market presence also gives it an edge over AAP and ORLY. Among automakers (FXD), General Motors (GM) is the largest US automaker, followed by Ford (F).

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